BILL ANALYSIS Ó SB 1243 Page 1 Date of Hearing: June 24, 2014 ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER PROTECTION Susan A. Bonilla, Chair SB 1243 (Lieu) - As Amended: June 18, 2014 SENATE VOTE : 36-0 SUBJECT : Professions and vocations. SUMMARY : Increases the transparency of information distributed by the Department of Consumer Affairs (DCA); requires DCA, the Attorney General (AG), and the Office of Administrative Hearings (OAH) to submit specified reports to the Legislature annually; enhances unlicensed advertising enforcement; and, establishes a board member mentor program, among other things; extends until January 1, 2017 the provisions establishing the Veterinary Medical Board (VMB) and the term of the executive officer (EO); extends the Certified Common Interest Development (CID) Manager program and the Tax Preparer program until January 1, 2019. Specifically, this bill : 1)Permits an agency within DCA that is required to provide specified meeting notifications to provide notice by regular mail, email, or both and specifies that the agency give the requester the option; and requires DCA to comply with the requester's chosen form or forms of notification, as specified. 2)Requires an agency that plans to Web cast a meeting to include in the meeting notice, as specified, a statement of the board's intent to Web cast the meeting, and permits the Web casting of a meeting in the absence of the statement of intent. 3)Expands the current authority to request telephone disconnection, for advertising of unlicensed activity in any form of advertisement, not just in a telephone directory, as currently permitted and provides this authority to all boards, bureaus, committees, commissions or programs under DCA. 4)Requires the department to provide an opportunity for an employee of an agency comprising the DCA who performs enforcement functions to attend an enforcement academy; as SB 1243 Page 2 specified. 5)Requires the DCA to develop the enforcement academy curricula in consultation and cooperation with the AG and the OAH, as specified, and further specifies that the curricula must include, but is not limited to, complaint intake, determining which cases should be referred for investigation, preparing a case suitable for filing an accusation, and the Administrative Procedures Act. 6)Requires DCA to develop and implement a measure of training outcomes that includes a pretest and posttest of an employee's knowledge of the training subject matter, and any other performance measures that the department deems appropriate. 7)Requires DCA to submit a report of the accounting of the pro rata calculation of administrative expenses to the appropriate policy committees of the Legislature on or before July 1, 2015 and on or before July 1, of each subsequent year. 8)Requires DCA to conduct a study of its current system for prorating administrative expenses, which must include consideration of whether some of the administrative services offered by DCA should be outsourced or charged on an as needed basis, and whether the agencies should be permitted to elect not to receive and be charged for certain administrative services, to determine if that system is the most productive, efficient, and cost effective manner for the department and the agencies, and requires the study be included in the report referenced in 7 above. 9)Requires DCA to immediately submit a report from the third-party consultant if it chooses to hire a third-party consultant to assess its operations, as specified. 10)Revises information contained in DCA's annual report to the Governor and the Legislature to include the total number of restraining orders or interim suspension orders, as specified and the following information relative to the performance of each constituent entity including: a) Number of consumer calls received; b) Number of consumer calls or letters designated as discipline-related complaints; SB 1243 Page 3 c) Number of complaint forms received; d) Number of convictions of licensees reported to the board; e) Number of criminal filings reported to the constituent entity; f) Number of complaints and referral closed, referred out, or resolved without discipline, respectively, prior to accusation; g) Number of accusations filed and final disposition of accusations through the constituent entities and court review, respectively; h) Final discipline by category; i) Number of citations issued with and without fines; j) Number of cases in process more than six months after a constituent entity receives information regarding the acts relevant to a filed accusation; aa) The average and median times in processing complaints from when a constituent entity receives a complaint to each state of discipline and court review; bb) Final discipline by category; cc) Number of public reprimands issued; dd) Probation violation reports and probation revocations filings and dispositions; ee) Number of petitions for reinstatement and the disposition of those petitions; ff) Caseloads of investigators for both original cases and probation cases; gg) Number of reports, as specified, by type of peer review body reporting and, where applicable, the type of health care facility involved and the number and type of SB 1243 Page 4 administrative or disciplinary actions taken by a constituent entity with respect to those reports; hh) Number of reports in relation to peer review, as specified; ii) The number of malpractice settlements in excess of $30,000, as specified; jj) Number of corner's reports received by the board; as specified; aaa) Average length of time for a constituent entity to reach each of the following milestones in the enforcement process: i) Average number of days from when a constituent entity receives a complaint until the board assigns an investigator to the complaint; ii) Average number of days from a constituent entity opening an investigation conducted by the constituent entity staff or the Division of Investigation (DOI) to closing the investigation regardless of outcome; iii) Average number of days from a constituent entity closing an investigation to imposing formal discipline; and, iv) Average number of days for a constituent entity to conduct a supplemental investigation for a case that was referred by the constituent entity to the AG to file an accusation. 11)Defines "action" to mean a proceeding brought by or on behalf of, a constituent entity against a licensee for unprofessional conduct that has not been finally adjudicated, and a disciplinary action taken by a constituent entity against a licensee. 12)Requires the report to be submitted in compliance with the Government Code, as specified. 13)Requires the AG to submit a report to DCA, the Governor, and the appropriate policy committees of the Legislature on or SB 1243 Page 5 before January 1, 2016, and on or before January 1, of each subsequent year that includes, at the minimum, the following: a) The number of cases referred to the AG by each constituent entity comprising of the DCA; b) Number of cases referred by the AG back to each constituent entity with no further action; c) Number of cases referred by a constituent entity to the AG after each constituent entity or the DOI completes a supplemental investigation; d) Number of accusations filed by each constituent entity; e) Number of accusations a constituent entity withdraws; f) Average number of days from the AG receiving a case to filing an accusation on behalf of each constituent entity; g) Average number of days to prepare an accusation for a case that is referred to the AG after a supplemental investigation is conducted by staff of a constituent entity or the DOI for each constituent entity; h) Average number of days from filing an accusation to transmitting a stipulated settlement for each constituent entity; i) Average number of days from filing an accusation to transmitting a default decision for each constituent entity; j) Average number of days from filing an accusation to scheduling a hearing for each constituent entity; and, aa) Average number of days from scheduling a hearing for each constituent entity. 14)Requires the OAH to submit a report to DCA, the Governor, and the legislature on or before January 1, 2016, and on or before January 1, of each subsequent year that includes, at a minimum, all of the following: a) Number of cases referred by each constituent entity to SB 1243 Page 6 each office of the OAH for a hearing; b) Average number of days from receiving a request to setting a hearing date at each office of OAH; c) Average number of days from setting a hearing to conducting a hearing; and, d) Average number of days after conducting a hearing to transmitting the proposed decision by each office of OAH. 15)Requires DCA to develop a board member mentor program through which experienced board members will be trained to act as mentors to newly appointed board members, as specified. 16)Extends the sunset date of the VMB until January 1, 2017. 17)Extends the authority of the VMB to appoint an executive office until January 1, 2017. 18)Extends the sunset date for the CID manager program until January 1, 2019. 19)Extends the sunset date for CTEC until January 1, 2019. 20)Makes findings and declarations pertaining to employees and enforcement functions. 21)Makes other technical and clarifying changes. EXISTING LAW 1)Specifies that the entities under DCA are established for the purpose of ensuring that those private businesses and professions deemed to engage in activities which have potential impact upon the public health, safety, and welfare are adequately regulated in order to protect the people of California. (Business and Professions Code (BPC) Section 101.6) 2)Permits, upon investigation, an agency, as specified, which has probable cause to believe that a person is advertising in a telephone directory with respect to the offering or performance of services, without being properly licensed or registered with agency to offer or perform those services, the SB 1243 Page 7 agency may issue a citation, as specified, that requires the violator to do both the following: a) Cease the unlawful advertising; and, b) Notify the telephone company furnishing services to the violator to disconnect the telephone service furnished to any telephone number contained in the unlawful advertising. (BPC 149) 3)Authorizes a charge for the estimated administrative expenses of the department, as specified, to be levied om advance on a pro rata share basis against any of the funds of any boards, bureaus, commissions, divisions, and agencies, at the discretion of the director and with the approval of the Department of Finance (BPC 201) 4)Requires the director of DCA to submit an annually, to the Governor and Legislature, a report of programmatic and statistical information regarding the activities of DCA and its constituent entities, as specified. (BPC 312) 5)Requires every newly appointed board member, within one year of assuming office, to complete a training and orientation program offered by DCA regarding, among other things, his or her functions, responsibilities, and obligations as a member of the board. (BPC 453) 6)Establishes the Veterinary Medical Board (VMB) which provides for the licensure and regulation of veterinarians and registered veterinarian technicians. (BPC 4800 et seq.) 7)Authorizes the VMB to appoint a person, as specified, to be the executive director of the VMB who will exercise the powers and perform the duties delegated by the VMB, and repeals this authority on January 1, 2016. (BPC 4804.5) 8)Specifies that protection of the public shall be the highest priority for the VMB, as specified. (BPC 4800.1) 9)Defines a "common interest development" to mean: a) A community apartment project; b) A condominium project; SB 1243 Page 8 c) A planned development; and, d) A stock cooperative. (Civil Code (CC) Section 4100) 10)Defines a "common interest development (CID) manager" to mean "an individual who provides or contracts to provide management or financial services, or represents himself or herself to act in the capacity of providing management or financial services to an association, as specified. (BPC 11501) 11)Requires a person seeking designation as a CID manager to meet one of the following requirements: a) Prior to July 1, 2003, passed a knowledge, skills and aptitude examination, as specified, or has been granted a certification or designation by a professional association for common interest development managers, as specified; and, b) On or after July 1, 2003, completed an educational curriculum that is no less than a combined 30 hours in coursework, as specified, and passed an examination or examinations that test competence in CID management, as specified. (BPC 11502) c) Establishes the requirements for a voluntary CID manager certification program to be administered by a professional association for CID managers, as specified and repeals those provisions January 1, 2015. (BPC 11500, 11506) 12)Defines a "tax preparer" to include: a) A person who, for fee or compensation, assists with or prepares tax returns for another person or who assumes final responsibility for completed work on a return which preliminary work has been done by another person, or who holds himself or herself out as offering those services. b) A corporation, partnership, association or other entity that has associated with it persons not exempted, as specified, which persons have as part of their responsibilities the preparation of data and ultimate signatory authority on tax returns or that holds itself out as offering those services or having that authority. (BPC SB 1243 Page 9 22251 (A)(B)) 13)Specifies that a tax preparer does not include an employee who, as part of the regular clerical duties of his or her employment, prepares his or her employer's income, sales or payroll tax returns. (BPC 22251(B)) 14)Establishes the California Tax Education Council (CTEC) as a single, nonprofit organization, made up of not more than one representative from each California nonprofit corporation in good standing that chooses to participate in the council and represents tax preparers, enrolled agents, attorneys or certified public accountant, as specified and repeals those provisions on January 1, 2015. (BPC 22251) 15)Requires an applicant for registration as a certified tax preparer to submit a written application and provide CTEC with satisfactory evidence that he or she has met the following requirements: a) The applicant has successfully completed the educational requirements, as specified; b) Paid all required fees, as specified; and, c) The applicant has met all other requirements for registration, as specified. (BPC 2251.3) FISCAL EFFECT : Unknown COMMENTS : 1)Purpose of the bill . This bill is one of nine sunset extension measures of legislative authority for multiple programs and enacts a wide variety of non-controversial reforms to address issues raised during the 2014 sunset review process. The changes contained in this bill include: increasing the public transparency of information distributed by DCA; requiring DCA, the AG and the OAH to continue to submit specified reports to the Legislature; enhances illegal advertising enforcement; extending the sunset date for the VMB and its EO to 2017; and extending the sunset date of the CID manager program and CTEC until 2019. This bill is author sponsored. SB 1243 Page 10 2)Author's statement . According to the author, this bill is one of six "sunset review bills" authored by the Chair of the Senate Business, Professions and Economic Development (BPED) Committee. Absent legislation to extend the sunset dates of the certified Common Interest Development (CID) manager program and Tax Preparer program, they will both be repealed on January 1, 2015 [and] absent legislation to extend the sunset date of the Veterinary Medical Board (VMB) and its executive officer; they will both be repealed on January 1, 2016. "[In addition], [t]his bill will require the boards to email public meeting notices, when requested. This bill will also require the boards to include information regarding their intent to webcast public meetings in the public meeting notice, when applicable... This bill will enhance the boards' and bureaus' authority to take action on unlicensed activity. The bill will require DCA to provide specified enforcement training with the intent of improving the quality of investigation and complaint handling. This bill will establish and enhance mandatory reporting requirements to assist policy makers in determining how best to solve the long standing problem of delayed disciplinary action." "This bill will establish a study and new reporting requirements regarding DCA's "pro-rata" methodology, which will enhance public awareness and understanding of how budgeting process works and potentially improve that process. This bill will enhance board member training to include a mentor program that will give newly appointed board members additional resources to help them understand their role as board members and to meet the responsibilities associated with sitting on a consumer protection board." 3)Oversight Hearings and Sunset Review of Licensing Boards of DCA . In March and April of 2014, the Assembly Business, Professions and Consumer Protection (BPCP) Committee and the Senate Business Professions, and Economic Development (BPED) Committee conducted a joint-oversight hearing to review 9 regulatory entities. The Committees began its review of these entities in March and conducted three days of hearings. This bill, like the accompanying sunset bills, is intended to implement legislative changes as recommended in the background reports authored by the Senate BPED Committee and this Committee for all of the agencies reviewed by the Committees SB 1243 Page 11 this year. 4)Sunset review process . The sunset review process provides a formal opportunity and mechanism for the DCA, the Legislature, the boards and bureaus, interested parties and stakeholders to discuss the performance of the boards, bureaus and committees and make recommendations for improvement. This is performed on a standard four-year cycle and was mandated by SB 2036 (McCorquodale) (Chapter 908, Statutes of 1994). The legislation pertaining to this bill is based on specific issues raised and addressed in the reports released by the BPED Committee and this Committee. 5)Department of Consumer Affairs . The mission of DCA is to "protect and serve the interests of California consumers." By statute, consumer protection is the primary purpose for all of the regulatory programs located within DCA, which consists of 26 boards, nine bureaus, two committees, one program, and one commission. Collectively, these entities regulate more than 100 types of businesses and 200 different industries and professions. For example, doctors, auto mechanics, private security companies, and beauty salons are all regulated by DCA. As regulators, these entities perform two basic program functions: licensing and enforcement. Licensing entails ensuring only those who meet minimum standards are issued a license to practice, and enforcement entails investigation of alleged violations. During the March 2014, sunset review hearing, and in the Senate BPED background paper on DCA, several issues were raised relating to the administration and operations of DCA. This bill addresses some of the issues raised during the sunset review process including greater transparency for consumers and the Legislature, specific enforcement reporting requirements, and expanding the telephone disconnect program for unlicensed advertising. Because entities under DCA do not always notify interested parties via e-mail when a public meeting notice has been issued or notify the public when they intend to webcast a public meeting, this bill will require those entities to email public meeting notices, when requested and will also require information be included regarding their intent to Web cast meetings in a public meeting notice, when applicable. SB 1243 Page 12 In addition, concerns were highlighted about DCA entities not disciplining licensees in a timely manner. This bill seeks to enhance the authority to take action on unlicensed activity and further requires DCA to provide specified enforcement training with the intent of improving the quality of investigation and complaint handling. In an effort to provide greater accountability, this bill also establishes and enhances the mandatory reporting requirements to help address issues associated with delayed disciplinary action. Concerns regarding DCA's pro rata policy was raised during the sunset review hearing and in the Senate BPED background paper. In order to address this issue, this bill will establish a study and new reporting requirements regarding DCA's pro rata calculation and administrative expenses which will be shared with the appropriate policy committees of the Legislature beginning July 1, 2015 and every subsequent year. DCA is authorized to hire outside consultants to conduct studies on its internal operations, but it is not mandated that those reports be made available to the Legislature. In order to enhance transparency, this bill will require DCA to submit those third-party reports to the Legislature. The issue of unlicensed advertising has been raised by many of the entities under DCA, and was also raised in the Senate BPED background paper. This bill attempts to address this issue by providing all DCA entities with the authority to request the disconnection of telephone services when the telephone service is associated with the advertising of unlicensed activity in any form of advertisement, not just in a telephone directory as currently permitted. While it was not specifically raised in the Senate BPED background report, this bill will enhance board member training to include a mentor program that will give newly appointed board members additional resources to help them understand their role as board members and to meet the responsibilities associated with sitting on a consumer protection board. 6)Veterinary Medical Board . The VMB licenses and regulates veterinarians, RVTs, schools/programs and veterinary premises/hospitals through the enforcement of the California Veterinary Medicine Practice Act. The VMB develops and SB 1243 Page 13 enforces the standards for examinations, licensing, and hospital and school inspections. The VMB licenses over 10,000 Veterinarians and 5,000 RVTs. The VMB also requires registration of all premises where veterinary medicine, veterinary dentistry, veterinary surgery, and the various branches thereof, is being practiced, which totals approximately 3,100 veterinary premises. The veterinary medical profession provides health care to a variety of animals including livestock, poultry, and pets from birds, fish, rabbits, hamsters, and snakes to dogs, cats, goats, pigs, horses, and llamas. The VMB was last reviewed by the BPED and BPCP committees on March 19, 2013. During the previous sunset review, there were many concerns raised by the BPED in its background paper which were not being addressed expeditiously. In order to ensure that the VMB would address the important issues recognized by both Committees such as outstanding RVT issues and facility inspections, SB 304 (Price) (Chapter 515, Statutes of 2013) imposed only a two-year sunset extension of the VMB. However, due to the time it may take to address these issues through regulations, or other means, extending the sunset date by one-year will allow the VMB sufficient time to address the concerns raised during its last sunset review. This bill simply extends the CMB sunset date and it authority to appoint an EO by one year to January 1, 2017. 7)Common Interest Development Managers . Under current law, CID managers may qualify for the title of "Certified Common Interest Development Manager." To attain this certification, an individual must complete at least thirty hours of specified course work in topics including California CID law and pass an examination. While a "manager" designation is not mandatory, it is mandatory for a manager to disclose to the CID whether or not they are certified and whether or not the manager has other relevant licenses, such as a real estate license. There are a number of organizations which offer credentials to CID managers, but there are two main organizations which actively certify CID managers. There were no specific issues raised or recommendations made regarding the CID manager program during the sunset review process. Because of this, this bill simply extends the sunset date of the CID manager program until January 1, 2019. 8)California Tax Education Council . CTEC is the organization SB 1243 Page 14 that registers tax preparers, the second largest segment of tax preparation professionals serving California, following certified public accountants. Anyone who, for a fee, assists with or prepares a state or federal income tax return, excluding certified public accountants, attorneys, enrolled agents, enrolled actuaries, and certain financial institutions or their employees, must be registered with CTEC. CTEC is also charged with approving providers of tax education and maintaining and distributing to the public a list of those approved providers. The BPED raised four issues during the sunset review including requiring additional education and a standardized test, involving the Franchise Tax Board to assist with enforcement actions, and CTEC's expensive media campaign. The BPED and BPCP Committees have requested that CTEC report back to the Committees by July 1, 2015 to inform the Committees about the effectiveness of its media campaign. The other issues will continue to be addressed by CTEC. This bill simply extends the sunset date of CTEC until January 1, 2019. 9)Technical amendments . On page, 7, line 35, after "the" strike "
board" and insert "constituent entity" On page 8, strike line 12. On page 8, line 28, after "a" strike " board" and insert "constituent entity" On page 8, line 32, after "the" strike " board" and insert "constituent entity" 10)Related legislation . SB 1242 (Lieu) of 2014, amends the Automotive Repair Act and updates the sunset provisions for the Bureau of Automotive Repair. This bill is pending in the Assembly Business, Professions and Consumer Protection Committee. SB 1244 (Lieu) of 2014 extends until January 1, 2019 the term of the Structural Pest Control Board which provides for the licensing and regulation of individuals and business involved in the structural pest control industry in California. The bill also extends the term of the board's executive officer SB 1243 Page 15 and subjects the board to review by the appropriate policy committees of the Legislature. This bill is pending in the Assembly Appropriations Committee. SB 1245 (Lieu) of 2014 extends until January 1, 2019 the term of the Dental Hygiene Committee of California which provides for the licensing and regulation of dental hygienists. The bill also extends the term of the committee's executive officer and subjects the committee to review by the appropriate policy committees of the Legislature. This bill is pending in the Assembly Business, Professions and Consumer Protection Committee. SB 1246 (Lieu, 2014) extends until January 1, 2019, the term of the Acupuncture Board which provides for the licensing and regulation of doctors of acupuncture under the Acupuncture Licensure Act and subjects the board to review by the appropriate policy committees of the Legislature. This bill is pending in the Assembly Business, Professions and Consumer Protection Committee. SB 1247 (Lieu) of 2014 extends until January 1, 2019 the term of the California Private Postsecondary Education Act of 2009, which provides for the regulation of private postsecondary educational institutions by the Bureau for Private Postsecondary Education (Bureau) in the Department of Consumer Affairs. The bill also extends the term of the Student Tuition Recovery Fund under the administration of the bureau, and subjects the bureau to review by the appropriate policy committees of the Legislature. This bill is pending in the Assembly Business, Professions and Consumer Protection Committee. AB 1147 (Bonilla, Gomez & Holden) of 2013 revises and recasts the massage therapy act and extends the operation of the California Massage Therapy Council until December 1, 2017. This bill is pending in Senate Business, Professions and Economic Development Committee. AB 2741 (Bonilla) of 2013 extends the sunset date on the Professional Fiduciaries Bureau (PFB) from January 1, 2015 to January 1, 2019. This bill is pending in Senate Business, Professions and Economic Development Committee. AB 2740 (Bonilla) of 2013 requires the Bureau of Electronic SB 1243 Page 16 and Appliance Repair, Home Furnishings and Thermal Insulation (BEARHFTI) to be subject to review by the Legislature before January 1, 2019, and requests that BEARHFTI report on specified concerns to the Legislature by March 1, 2015. This bill is pending in Senate Business, Professions and Economic Development Committee. 11)Previous legislation . SB 304 (Price), Chapter, 515 Statutes of 2013, revises the Medical Practice Act (MPA) to transfer inspectors and medical consultants from the Medical Board of California (MBC) to the Division of Investigation (DOI) within the Department of Consumer Affairs (DCA), extends the sunset date of MBC by four years, and amends the Veterinary Practice Act to extend its sunset date by two years. REGISTERED SUPPORT / OPPOSITION : Support None on file. Opposition None on file. Analysis Prepared by : Elissa Silva / B.,P. & C.P. / (916) 319-3301