BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 467|
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UNFINISHED BUSINESS
Bill No: SB 467
Author: Hill (D)
Amended: 9/3/15
Vote: 21
SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 4/27/15
AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez,
Jackson, Mendoza, Wieckowski
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SENATE FLOOR: 40-0, 6/1/15
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,
Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning,
Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner,
Stone, Vidak, Wieckowski, Wolk
ASSEMBLY FLOOR: 76-0, 9/8/15 - See last page for vote
SUBJECT: Professions and vocations
SOURCE: Author
DIGEST: This bill requires the Attorney Generals (AG) Office
to submit specified reports and information to the Legislature
annually; requires the Department of Consumer Affairs (DCA)
Director, through the Division of Investigation (DOI), to
implement "Complaint Prioritization Guidelines" for health care
boards; extends until January 1, 2020, the provisions
establishing the California Board of Accountancy (CBA) and the
term of the executive officer; authorizes CBA to provide for
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certain practice restrictions on an accountant license for
disciplinary reasons; extends until January 1, 2020, the
provisions establishing the Contractors State License Board
(CSLB) and the term of the Registrar; and repeals the financial
solvency requirement for contractors and instead increases the
surety bond requirement.
Assembly Amendments:
1) Remove the requirement that the DCA receive approval of the
Legislature to levy in advance a charge for the estimated
administrative expenses of the DCA on a pro rata share basis
against any of the boards, bureaus, commissions, divisions,
and agencies for the estimated administrative expenses of the
DCA.
2) Extend the sunset date for the CSLB and its Registrar until
January 1, 2020, and revise financial and surety bond
requirements placed on contractors.
3) Clarify the reporting requirements for the AG regarding
information provided to DCA, the Governor and the Legislature
regarding disciplinary cases handled by their office.
4) Clarify the implementation requirements for prioritizing
complaints of health care boards.
5) Exempt the Medical Board of California (MBC) from the
requirements of complaint prioritization established by the
DCA.
ANALYSIS:
Existing law:
1) Requires the Director of the DCA to submit to the Governor
and the Legislature on or before January 1, 2003, and
annually thereafter, a report of programmatic and statistical
information, as specified, regarding the activities of the
DCA and its constituent entities for the previous fiscal
year.
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(BPC § 312)
2) Requires the Office of Administrative Hearings (OAH) to
submit a report to the DCA, the Governor, and the Legislature
on or before January 1, 2016, and on or before January 1 of
each subsequent year that includes specified statistical
information regarding cases referred to each office of OAH.
(BPC § 312.1)
3) Specifies that it shall be the duty of the Director to
receive complaints from consumers concerning various
violations of the Business and Professions Code relating to
businesses and licensed professions, unfair or deceptive acts
or practices by any person in the conduct of any trade or
commerce, and the production, distribution, sale and lease of
any goods or services undertaken by any person which may
endanger the public health, safety or welfare.
(BPC § 325)
4) Requires the Director of DCA to transmit any valid complaint
to the appropriate local, state or federal agency whose
authority provides the most effective means to secure the
relief and it shall be the continuing duty to the Director to
discern patterns of complaints and to ascertain the nature
and extent of action taken with respect to the probable
violations or pattern of complaints. (BPC § 326)
5) Provides that in order to ensure that its resources are
maximized for the protection of the public, the MBC shall
prioritize its investigative and prosecutorial resources to
ensure that physicians and surgeons representing the greatest
threat of harm are identified and disciplined expeditiously
and that cases be given the highest priority, as specified.
(BPC § 2220.05 (a))
6) Provides that the CBA within the DCA is responsible for the
licensure and regulation of accountants and is required to
designate an executive officer and repeals these provisions
on January 1, 2016.
(BPC § 5000 and § 5015.6)
7) Provides that the CBA, after notice and hearing, may revoke,
suspend, or refuse to renew any permit or certificate granted
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by the CBA, or may censure the holder of that permit or
certificate for unprofessional conduct that includes, but is
not limited to, one or any combination of criminal acts,
specified false statements or omissions, dishonesty, fraud,
gross negligence or repeated negligent acts in performance of
professional standards, and other acts or violations, as
specified. (BPC § 5100)
8) Provides for the licensure and regulation of more than
300,000 contractors under the Contractors State License Law
(Contractors Law) by the CSLB within the DCA. The CSLB is
under the direction of the Registrar of contractors and
repeals these provisions on January 1, 2016. (BPC § 7000.5
and § 7011)
9) Requires that all applicants, and all licensees at renewal,
demonstrate, as evidence of financial solvency, that his or
her operating capital exceeds $2,500.
(BPC § 7067.5)
10)Requires a licensed contractor to file or have on file a
contractor's bond in the sum of $12,500. (BPC § 7071.6(a))
This bill:
1) Requires the AG to submit a report to the DCA, the Governor,
and the appropriate policy committees of the Legislature on
or before January 1, 2017, and on or before January 1 of each
subsequent year that includes specific statistical
information regarding cases referred to the AG by each
constituent entity comprising the DCA and the DOI of the DCA.
2) Provides that in order to implement the Consumer Protection
Enforcement Initiative of 2010, the Director, through the
DOI, shall implement "Complaint Prioritization Guidelines"
for health care boards to utilize in prioritizing their
respective complaint and investigation workloads and that the
guidelines shall be used to determine the referral of
complaints to DOI and those that are to be retained by the
boards for investigation.
3) Provides that the MBC shall not be required to utilize the
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guidelines pursuant to Item # 2, above, since they already
have specific requirements for prioritizing complaints.
4) Extends until January 1, 2020, the provisions establishing
the CBA and the term of the executive officer.
5) Authorizes the CBA, after notice and hearing, to permanently
restrict or limit the practice of a licensee, or impose a
probationary term or condition on a license, which prohibits
the licensee from performing or engaging in any of the acts
or services of accountancy due to unprofessional conduct, as
specified. Provides that a practice restriction may include,
but not be limited to, the prohibition on engaging in or
performing any attestation engagement, audits or
compilations.
6) Allows a licensee to petition the CBA for a penalty
reduction or reinstatement of the privilege to engage in the
service or act restricted or limited, as specified.
7) Provides that the authority of sanctions provided are in
addition to any other civil, criminal, and administrative
penalties or sanctions provided by law, and do not supplant,
but are cumulative to, other disciplinary authority,
penalties or sanctions.
8) Specifies that failure to comply with any restrictions or
limitation imposed by the CBA is grounds for revocation of
the license.
9) Extends until January 1, 2020, the provisions establishing
the CSLB and the term of the Registrar.
10)Deletes the exiting requirement that contractors maintain
$2,500 in capital, and increases the existing surety bond
requirement from $12,500 to $15,000.
Background
Oversight Hearings and Sunset Review of DCA and Licensing Boards
and Programs. The mission of DCA is to "protect and serve the
interests of California consumers." By statute, consumer
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protection is the primary purpose for all of the regulatory
programs located within DCA, which includes 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. In
2015, the Senate Business, Professions and Economic Development
Committee and the Assembly Business and Professions Committee
(Committees) conducted joint oversight hearings to review 12
regulatory entities including the DCA, CBA and CSLB. This bill
is intended to implement legislative changes as recommended by
staff of the Committees reflected in a Background Paper on each,
as well as the discussion stemming from an oversight hearing on
the each.
This bill addresses two of the issues raised during the Sunset
Review process regarding the DCA, including prioritization of
disciplinary cases and specific enforcement reporting
requirements for the AG's Office. It also addresses issues
raised and improvements recommended for the CBA and the CSLB.
DCA Consumer Protection Enforcement Initiative (CPEI) and AG
Reporting and Complaint Prioritization. In response to pressure
from the media and the Legislature, the DCA created CPEI in
2010, which was designed to reduce the average length of time it
takes health care boards to take formal disciplinary action from
three years to 12 to 18 months. While significant steps have
been taken, most boards have failed to meet their performance
targets.
Boards are not entirely in control of their disciplinary process
timelines, though; boards rely on the AG and the OAH to perform
critical functions within the enforcement process. While OAH is
subject to performance measures starting January 1, 2016, the
AG's office is not.
This bill requires the AG's office to provide performance
metrics annually to the DCA, the Governor, and the appropriate
policy committees of the Legislature beginning in 2017.
Another essential component of CPEI was enhancing the use of
non-sworn investigative staff to conduct less complex
investigations for the health care boards. To assist complaint
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prioritization, DCA issued "Complaint Prioritization Guidelines"
in 2009. These guidelines, coupled with staff training, were
designed to free up sworn staff so that they could work on
complex investigations. However, not all boards are complying
with these parameters.
This bill requires the Director, through the DOI, to implement
"Complaint Prioritization Guidelines" for health care boards to
utilize in prioritizing their respective complaint and
investigation workloads and that the guidelines shall be used to
determine the referral of complaints to DOI and those that are
to be retained by the boards for investigation. The MBC would
be exempt from these guidelines since they already have very
specific complaint requirements regarding complaint
prioritization.
Review of the CBA. CBA is a public majority board and is
composed of 15 members: seven certified public accountants
(CPAs) and eight public members. The CBA enforces the
Accountancy Act which defines the practice of public accountancy
as the process of recording classifying, reporting and
interpreting the financial data of an individual or an
organization. CBA's regulatory authority over CPAs, public
accountants, and accounting firms is guided by CBA's statutory
mandate to protect the public.
This bill extends the CBA's sunset date and that of its
executive officer until 2020.
CBA Permanent Practice Restrictions. The CBA has the authority
to revoke, suspend, or refuse to renew any permit or
certificate, or censure the holder of that permit or certificate
due to unprofessional conduct.
Currently, practice restrictions may only be imposed beyond the
probationary term when specifically agreed to by the licensee
via a stipulated settlement. Some circumstances may warrant
permanent practice restrictions in order to protect the public,
however, if the licensee is unwilling to agree to such terms via
a stipulated settlement, the only recourse for the CBA is to
seek revocation of the license.
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This bill authorizes the CBA to permanently restrict or limit
the practice of a licensee or impose a probationary term or
condition on a license, after notice and hearing, which
prohibits the licensee from engaging in any acts of accountancy
due to unprofessional conduct, as specified. This change would
allow the CBA and administrative law judges to include permanent
practice restrictions as part of a disciplinary order, which
permits the licensee to retain a license and be able to practice
and earn income in such areas where competency is not
compromised.
Review of CSLB. The CSLB, within DCA, is responsible for the
implementation and enforcement of the Contractors Law, including
the laws and regulations related to the licensure, practice, and
discipline of the construction industry in California. All
businesses and individuals who construct or alter, or offer to
construct or alter, any building, highway, road, parking
facility, railroad, excavation, or other structure in California
must be licensed by the CSLB if the total cost (labor and
materials) of one or more contracts on the project is $500 or
more. The CSLB licenses approximately 290,000 contractors in 44
license classifications and two certifications, and also
registers an additional 9,600 home improvement salespersons who
are engaged in the sale of home improvement goods and services.
The CSLB issues approximately 15,000 new licenses each year, and
renews more than 121,000 existing licenses. Existing law
provides for a sunset of the CSLB and the Registrar on January
1, 2016, which provides for continued legislative oversight, of
the board's regulatory activities.
This bill extends the CSLB sunset date and that of its Registrar
until 2020.
Financial and Surety Bond Requirements of Contractors. Current
law requires that all CSLB applicants and all licensees at the
time of renewal demonstrate, as evidence of financial solvency,
that his or her operating capital exceeds $2,500. The CSLB has
indicated that this requirement is outdated and the information
is basically unverifiable and recommended that it be eliminated.
The CSLB recommended instead that the surety bond requirement
be increased from the current $12,500 to $15,000, which this
bill does.
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FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Assembly Appropriations Committee:
1)CBA: Projected expenditures of approximately $14.1 million
annually (Accountancy Fund), supporting 98.8 PY, to extend the
sunset date until January 1, 2020, partially offset by annual
fee revenues of approximately $5.4 million in 2015-16, based
on the proposed 2015-16 Budget. Annual fee revenues will
increase to approximately $11 million annually beginning July
1, 2016. Minor and absorbable costs to DCA to extend the
sunset and provide authority for the CBA to place practice
restrictions on licensees for disciplinary reasons.
2)The California Department of Justice reports that it would
incur significant workload impacts and increased costs of
approximately $1.45 million in 2015-16 ($537,000 GF and
$911,000 Legal Services Revolving Fund - LSRF), and ongoing
costs of $1.8 million ($268,000 GF and $1.534 million LSRF)
for the AG to compile data and develop, design, and prepare
the required report. AG costs from the LSRF would be
reimbursed from the funds of the boards and bureaus that refer
cases to the AG.
3)CSLB: Projected expenditures of approximately $63 million
annually (primarily Contractors License Fund), supporting
405.6 PY, to extend the sunset date until January 1, 2020,
partially offset by annual fee revenues of approximately
$55-56 million, based on the proposed 2015-16 Budget. Minor
and absorbable costs to DCA to extend the sunset on the CSLB,
and revise the financial security requirements for
contractors.
SUPPORT: (Verified 9/8/15)
California Board of Accountancy
California Landscape Contractors Association
California Society of CPAs
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HCC Surety Group
OPPOSITION: (Verified 9/8/15)
None received
ARGUMENTS IN SUPPORT: Supporters indicate that CBA plays an
important role in protecting consumers by ensuring only
qualified licensees practice public accountancy in accordance
with established professional standards and that it is vital for
the CBA to continue regulating the practice of public
accountancy, which includes both licensing and enforcement
functions of more than 97,000 licensees.
ASSEMBLY FLOOR: 76-0, 9/8/15
AYES: Achadjian, Alejo, Baker, Bigelow, Bloom, Bonilla, Bonta,
Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu,
Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman,
Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo
Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley,
Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer,
Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis,
Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,
O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Travis Allen, Chávez, Grove, Ridley-Thomas
Prepared by:Bill Gage / B., P. & E.D. / (916) 651-4104
9/8/15 22:02:45
**** END ****
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