The enabling legislation creating DAL exempts professional and occupational licensing boards from its jurisdiction.3 Until 2018, this exemption remained intact in Louisiana, despite years of discussion of the need for reform in how disciplinary proceedings are conducted by licensing boards.4
In 2018, the Louisiana Legislature enacted Louisiana Revised Statutes § 37:21.1, which allows licensees of the Louisiana State Board of Dentistry (LSBD) or the Louisiana Auctioneers Licensing Board (LALB) to have disciplinary proceedings conducted by DAL, rather than those licensing boards.5 The respective board must notify the licensee that he or she has the right to have a pending disciplinary action heard by an administrative law judge at DAL instead of the licensing board, and the licensee has 30 days from receiving notice of the intent to pursue disciplinary action to request the hearing be removed to DAL.6
The LSBD, LALB, and DAL are required to submit quarterly reports to the appropriate Legislative Oversight Committee regarding disciplinary action and hearings conducted. The Legislative Oversight Committees are charged with reviewing the reports submitted by LSBD, LALB, and DAL and submitting a report of findings and recommendations to the legislature no later than January 1, 2021.7
This article provides background for this new approach of ensuring due process is met and proceedings are conducted fairly when the state takes disciplinary action against a professional license, starting with a general overview of occupational licensure in Louisiana. The article then provides context and background for this specific change and highlights possible implications. While recognizing that, if expanded to apply to additional state professional and occupational authorities, the change to the administrative hearing process accomplished by the enactment of Louisiana Revised Statutes § 37:21.1 has the potential to inspire greater reform to the way Louisiana regulates licensed professionals, the benefit of having an independent and impartial agency like DAL adjudicate matters initiated by a licensing board can only be realized if sufficient hearings are conducted under its authority.
General Overview of Occupational Licensure in Louisiana
In Louisiana, when there is a recognized need to regulate an occupation or profession, the legislature places oversight of the profession within a state agency, board, or commission and sets forth the legal parameters licensees in the particular profession must follow. The agency with oversight of the profession has substantial authority, through rulemaking and enforcement authority, to determine the applicable rules and regulations that will apply. Over the years, the number of licensing boards has grown to include the regulation of many different types of professions in Louisiana, including hearing aid dealers, barbers, certified shorthand reporters, veterinarians, medical doctors, speech pathologists, professional counselors, architects, cosmetologists, and interior designers.8
Typically, a licensing board has the authority to promulgate and adopt rules in accordance with its statutorily granted authority. In Louisiana, the formal rulemaking process includes filing a notice of intent in the Louisiana Register, a public comment period, and the opportunity for an oversight hearing by a legislative committee prior to a proposed rule becoming final. Proposed and final rules published in the Louisiana Register are codified in Louisiana’s Administrative Code, maintained by the Louisiana Division of Administration.9
The qualifications for occupational licensure in a particular profession are often set in general terms by law and include some objective criteria, but also include criteria that require interpretation by board members, such as what constitutes “good moral character and temperate habits.”10 Appointed members of a board, many of whom are practitioners of the profession being regulated and are rarely involved in the daily operations of the board, make decisions that shape the standards of practice and protect the public from what they believe to be unauthorized or unsafe practices.
In furtherance of this obligation to protect the public, licensing boards receive complaints about licensees (or people allegedly holding themselves out as practitioners) that are reviewed, and subsequently dismissed or further investigated, as deemed appropriate, by some or all of the board members or employees acting at the direction of the board. After the investigation, the file may be referred to an attorney serving as the board’s prosecutor.
If the board determines to pursue disciplinary action against a licensee for violation(s) of its practice act, this type of activity usually qualifies as an action under Louisiana’s Administrative Procedure Act (APA), which requires that the individual must be given proper notice of the proposed action and an opportunity for a hearing on the charges.11 A hearing is then held before all or some of the board members, typically practitioners and potential competitors of the aggrieved practitioner, with a chair or contract attorney serving as the hearing officer. The licensee subject to action by the board usually has the option of entering into a settlement agreement in lieu of an administrative hearing, which typically includes an admission that the licensee violated the law and/or rules, and accepting the consequences imposed for the violation, which may include fines and costs of the proceeding.12 If the individual does not accept the board’s terms for settlement, the matter goes to a hearing before some or all members of the board, who may have had access to some or all of the details contained in the initial complaint received, the investigation, and the failed settlement. The APA requires that all parties be provided with an opportunity to respond and present evidence on all issues of fact, to present argument on all issues of law and policy involved, and “to conduct such cross-examination as may be required for a full and true disclosure of the facts.”13
It is easy to see why the licensee might question the impartiality or meaningfulness of the proceedings. The prosecutor is often familiar with the decision makers, hearing officer, environment, and staff, who are frequently used as witnesses, whereas the licensee is usually unfamiliar with the board members, hearing venue, and the administrative hearing process. Licensees often do not avail themselves of the right to legal representation. Generally, after the prosecutor presents the board’s case against the licensee at the board’s regularly scheduled business meeting, and the licensee presents his or her defense, the board takes the matter under advisement, continuing on with its business. Often, the licensee is the only one who leaves the room when the hearing is concluded. The licensee receives a decision in the mail, sometimes several months later, and accepts the conclusion, or appeals it to the appropriate judicial branch court for review. Decisions are infrequently reversed or modified when judicial review is sought in these cases.14
So, What Is the Big Deal?
For decades, change has been proposed to address these issues. In recent years, however, that movement has gained traction, and change is coming to licensing boards. This change is driven by different forces, including significant litigation regarding state licensing boards.
Most recently, the U.S. government has made funding available to the states for such changes. Specifically, the U.S. Department of Labor has supported these efforts by making federal funds available to encourage states to engage in occupational licensing reform. In announcing millions of dollars to encourage such change, Alexander Acosta, U.S. Secretary of Labor, said, “Excessive licensing can create economic barriers for Americans seeking a job, including veterans and military spouses, and hinder competitiveness for businesses. . . . Because licensing is based on state law, states must take the lead in reforming the licensing system. These grants provide an opportunity to examine licensing criteria and remove burdens that limit competition and bar entry to employment.”15
Other contributing factors to the conversation driving reform include a recent U.S. Supreme Court decision, North Carolina State Board of Dental Examiners v. Federal Trade Commission,16 and focused efforts to decrease barriers to entering a profession and increase the portability of licenses across state lines.17 In general, the activity at issue in N.C. State Board of Dental Examiners concerned multiple cease-and-desist letters sent to unlicensed individuals performing teeth-whitening procedures at retail establishments, such as mall kiosks, at significantly lower prices than licensed dentists.18 When the North Carolina Dental Board (Dental Board) demanded unlicensed individuals stop offering whitening services, it was because so many consumers were seeking whitening services from these individuals, rather than from licensed dentists, not necessarily because the unlicensed individuals were offering whitening services to consumers in a way that threatened public harm.
The Federal Trade Commission (FTC) took the position that the Dental Board, whose membership included active market participants, took actions that harmed competition and violated the Federal Trade Commission Act. The Supreme Court opined that a state must “actively supervise” any state agency that wishes to obtain antitrust immunity when “a controlling number of [the] decisionmakers are active market participants in the occupation the board regulates.”19 States have struggled to identify what number or percentage of active-market participants on a licensing board constitutes a “controlling number” of decision makers or the degree of supervision necessary to satisfy the active supervision requirement.20
This discussion of whether and/or how a state should reform the way it regulates professional and occupational licensure in compliance with N.C. State Board of Dental Examiners has occurred amid an ongoing debate about the continued necessity to examine the methods and procedures by which states regulate professions, including the discretion afforded to board members to control entry into the market, as well as the requirements to maintain licensure, and the degree (or lack thereof) of monitoring by a separate executive branch authority in how a board exercises this discretion. Specifically, this includes whether the barriers to licensure, such as disqualification of individuals with criminal records, are reasonable; whether it is good public policy to allow a licensing board to serve the investigatory, prosecutorial, and enforcement functions related to the imposition of discipline as a result of complaints concerning improper practice; or whether a state should even regulate particular professions at all.21
The number of professions regulated continues to grow. Even if a state has or creates an entity to review the substance and effectiveness of all licensing board operations—notwithstanding the obvious challenge of creating something that effectively streamlines the bureaucracy rather than enables it—the funding, expertise, and duties/authority required to accomplish the task would have to be carefully articulated and provided for to have any chance of meaningful reform.
The need for reform in the way the state regulates occupational licensing is multifaceted, and addressing one concern without considering the impact a proposed solution will have on the others will likely frustrate progress. Discussion for reform often includes one or more of the following:
- Membership: the qualifications of board members, specifically, the balance of active-market participant professionals and consumer advocate members;
- Competition: whether the professional or occupational licensing board’s authority and activities, including restrictions/qualifications on the ability to practice, serve the purpose of protecting the public, and to what degree, if any, the activities have the effect of improperly stifling competition and available choices for consumers;
- Rule promulgation: in Louisiana at least, the overarching methods and procedures for promulgating ordinary and emergency rules and the requirements for adjudications contained in the APA have not been seriously debated or significantly revised in decades;
- State supervision: some proposals have created a separate state entity for the purpose of providing additional supervision to the activities of licensing and occupational boards, some solutions specifically delegating the task of supervision to other executive branch agencies;22 and
- Perception of fairness: whether the method and manner in which due process is served in the disciplinary proceedings conducted by licensing boards (against both licensees and nonlicensees) should be reconsidered.23
These concepts are related, yet different, and daunting to build consensus upon by those impacted and necessary for successfully changing existing practices.
A necessary element for reform to professional and occupational licensure is the attention and desire of a state legislature to change existing practices. This is a challenge, at least in Louisiana, with the overturn in legislative office24—and a challenge that is impacted or influenced by many interested parties, including (1) representatives of the licensing authority, including appointed members and employees; (2) practitioners of the profession, especially those who have been subject to investigation or discipline by a licensing authority; (3) members of the public or consumers; (4) national professional licensing organizations; and (5) legislative colleagues and other government officials.
Many are resistant to change. Many fear change. However, some want change, and perhaps enough people will see the value in taking meaningful steps to reform the way professional and occupational licensure is regulated.
There is a lot of value in the work being done by licensing boards. Often, it makes sense that practitioners of a profession, or active-market participants, would make excellent partners for the state in regulating the practice of the profession. Unfortunately, when the public loses faith in the work being done by appointed members of a licensing board, the damage to the integrity of the profession and credibility of the board’s work is slow to remedy.
While the world of administrative adjudications is often less formal and less costly than traditional judicial proceedings, and sometimes happens quite quickly for individuals without legal grounds to challenge the executive branch action at issue, the world of administrative adjudications is often a mystery to those who have never had a reason to experience it. And it is sometimes easy to forget that an agency like DAL, created to excel in providing these very sorts of hearings, is even more of a mystery.
When Louisiana’s Department of Children and Family Services makes a valid finding of abuse or neglect in the care of a child against a Louisiana citizen, when Louisiana’s Department of Health determines an individual no longer qualifies for continued services, or when Louisiana’s Department of Public Safety and Corrections takes action against a driver’s license, a right to request a hearing before a qualified administrative law judge at DAL is provided for thousands of Louisiana citizens. Not totally unlike a judicial branch court, however, squarely within the executive branch of state government, a central panel like DAL is unique in its stand-alone nature, safeguarding the impartiality of the administrative law judges (ALJs) and maintaining efficient and effective case processing and docketing procedures. Most of the ALJs employed at DAL have decades of legal experience, much of that experience in administrative law. Many of DAL’s ALJs are qualified to hear cases in multiple areas of the law. In other words, DAL easily has the resources and capable personnel to handle the hearings that might result from licensees opting to have an ALJ at DAL render a decision-making findings of fact and conclusions of law as to whether disciplinary action against a licensee is authorized.
The drive to reform professional and occupational licensure is something that is likely to continue across the United States, and as some states take actual efforts for reform, other states are provided with models to consider in changing occupational licensing.25 The realized or actual impact of Act 655 of the Regular Session of the Louisiana Legislature, which amended and reenacted Louisiana Revised Statutes § 49:992(D)(5) and enacted §§ 37:21.1, 37:23.1, 37:23.2, and 49:992.2, might just be small enough to not even notice, especially when compared to more sweeping reform efforts undertaken by other states.
Louisiana licenses many more professionals than those covered by Louisiana Revised Statutes § 37:21.1 and, as the bill in its initial form was filed, was intended to apply to all licensing boards. However, in its final form, the only licensing authorities left were dentists and auctioneers, and the amendments dramatically narrowing the scope occurred with little public debate.26 Additionally, to date—roughly six months after the law took effect in August 2018—not a single disciplinary action instituted by either board has resulted in a hearing at DAL, the state agency authorized to adjudicate these proceedings. Further, as referenced throughout, the authority granted to DAL by Louisiana Revised Statutes § 37:21.1 is not, in and of itself, extraordinary or even unusual, as DAL’s mission and purpose are to provide administrative hearings for executive branch agencies.
Despite its limited applicability in scope, Louisiana Revised Statutes § 37:21.1 demonstrates, at least temporarily, Louisiana’s interest in joining the national discussion in occupational licensing reform.
1. See La. Rev. Stat. § 49:991 et seq. While a particular state’s enabling legislation must be reviewed for a better understanding of the jurisdiction and authority of an agency created to serve as a state’s centralized hearing panel, a nonexclusive list of other states that have created entities similar to Louisiana’s Division of Administrative Law include Arizona, California, Colorado, Florida, Georgia, Maryland, North Carolina, North Dakota, Tennessee, Texas, Washington, and Wisconsin.
2. Louisiana Revised Statutes § 49:992(B)(2) provides: “Except in the instances of adjudications initiated pursuant to Items (D)(2)(b)(iii), (vi), and (vii) of this Section, in an adjudication commenced by the division, the administrative law judge shall issue the final decision or order, whether or not on rehearing, and the agency shall have no authority to override such decision or order. Upon the issuance of such a final decision or order, the agency or any official thereof shall comply fully with the final order or decision of the administrative law judge.” See also id. § 49:992(B)(3) (which directs that, except for a particular type of Department of Children and Family Services case brought under a specific provision of the Children’s Code, agencies are not entitled to judicial review).
3. Id. § 49:992(D)(5).
4. See La. S.B. 260, 2018 Reg. Leg. Sess. (La. 2018), http://www.legis.la.gov/legis/ViewDocument.aspx?d=1070807. Act 655 of the 2018 Louisiana Legislative Session, among other things, amended Louisiana Revised Statutes § 49:992(D)(5). As originally drafted, the changes were proposed as permanent; however, the bill was amended before its final adoption to provide for an automatic termination date of August 1, 2021.
5. Act 655, 2018 Reg. Sess. (La. 2018).
6. La. Rev. Stat. § 37:21.1.
7. Further, Louisiana Revised Statutes § 37:21.1(E) provides a termination clause of August 1, 2021.
8. Louisiana’s Legislative Auditor produces an annual report to the Legislature of all boards, commissions, and like entities pursuant to Louisiana Revised Statutes § 24:513.2(E). The most recent report, issued in October 2018, identifies 477 boards, commissions, and like entities. While inclusive of many other types of boards, commissions, and like entities, the comprehensive index includes professional and occupational licensing entities authorized to regulate practice in Louisiana by Title 37 of Louisiana’s Revised Statutes. La. Legis. Auditor, Boards, Commissions, and Like Entities, State of Louisiana, Annual Report to the Legislature Fiscal Year Ended June 30, 2018 (Oct. 10, 2018), available at https://www.lla.la.gov/PublicReports.nsf/6A1477D749483C5B8625832200691043/$FILE/0001A9B5.pdf.
9. Issues of the Louisiana Register are available at https://www.doa.la.gov/Pages/osr/reg/register.aspx; Louisiana’s Administrative Code is available at https://www.doa.la.gov/Pages/osr/lac/Code.aspx.
10. La. Rev. Stat. § 37:354(A)(2) (barbery). Other examples of statutes requiring members to assess an applicant’s character include the following: id. § 37:75 (certified public accountant); id. § 37:1107 (licensed professional counselor); id. § 37:2659 (audiologist); id. § 37:1116 (marriage and family therapist); id. § 37:146 (architect); id. § 37:842 (funeral director); id. § 37:920 (registered nurse); id. § 37:3071 (electrologist); id. 37:1334 (perfusionist).
11. Id. § 49:950 et seq.
12. See, e.g., id. § 37:604 (which allows the Louisiana State Board of Cosmetology to order a payment of up to $200 per violation, not to exceed a total of $5,000, the calculation of which permits counting each day a violation occurs as a separate violation, and also permits the board to assess all costs incurred in connection with the proceedings, including, but not limited to, the costs of an investigator, stenographer, and attorney).
13. Id. § 49:955(C).
14. The method of seeking review is provided for by Louisiana Revised Statutes § 49:964.
15. See Press Release, “U.S. Dep’t of Labor, U.S. Dep’t of Labor Awards $7 Million to States to Support Occupational Licensing Reform” (June 25, 2018), https://www.dol.gov/newsroom/releases/eta/eta20180625.
16. 135 S. Ct. 1101 (2015).
17. See, e.g., Jonathan Zalweski, On Occupational Licensing, Texas Is Again the “Lodestar State” for Legal Reforms, Daily Signal (Feb. 8, 2019), https://www.dailysignal.com/2019/02/08/on-occupational-licensing-texas-is-again-the-lodestar-state-for-legal-reforms; Leg. B. 299, 2018 Reg. Leg. Sess. (Neb. 2018), https://www.nebraskalegislature.gov/FloorDocs/105/PDF/Final/LB299.pdf; Occupational Board Reform Act, Neb. Rev. Stat. § 84-945 (effective July 1, 2019); Regulatory Reduction Pilot Program, Leg. B. 883, 2018 Reg. Leg. Sess. (Va. 2018), https://www.legiscan.com/VA/bill/HB883/2018; Ellen Marks, Governor Reduces Need for Occupational Licenses, Albuquerque J. (Oct. 3, 2018), https://www.abqjournal.com/1228841/governors-order-no-license-needed-for-many-occupations.html. For information about occupational licensure across the states, as compared among multiple distinct occupations, visit the Occupational Licensing Legislation Database at http://www.ncsl.org/research/labor-and-employment/occupational- licensing636476435.aspx#1.
18. See N.C. State Bd. of Dental Examiners v. Fed. Trade Comm’n, 717 F.3d 359, 364–65 (4th Cir. 2014).
19. N.C. State Bd. of Dental Examiners, 135 S. Ct. at 1114. This is a simplified or basic description of a complex case; ideas and issues related to it are summarized for efficiency purposes. More comprehensive discussion of the decision and its impact is more appropriate for a separate article.
20. The Dental Board essentially conceded that there was no state supervision exercised over it in issuing the various cease-and-desist letters. Id. at 1116.
21. See, e.g., Elizabeth Crisp, In La., Florists Need a License. Governor Questions Why, The Advoc. (Jan. 16, 2018), https://www.houmatoday.com/news/20180116/in-la-florists-need-license-governor-questions-why.
22. See, e.g., La. Rev. Stat. § 37:45(B) (which creates the Occupational Licensing Review Commission, effective January 1, 2019, and “is responsible for the active supervision of state executive branch occupational licensing boards controlled by active market participants to ensure compliance with state policy in the adoption of occupational regulations promulgated by an occupational licensing board,” but this active supervision specifically does not extend to disciplinary actions taken or imposed by an occupational licensing board).
23. The category of “licensees” includes those who have applied for licensure with the state or who were at some point licensed by the state to practice.
24. Melinda Deslatte, Analysis: Louisiana Legislature Shedding Members at High Rate with Lawmakers Leaving Term Early, The Advoc. (Dec. 31, 2018), https://www.theadvocate.com/baton_rouge/news/politics/article_e5ac214a-0d5f-11e9-a819-6f465 b6028db.html.
25. See supra note 15.
26. S.B. 260, 2018 Reg. Leg. Sess. (La. 2018), http://www.legis.la.gov/legis/ViewDocument.aspx?d=1070807. Act 655 in its original form, filed as Senate Bill 260, proposed allowing any person with a disciplinary action brought by any professional or occupational licensing board or commission in Louisiana to remove the matter to the Division of Administrative Law. The House Committee on House and Governmental Affairs amended the bill, narrowing its application to the Louisiana State Board of Dentistry, the Louisiana State Board of Medical Examiners, and the Louisiana Auctioneers Licensing Board; the bill was further amended in the legislative process to remove the Board of Medical Examiners.