BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 679|
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UNFINISHED BUSINESS
Bill No: SB 679
Author: Berryhill (R)
Amended: 6/12/13
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
SENATE FLOOR : 32-0, 5/6/13 (Consent)
AYES: Anderson, Beall, Block, Calderon, Cannella, Corbett,
Correa, De León, DeSaulnier, Emmerson, Evans, Fuller, Gaines,
Galgiani, Hancock, Hernandez, Hill, Hueso, Huff, Knight, Leno,
Lieu, Liu, Monning, Nielsen, Padilla, Pavley, Price, Roth,
Steinberg, Wright, Wyland
NO VOTE RECORDED: Berryhill, Jackson, Lara, Walters, Wolk, Yee,
Vacancy, Vacancy
ASSEMBLY FLOOR : 78-0, 8/22/13 (Consent) - See last page for
vote
SUBJECT : Licensees: reporting requirements engineers or land
surveyors
SOURCE : California Geotechnical Engineering Association
DIGEST : This bill revises the monetary threshold for a
licensed engineer or land surveyor to report a civil action
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settlement or administrative action to the Board for
Professional Engineers, Land Surveyors, and Geologists (Board)
from "$50,000 or greater" to "greater 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.
Assembly Amendments make technical changes.
ANALYSIS :
Existing law:
1. Requires an engineering or 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:
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
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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. Requires a licensed professional engineer or a licensed land
surveyor to report to the Board 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
binding arbitration award 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
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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 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.
Recent settlement data . From 2008-2012, licensees reported 112
actions to the Board in which a settlement, judgment, or
arbitration award involving the licensee was $50,000 or more.
The overwhelming majority of reported actions were settlements,
out of which only five were 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
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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 arbitration awards.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/23/13)
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
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.
ASSEMBLY FLOOR : 78-0, 8/22/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
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Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden,
Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell,
Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson,
Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas,
Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski,
Wilk, Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Vacancy, Vacancy
MW:d 8/23/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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