BILL ANALYSIS �
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|Hearing Date:April 4, 2011 |Bill No:SB |
| |865 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: SB 865Author:Negrete McLeod
As Introduced: February 18, 2011 Fiscal: Yes
SUBJECT: Contractors: expertise: legal representation.
SUMMARY: Requires the Contractors State License Board to provide
legal representation to any person hired to provide expertise in a
licensing or disciplinary matter when, as a result of providing that
expertise, that person is named as a defendant in a civil action;
requires the Board to indemnify the expert for any judgment rendered
against him or her.
Existing law:
1) Requires a board under the Business and Professions Code, to
provide legal representation to any person hired or under contract
who provides expertise to the board in the evaluation of an
applicant or the conduct of a licensee when that person is named as
a defendant in a civil action arising out of the evaluation or any
opinions rendered, statements made, or testimony given to the
board. (Business and Professions Code (BPC) � 154.5).
a) Provides that the board is not liable for any judgment
rendered against that person.
b) Requires the Attorney General to be utilized in the action
and his or her services charged to the board.
2) Licenses and regulates more than 300,000 contractors under the
Contractors State License Law (Contractors Law) by the Contractors
State License Board (CSLB) within the Department of Consumer
Affairs (DCA).
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3) The Contractors Law authorizes CSLB to contract with professionals
whose skills or expertise are required to aid in the investigation
or prosecution of a licensee, registrant, applicant for a license
or registration, or those subject to licensure or registration by
CSLB. (BPC � 7019)
4) Provides for the indemnification of a public employee or former
employee of a public entity against any claim or action for an
injury arising out of an act or omission occurring within the scope
of that public employment, as specified, and provides that the
public entity shall pay any judgment based thereon or any
compromise or settlement of the claim or action to which the public
entity has agreed. (Government Code � 825)
This bill:
1) Requires the CSLB to provide legal representation to any person
hired to provide expertise to the CSLB in the evaluation of the
conduct of a licensee, registrant, or applicant when, as a result
of providing that expertise, that person is named as a defendant in
a civil action.
2) Requires the Attorney General to be utilized in the defense of the
expert and his or her services charged to the CSLB.
3) Requires the CSLB to indemnify the expert for any judgment rendered
against him or her.
4) Provides that the right of defense and indemnification shall be the
same as, and no greater than, the right provided to a public
employee as specified within the Government Code.
FISCAL EFFECT: Unknown. This bill has been keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1. Purpose. This bill is sponsored by Contractors State License Board
(CSLB) to provide indemnification for industry experts for their
work on behalf of the CSLB in evaluating the conduct of a licensee,
in the course of their work assisting in a consumer complaint
investigation.
Under existing law, CSLB is authorized to provide industry experts
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with legal counsel to defend against any civil suit resultant from
legal actions filed against a licensee or applicant by CSLB.
However, the law does not authorize CSLB to indemnify experts who
become involved in such suits.
CSLB paraphrases its legal counsel at the Office of the Attorney
General: "Without the benefit of indemnification, the risk of
financial loss may have a chilling effect on industry experts who
contemplate participation in the industry expert program."
2. Background. The CSLB states that when investigating consumer
complaints, the Board may ask a member of its Industry Expert
Program to inspect a project and render opinions on specific items
of complaint. Such persons provide expert opinion and testimony
about specific complaint items and accepted trade standards.
Industry experts participate in complaint investigations, mandatory
arbitration, voluntary arbitration, on-site negotiation,
administrative hearings and license examination development.
CSLB's Industry Expert Program involves a statewide pool of licensed
tradespeople which provides a variety of essential services. In
investigating consumer complaints, the CSLB's enforcement personnel
sometimes uses trained members of its Industry Expert Program to
inspect projects and render opinions on specific items involved in
the complaint. These industry experts are either appropriately
licensed or registered professionals such as contractors,
engineers, architects, landscape architects, geologists, and
accountants, or manufacturer representatives with skills and
expertise essential to specific investigations or criminal
prosecutions.
3. Indemnification of Expert Witnesses. This bill mirrors provisions
established by AB 1754 (Frazee, Chapter 44, Statutes of 1994) for
the Board of Accountancy. Similar provisions also exist for the
California Architects Board, the Medical Board of California, and
the Board of Podiatric Medicine. In providing indemnification, the
board is responsible for paying any loss damage incurred by any
judgment or settlement of a civil suit involving the expert in
carrying out his or her duties on behalf of the board. Boards have
seen fit to provide for indemnifcation of expert witnesses in order
to facilitate recruitment and retention of consultants or experts
which are critical to a board's ability to fulfill its
comprehensive consumer protection activities. Often a disciplinary
case may be dependent on the availability of outside consultant
with expertise and specialized knowledge to investigate complicated
cases.
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4. Arguments in Support. The CSLB argues that the bill is needed so
that industry experts are not burdened with legal costs in the
event that an enforcement case they participate in is the subject
of a lawsuit.
The California Chapter of the American Fence Association , California
Fence Contractors Association , Engineering Contractors Association ,
Flasher Barricade Association , and Marin Builders Association state
that many of their members provide services to the CSLB as industry
experts, and that potential exposure under the status quo is so
great that few if any contractors will ever want to serve as
industry experts in the future without receiving indemnification.
SUPPORT AND OPPOSITION:
Support:
Contractors State License Board (Sponsor)
California Chapter of the American Fence Association
California Fence Contractors Association
California Professional Association of Specialty Contractors
(CALPASC)
Engineering Contractors Association
Flasher Barricade Association
Marin Builders Association
Opposition:
None received as of March 30, 2011.
Consultant:G. V. Ayers