BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  SB 679
          Author:   Berryhill (R)
          Amended:  4/8/13
          Vote:     21

           
           SENATE BUSINESS, PROF. & ECON. DEVELOP. COMM.  :  10-0, 4/15/13
          AYES:  Price, Emmerson, Block, Corbett, Galgiani, Hernandez,  
            Hill, Padilla, Wyland, Yee

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8


           SUBJECT  :    Licensees:  reporting requirements engineers or land  
          surveyors

           SOURCE  :     California Geotechnical Engineering Association


           DIGEST  :    This bill 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  
           (Board) from "$50,000 or more" to "more than $50,000;" and  
          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.

           ANALYSIS  :    

          Existing law:

          1. Requires an engineering or land surveyor licensee to report  
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             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:

             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 or 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.

          2. Provides that failure of a licensee to report to the Board in  
             the time and manner required shall be grounds for  
             disciplinary action.

          3. Requires a court that renders a conviction or judgment  
             against an engineer or land surveyor 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. 

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

          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. 


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          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.

           Background
           
          In 2000, as a part of the Joint Legislative Sunset Review  
          Committee's (JLSRC) review of the Board, SB 2030 (Figueroa,  
          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  

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          attorneys and reporting requirements for 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.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  4/30/13)

          California Geotechnical Engineering Association (source)

           ARGUMENTS IN SUPPORT  :    According to the author's office,  
          existing 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's office, 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's office indicates that the Board's  
          disciplinary process can take several years and cause the  

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          engineer a great amount of stress while they are under scrutiny,  
          even where their conduct was in reality faultless.

          The bill's sponsor, California Geotechnical Engineering  
          Association (CalGeo), writes that an unfortunate result of the  
          existing law is that nuisance 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.

          MW:d  5/1/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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