BILL ANALYSIS Ó
SB 679
Page 1
Date of Hearing: July 2, 2013
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
SB 679 (Berryhill) - As Amended: June 12, 2013
PROPOSED CONSENT
SENATE VOTE : 32-0
SUBJECT : PROFESSIONAL ENGINEERS: Reporting Requirements
KEY ISSUE : should california law be amended to reduce the
likelihood that engineers will be subject to POTENTIAL
disciplinary review as a result of a Lawsuit that finds no fault
against them?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This non-controversial bill, sponsored by the California
Geotechnical Association, seeks to reduce some disclosure
triggers in the disciplinary review process of the Board of
Professional Engineers, Land Surveyors and Geologists ("Board").
Current law regarding professional engineers requires reporting
to the Board in all cases where there is a settlement or
adjudication of a lawsuit against an engineer equaling or
exceeding $50,000. According to the sponsor, "an unfortunate
result of this 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." The
sponsor claims this triggers the unnecessary possibility of
disciplinary Board review. The bill addresses this perceived
problem by modestly increasing the dollar threshold which
triggers reports to the Board. The bill also provides a bit
greater consumer protection by lowering the reporting standard
to $25,000 for any settlement resulting from a finding of fault
before a jury, judge or arbitrator. There is no known
opposition.
SUMMARY : Revises the monetary threshold amounts above which a
licensed engineer or land surveyor must report a settlement,
SB 679
Page 2
judgment, or arbitration made against him or her to the Board
for Professional Engineers, Land Surveyors, and Geologists
(Board). Specifically, this bill :
1)Revises the minimum amounts for which a licensed engineer or
land surveyor must report to the Board a settlement, judgment,
or arbitration award arising from a civil or administrative
action alleging fraud, deceit, misrepresentation, breach or
violation of contract, negligence, incompetence, or
recklessness, as follows:
a) For settlements, from $50,000 or more, to greater than
$50,000; and,
b) For judgment and binding arbitration awards, from
$50,000 or more, to $25,000 or greater.
2)Clarifies that a court must report settlements made against a
licensed engineer and land surveyor to the Board, as
specified.
3)Revises the threshold from $50,000 or greater, to greater than
$50,000 for reporting a judgment, settlement, or arbitration
award to the Board by an insurer who provides professional
liability insurance to, or a state or local government agency
that self-insures, a licensed engineer or land surveyor for an
award resulting from an allegation of fraud, deceit,
misrepresentation, breach or violation of contract,
negligence, incompetence, or recklessness.
4)Clarifies that the arbitration awards that must be reported to
the Board are binding arbitration awards.
5)Makes other various technical and clarifying amendments.
EXISTING LAW :
1)Provides for the licensure and regulation of professional
engineers, land surveyors, geologists and geophysicists by the
Board within the Department of Consumer Affairs. (Business
and Professions Code (BPC) Section 6700 et seq.; BPC 8700 et
seq.)
2)Requires a licensed engineer or land surveyor to report to the
Board in writing within 90 days of the date the licensee has
SB 679
Page 3
knowledge of any of the following events:
a) The conviction of any felony;
b) The conviction of any other crime substantially related
to the qualifications, functions, and duties of a licensed
engineer or land surveyor; or,
c) Any civil action judgment, settlement, or arbitration
award made against a licensee in any action alleging fraud,
deceit, misrepresentation, contract breach or violation,
negligence, incompetence, or recklessness if the amount is
$50,000 or greater. (BPC 6770; BPC 8776.)
3)Provides that failure of a licensed engineer or land surveyor
to report to the Board in the time and manner required shall
be grounds for disciplinary action. (BPC 6770(e); BPC
8776(e).)
4)Requires a court that renders a conviction or judgment against
a licensed 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. (BPC 6770.1; BPC 8776.1.)
5)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
judgment, settlement, or arbitration award $50,000 or greater,
against a licensed engineer or land surveyor has been made.
(BPC 6770.2; BPC 8776.2.)
COMMENTS : This non-controversial bill, sponsored by the
California Geotechnical Engineering Association, seeks to change
the reporting threshold for settlements from $50,000 or more to
greater than $50,000 in order to prevent $50,000 settlements
from being reported to the Board. Conversely, it would also
lower the minimum reporting amount for judgments and binding
arbitration awards for unprofessional conduct against a licensed
engineer or land surveyor from $50,000 or more to $25,000 or
more, thereby theoretically increasing the reporting of
judgments and arbitration awards. The author states that this
change will help avoid unnecessary administrative review of
settlements by the Board while at the same time strengthen the
SB 679
Page 4
trigger when fault determinations should lead to reports to the
Board.
In support, the author states:
Current law requires in all cases where there is a settlement
or adjudication of a lawsuit against an engineer [in which]
the amount equals or exceeds $50,000, [that] the engineer must
be referred to the Board [?]. The problem is that most
engineering malpractice coverage has a $50,000 deductible, so
an insurer will often settle a case for that amount to avoid
incurring a more expensive cost of defense, even if there is
no actual culpability or fault on the part of the engineer.
The disciplinary process can take several years and cause the
engineer a great amount of stress while they are under
scrutiny, even when their conduct was, in reality, faultless.
Background : SB 1549 (Figueroa) Chapter 691, Statutes of 2004,
established the current requirements 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. The Board
can use the reported information to perform a cursory review, or
if necessary, initiate a more formal investigation of an
engineer or land surveyor to determine whether enforcement
action against the licensee is appropriate. The information
reported to the Board is not publicly disclosed and is for
internal use only.
Changes by This Bill : According to the sponsor, this bill would
prevent reports to the Board for settlements in the exact amount
of $50,000 because it is a common deductible amount that is
frequently used in settlements where there is no admission of
wrongdoing. The threshold itself simply triggers reporting of
the award; it does not automatically mean culpability. Even if
an engineer, land surveyor, court, or insurer must report
certain settlements, judgments, and arbitration awards to the
Board, the Board is not statutorily required to take action
against an engineer or land surveyor; existing law merely
authorizes the Board to review a case.
From 2008-2012, licensees reported 112 actions to the Board in
which a settlement, judgment, or arbitration award involving the
licensee were $50,000 or more. The overwhelming majority of
SB 679
Page 5
reported actions were settlements, out of which only five were
reportedly exactly $50,000. One of these resulted in a formal
accusation by the Board to revoke or suspend the license. All
other settlements were significantly greater than $50,000 and
the reporting of these settlements to the Board would be
unaffected by this bill. Of the 112 reports to the Board
mentioned above, only two were reportedly arbitration awards.
Differential treatment of settlements and judgments/arbitration
awards . This bill would apply a different threshold to the
reporting of settlements to the Board than to judgments and
arbitration awards. This bill lowers the minimum reporting
amount for judgments and binding arbitration awards from $50,000
to $25,000, thereby increasing reporting for judgments and
arbitration awards. The sponsor believes that this change will
allow the Board to dedicate more resources towards reviewing
licensees who have been subject to civil action or arbitration -
cases which went to verdict and fault was found by a jury,
judge, or arbitrator - versus licensees who have financially
settled a dispute without proceeding to trial or admitting any
wrongdoing.
PRIOR RELATED LEGISLATION : 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.
REGISTERED SUPPORT / OPPOSITION :
Support
California Geotechnical Engineering Association (sponsor)
American Council of Engineering Companies of Northern California
California Land Surveyors Association
Opposition
None on file
Analysis Prepared by : Drew Liebert / JUD. / (916) 319-2334
SB 679
Page 6