BILL ANALYSIS                                                                                                                                                                                                    Ó







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        |Hearing Date:April 15, 2013        |Bill No:SB                         |
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                      SENATE COMMITTEE ON BUSINESS, PROFESSIONS 
                               AND ECONOMIC DEVELOPMENT
                          Senator Curren D. Price, Jr., Chair
                                           

                        Bill No:        SB 679Author:Berryhill
                          As Amended:April 8, 2013 Fiscal:Yes

        
        SUBJECT:  Licensees: reporting requirements.
        
        SUMMARY:  Revises the threshold for a licensed engineer or land  
        surveyor to report a civil action judgment, settlement, arbitration  
        award, or administrative action to the Board for Professional  
        Engineers, Land Surveyors and Geologists from "$50,000 or more" to  
        "more than $50,000;" requires a licensed engineer or land surveyor to  
        report to the Board any civil action judgment or binding arbitration  
        award or administrative action of $25,000 or greater.

        Existing law:
        
       1)Licenses and regulates professional engineers, land surveyors,  
          geologists and geophysicists by the Board for Professional  
          Engineers, Land Surveyors, and Geologists (Board) within the  
          Department of Consumer Affairs.

       2)Requires an  engineering  licensee to report to the Board in writing  
          the occurrence of any of the following events within 90 days of the  
          date the licensee has knowledge of the event:  (Business and  
          Professions Code (BPC) § 6770)

           a)   The conviction of any felony.

           b)   The conviction of any other crime (misdemeanor) substantially  
             related to the qualifications, functions, and duties of a  
             licensed engineer.

           c)   Any civil action judgment, settlement, arbitration award, or  
             administrative action resulting in a judgment, settlement, or  





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             arbitration award against the licensee in any action alleging  
             fraud, deceit, misrepresentation, breach or violation of  
             contract, negligence, incompetence, or recklessness by the  
             licensee in the practice of professional engineering if the  
             judgment, settlement, or arbitration award is $50,000 or greater.

       3)Provides that failure of a licensee to report to the Board in the  
          time and manner required shall be grounds for disciplinary action.   
          (BPC § 6770 (e))

       4)Requires a court that renders a conviction or judgment against an  
          engineer to report that fact to the Board within 30 days and furnish  
          a copy of the conviction or judgment and any accompanying orders or  
          opinions of the court.  (BPC § 6770.1)

       5)Requires an insurer that provides professional liability insurance to  
          an engineer or a state or local government agency that self-insures  
          an engineer to report to the Board when payment of a civil action  
          judgment, settlement, or arbitration award of $50,000 or greater,  
          against licensed engineer has been made.  (BPC § 6770.2)

       6)Requires a  land surveyor  licensee to report to the Board in writing  
          the occurrence of any of the following events within 90 days of the  
          date the licensee has knowledge of the event:  
       (BPC § 8776)

           a)   The conviction of any felony.

           b)   The conviction of any other crime (misdemeanor) substantially  
             related to the qualifications, functions, and duties of a land  
             surveyor.

           c)   Any civil action judgment, settlement, arbitration award, or  
             administrative action resulting in a judgment, settlement, or  
             arbitration award against the licensee in any action alleging  
             fraud, deceit, misrepresentation, breach or violation of  
             contract, negligence, incompetence, or recklessness by the  
             licensee in the practice of professional engineering if the  
             judgment, settlement, or arbitration award is $50,000 or greater.

       7)Provides that failure of a licensee to report to the Board in the  
          time and manner required shall be grounds for disciplinary action.   
          (BPC § 8776 (e))

       8)Requires a court that renders a conviction or judgment against a land  
          surveyor to report that fact to the Board within 30 days and furnish  





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          a copy of the conviction or judgment and any accompanying orders or  
          opinions of the court.  (BPC § 8776.1)

       9)Requires an insurer that provides professional liability insurance to  
          a land surveyor or a state or local government agency that  
          self-insures a land surveyor to report to the Board when payment of  
          a civil action judgment, settlement, or arbitration award of $50,000  
          or greater, against licensed land surveyor has been made.  (BPC §  
          8776.2)

        This bill:

       1)Revises those provisions above to instead require a licensed  
          professional engineer or a licensed land surveyor to report to the  
          Board any disciplinary action, or any civil action settlement or  
          administrative action resulting in a settlement against the licensee  
          of greater than $50,000. 

       2)Requires a licensed professional engineer or a licensed land surveyor  
          to report to the Board any civil action judgment or binding  
          arbitration award or administrative action resulting in a judgment  
          or binding arbitration award against the licensee, if the amount or  
          value is $25,000 or greater.

       3)Requires a court that entered a settlement against a licensed  
          professional engineer or a licensed land surveyor for more than  
          $50,000 or a conviction or judgment of more than $25,000 to report  
          that fact to the Board and provide a copy of the settlement and any  
          orders or opinions accompanying the settlement. 

       4)Requires an insurer that provides professional liability insurance to  
          a professional engineer or to a land surveyor or a state or local  
          government agency that self-insures a professional engineer or a  
          land surveyor to report to the Board when payment of a civil action  
          judgment, settlement, or arbitration award of more than $50,000,  
          against a licensee has been made.

        FISCAL EFFECT:  Unknown.  This bill has been keyed "fiscal" by  
        Legislative Counsel.

        COMMENTS:
        
       1.Purpose.  This bill is  Sponsored  by the  California Geotechnical  
          Engineering Association  (Sponsor) to adjust the monetary amount of a  
          judgment, settlement, or arbitration award required to be reported  
          by a professional engineer or land surveyor to the Board of  





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          professional Engineers and Land Surveyors.  

       According to the Author, current law requires in all cases where there  
          is a settlement or adjudication of a lawsuit against an engineer  
          where the amount equals or exceeds $50,000, the engineer must be  
          referred to the Board for a disciplinary review.  The problem is,  
          according to the Author, that most engineering malpractice coverage  
          has a $50,000 deductible, so an insurer will often settle a case for  
          that amount to avoid their own potential of incurring a more  
          expensive cost of defense, even if there is no actual culpability or  
          fault on the part of the engineer.  The Author indicates that the  
          Board's disciplinary process can take several years and cause the  
          engineer a great amount of stress while they are under scrutiny,  
          even where their conduct was in reality faultless.

       The solution proposed by the Sponsor is to adjust the referral amount  
          threshold slightly, from $50,000 to that of any amount  greater than   
          $50,000 in settlement cases, and to provide additional consumer  
          protection by reducing the referral amount to $25,000 in cases which  
          went to verdict and fault was found by a jury, judge or arbitration.  
           This change would remove those engineers from disciplinary scrutiny  
          where the settlement was simply to protect an insurer's financial  
          interest, but would increase the public protection in those cases  
          where there is actual fault, according to the Sponsor.

       2.Background.  In 2000, as a part of the Joint Legislative Sunset  
          Review Committee's (JLSRC) review of the Board, SB 2030 (Chapter  
          1006, Statutes of 2000) mandated that an independent research group  
          conduct an in-depth analysis of the Professional Engineer's  
          Licensing Act.  The California State University at Sacramento,  
          Institute for Social Research (ISR) was hired and oversight was  
          provided by the DCA; the report was completed in November 2002.  A  
          task force was appointed by the Board to review the report, take  
          public comments regarding the report and make recommendations to the  
          Board.  

       Among the findings of the ISR report, the report concluded that,  
          similar to medicine, but on a larger scale, engineering activities  
          have the potential for significant harm to large numbers of people.   
          However engineering lacks a reporting system analogous to that for  
          the practice of medicine.  Mandated reporting would provide  
          information on the potential for harm in exempt industries, and  
          among unregulated disciplines and licensed engineers.  The JLSRC  
          stated that, similar reporting requirements regarding civil  
          judgments and malpractice settlements exist for architects,  
          landscape architects and attorneys and reporting requirements for  





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          civil actions, were required for certified public accountants.  All  
          health-related boards require reporting of civil judgments,  
          settlements and arbitration awards including those which regulated  
          physicians, podiatrists, osteopaths, marriage and family counselors,  
          dentists, psychologists, chiropractors, registered nurses,  
          vocational nurses, optometrists, and veterinarians.

       Ultimately the JLSRC recommended establishing a requirement for  
          licensees and insurers to report a civil action settlement or  
          arbitration award to the Board.  

       Subsequently, the requirement for engineers and land surveyors to  
          report settlements or judgments of $50,000 or more to the Board was  
          established by SB 1549 (Figueroa, Chapter 691, Statutes of 2004) as  
          a result of the 2003 Sunset Review of the Board.  The bill required,  
          a licensee to report to the Board within 90 days the conviction of  
          any felony, and the conviction of the licensee of any other crime  
          substantially related to the qualifications and work of the  
          licensee, and any civil action judgment, settlement, arbitration  
          award or administrative action against a licensee relating to the  
          practice of professional engineering or land surveying in the amount  
          of $50,000 or greater.  

       3.Related Legislation.
       
        SB 207  (Canella) modifies the requirement that the Board disclose  
          information on the Internet about its registrants and licensees to  
          exclude disclosing the address of record of a licensee.  SB 207 is  
          set for hearing in this Committee on April 15.
        
       SB 152  (Roth) repeals the provision for a temporary authorization to  
          practice engineering, geology or geophysics in California; requires  
          a geologist or geophysicist to use a written contract when providing  
          geological or geophysical services.  SB 152 was heard in this  
          Committee on April 1, 2013, and passed 8-1.  
        
        SB 1549  (Figueroa, Chapter 691, Statutes of 2004) established the  
          current requirement for engineers and land surveyors to report to  
          the Board any civil action judgment, settlement, arbitration award  
          or administrative action against a licensee relating to the practice  
          of professional engineering or land surveying in the amount of  
          $50,000 or greater.

       4.Arguments in Support.  The Sponsors of the bill,  California  
          Geotechnical Engineering Association  (CalGeo) writes in support that  
          an unfortunate result of the current law is that nuisance  





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          settlements where there is no finding of fault, and there is no  
          liability found, are settled for the exact amount of $50,000 because  
          that coincides with the most common deductible for errors and  
          omissions coverage in insurance policies for this profession.  In  
          addition, CalGeo writes, in cases where a trial or binding  
          arbitration finds actual negligence on the part of the professional  
          for a lesser amount, some of those cases escape review due to the  
          current referral level.  Ultimately, CalGeo believes that the bill  
          will ensure additional scrutiny in cases where it is justified, and  
          correct the current unintended problem where a nuisance or a suit  
          settlement happens to be exactly $50,000.

        





        SUPPORT AND OPPOSITION:
        
         Support:  

        California Geotechnical Engineering Association (CalGeo)

         Opposition:  

        None received as of April 9, 2013



        Consultant:G. V. Ayers