ALTERNATIVE DISPUTE RESOLUTION AND PROFESSIONAL LICENSING

by Pam Brinegar, Council on Licensure, Enforcement and Regulation
and
 
Bruce Douglas, Division of Registration, Colorado Department of Regulatory Agencies

 

Introduction

State professional and occupational regulatory agencies are charged with protecting the consumer from harm that results from illegal or incompetent practitioner acts. Disciplining practitioners has become a major industry within the regulatory business:

At both the state and federal level, identifying and taking appropriate disciplinary measures against incompetent practitioners remains a high priority for state legislators and regulators. Legislatures have in_creased funding for enforcement functions, and practice acts have been amended to expand the disciplinary sanctions available to regulators . . . (Brinegar and Schmitt)

As a result, it is not unusual to find state regulatory agencies allocating 50% or more of their resources to the disciplinary process, which may be defined as "the detection, investigation and adjudication of alleged misconduct by licensees and the reporting of resulting actions" (Nebiker et al).

The traditional professional discipline system of regulatory agencies mirrors the legal system in that a licensee who violates a law is brought to justice by the state, rather than by an offended individual. This means that although an individual may initiate the disciplinary process by filing a complaint with a licensing board, once this initial action has occurred, the board takes over to remedy the wrong that the state (and not the individual) has suffered. Licensing boards are increasingly using alternative dispute resolution techniques such as mediation or arbitration within this system, most often in the context of pursuing consent agreements (also known as stipulated settlements) through an informal or settlement conference. This extension of the legal model does not directly involve the consumer, and the licensee�s record indicates that a consent agreement was reached.

In non-state societies, methods such as negotiation, mediation and arbitration, both binding and non-binding, are used as the means to bring the accused and accuser face to face in order to, primarily, keep social order and, secondarily, to redress the wrong committed against an individual (and not against society). Today, in the United States, there are recent examples of licensing boards employing these techniques completely outside of the traditional professional discipline track. These arrangements commonly have at least two features that set them apart from con_sent agreements: 1) the consumer is involved in the process; and 2) if the process is successful in resolving the matter, the licensees do not have the incident recorded on their public records or reported to the National Practitioner Data Bank.

The shift in thinking that permits involvement of consumers in the disciplinary process has its philosophical roots in the changing purpose of licensing boards and its pragmatic roots in the desire to save time and money in an often unwieldy professional discipline system. L. Randolph Lowery, the Director of the Institute for Dispute Resolution at the Pepperdine University School of Law pointed out several years ago that the current system is burdened by a tremendous number of backlogged cases, by tremendous cost to handle these cases when they do reach the front, and, increasingly, by a lack of expertise to handle the kinds of disputes brought before it. He predicted that as a result of these increasing systemic burdens, four things would happen in public sector organizations that would result in a significant rise in the use of dispute resolution: "an in_creased interest in efficiency; interest in more collaborative processes; agencies that are looking for better service; and agencies that are recognizing it is the personal skill, especially at the entry level or the level where you are dealing with the client, that is the most effective."

In 1988, when Lowery made these predictions, state regulatory agencies were just beginning to explore alternatives to traditional professional discipline methods. Now, in most states, if the public is not judged to be at great risk as a result, there are opportunities for agencies and practitioners to settle at almost any point throughout the process. Now, in a few states, it is even possible to settle complaints that are judged of less than serious harm to a state’s citizenry without any publicly available record of the transaction.

Description of Traditional Professional

Discipline Model

  1. All 50 states have an administrative procedures act that is based to a large degree on the model act developed by the National Conference of Commissioners on Uniform State Laws and that prescribes, among other things, disciplinary process. The model used by most boards and agencies contains many, if not all, of the following features:

  2. A complaint is received regarding a licensee’s behavior.
  3. A response to the allegation of the complaint is requested of the licensee.
  4. The complaint is assigned to an investigator who prioritizes it based on the degree of threat the alleged violation poses to consumers. For example, technical complaints would typically receive a very low priority.
  5. An investigation is conducted and the investigator makes a report to board staff.
  6. Board staff presents an investigation report to the board. In some cases, board staff is authorized to recommend action, in others not.
  7. The board determines whether the complaint should
    a) be screened out for lack of investigative suitability; e.g., outside agency jurisdiction,
    b) be dismissed (in which instance, it is recorded on the practitioner’s record as such),
    c) result in a reprimand to the practitioner,
    d) result in an informal conference, or
    e) be referred for formal discipline to the legal unit. The legal unit may be in-house or external, such as services purchased from the Office of the Attorney General.

An interesting feature of this process is that in many states the board not only makes a determination of whether formal discipline is necessary but later, after counsel prepares the case, may also hear the case (Collins 1994). On the other hand, many boards use administrative law judges to hear cases.

Alternative Dispute Resolution

The Society of Professionals in Dispute Resolution defines the process in its "Ethical Standards of Professional Responsibility":

The dispute resolution process belongs to the parties. The neutral has no vested interest in the terms of a settlement, but must be satisfied that agreements in which he or she has participated will not impugn the integrity of the process. The neutral has a responsibility to see that the parties consider the terms of a settlement. If the neutral is concerned about the possible consequences of a proposed agreement, and the needs of the parties dictate, the neutral must inform the parties of that concern. In adhering to this standard, the neutral may find it advisable to educate the parties, to refer one or more parties for specialized advice, or to withdraw from the case. (Gorlin 1994)

Regulatory agency administrators have varying perspectives about what Alternative Dispute Resolution (ADR) is and, accordingly, about whether or not they use ADR. Many administrators believe if they use techniques such as mediation and arbitration within the traditional discipline model, then institutionalized dispute resolution is in place.

Ronald Dalrymple, Executive Director of the Arizona Board of Technical Registration, argues that his agency’s informal settlement procedure is ADR: "We use volunteer professionals and lay persons as enforcement advisory committee members and allow every respondent the opportunity to participate in a voluntary informal settlement procedure. Approximately 99% of all cases are settled without the need for a formal hearing . . . and $1,500 [is] saved every time a formal hearing is avoided."

Critics of the use of consent agreements by professional and occupational licensing boards argue that they are not in the consumers’ best interest since remedies may be lighter than could be expected under a more formal process. Attorneys for the boards insist that the consumers’ rights are protected because even license revocations are obtainable through consent agreements and further, in most states, the board must approve the agreement just as it does other disciplinary actions (see p. 6).

Thomas J. Stipanowich, law professor at the University of Kentucky College of Law who conducted a national survey on ADR for the construction industry, suggests a third reason on the horizon that may result in an enormous increase in the use of dispute resolution techniques by state agencies--because the federal government says so. He posits that with the current mandate to streamline federal agencies, dispute resolution is viewed as an effective tool, and a lot of neutrals are being employed for both mediation and non-binding arbitration. This will trickle down to the states in a variety of ways. Stipanowich’s concern is that agencies will begin to act with a blind kind of response to direction from above with a number of resulting possibilities, both good and bad. If he’s right, ADR could become the Total Quality Management (TQM) of the turn of the century.

As the use of ADR techniques rises, it will be of increasing importance to evaluate the programs using them. Lowery establishes three criteria for evaluating the outcome of a conflict resolution. First, the parties should experience procedural satisfaction, feeling comfortable enough with the process that they will support the outcome. Second, they should feel substantive satisfaction. This does not mean that people will necessarily be delighted with the outcome, but will view it as better than the alternatives and, again, as something they can and will support. Third, they should experience psychological satisfaction resulting from being treated well during the process. To these, regulatory administrators, who have to be pragmatic, would add saving time and money as desired outcomes.

Conclusions

State Agency Profiles

California
Part of the California Department of Consumer Affairs’ (DCA) mission is the early resolution of consumer disputes involving any of the 38 boards, bureaus and commissions within its jurisdiction. Most boards use a model closely resembling the traditional one outlined earlier; however, the Contractors State License Board incorporates mediation and an arbitration process in their enforcement program. Some arbitration is voluntary and others mandatory, as determined by the board. In February 1994, DCA’s Mediation Division began receiving and mediating complaints for five programs: Automotive Repair, Tax Preparers, Security and Investigative Services, Electronics and Home Repair, and Home Furnishings and Thermal Insulation. The complaints are received and reviewed by a technical advisor who determines if mediation is possible. Survey cards are sent to all participants in the process to determine how they rate the mediation service. The DCA is in the process of developing performance measures to evaluate the mediation program as a whole.

Colorado
Although they retain the authority to do so, Colorado licensing boards have not heard cases in more than 12 years; they are all referred to the Colorado Division of Administrative Hearings that serves licensing boards by providing adjudications. Beginning in 1991, the Division began offering mediation services to the boards on an experimental, informal basis. Boards did not begin using this service until 1994, and then on a relatively limited basis. Under board policy, cases do not reach the Division of Administrative Hearings until formal charges are filed. When boards refer cases to the Attorney General’s Office for preparation of formal charges, they also provide parameters that, if accepted, would resolve the case without a formal hearing. Since the boards subscribe to the traditional legal model, it means that consumers are not represented in the process since, according to Division Director and Chief Administrative Law Judge Edwin L. Felter, Jr., "it is the state that has a compelling interest in who is licensed. This is a softer way of doing a settlement conference."

When asked about the merits of involving consumers in the disciplinary process, Felter suggests that "victims are rarely made whole in a legal process," although he says the Division stands ready to provide dispute resolution services involving consumers should board policy change. The Division’s dispute resolution program is evaluated by soliciting input from all participants and, if the results are promising, other forms of dispute resolution such as early neutral evaluation may be offered. To use this technique, boards would have to amend policy and permit cases to be considered by the Division prior to the filing of formal charges. The Division handles only cases where all parties agree to the process and sets a hearing date within 75 days after this is known. Although boards and commissions are not officially represented during the discussions, they retain decision-making authority, and the agency provides the division with some range of acceptable settlement options. Board members and program administrators are encouraged to participate in the ADR process, although they may be later disqualified from further deliberations if a settlement is not reached. It is interesting to note that in Colorado, licensing boards are prohibited by law from investigating cases which are fee disputes.

Massachusetts
The Massachusetts Board of Registration in Medicine has recently established a voluntary mediation program that is covered in-depth by Cohen and Raines (1994) and is briefly updated here. An interesting component of the Massachusetts program is its expressed intent to discover whether an offer of automatic confidentiality to licensees is a factor in their willingness to participate in mediation. According to Lisa Fenichel, Chief of Consumer Protection for the board, mediation is held out as a possibility for those cases that would likely be dismissed because the action of the practitioner has not fallen below an acceptable standard of care and the complaint is usually the result of a communication problem. In what she calls a "quasi-experiment at best," these cases are assigned in rotation to one of two categories: 1) offered participation in mediation with the assurance if there is a successful resolution, the case remains confidential; and 2) offered participation in mediation with the assurance that the issue of confidentiality can be mediated. The consumer mediates directly with the licensee (the board is not represented in the mediation process, although there is a possibility that may change in a few years), and while there is an internal record maintained by the board of the agreement, there is no public record maintained. Three cases have been through this process to date and confidentiality has been of interest to each licensee. Fenichel says that getting the evaluation component for the pro_gram in place is important before too many more cases are offered mediation.

Michigan
In 1987, the predecessor to the current Bureau of Occupational and Professional Regulation began using mediation in an effort to more quickly handle its growing disciplinary caseload. The process was initially unsatisfactory because every allegation still went through the routine investigative track before it reached the mediators. In 1991, a separate Mediation Unit was established. Now, unless an allegation received by the Bureau involves sexual misconduct or the use of drugs, it is sent immediately to the mediation staff for evaluation. The unit’s Director, Henry Moore, says about 40% of the individuals contacted and offered mediation don’t respond, but that 60% are willing to participate in the process. Of that 60%, approximately 80% are resolved, and of that, 77% honor the agreements. With a target date of 90 days to resolve cases, mediation is both faster and much cheaper than the traditional method. The process has been so successful that there has been discussion of making mediation mandatory for cases that don’t involve sex or drugs, but Moore strongly feels that it is important to maintain the voluntary nature of the mediation process, saying that "It is only by not limiting people’s rights or access to due process that we are truly providing a service."

Oregon
The Oregon Board of Medical Examiners (OBME) was established in 1889 to credential qualified medical practitioners. This mission evolved over time to include oversight of medical practice to protect the public welfare and, by the 1970s with the malpractice flurry, the board was given more resources to effectively discipline licensee. The OBME found that the largest numbers of cases coming before the board were of two distinct types--personal chemical sub_stance abuse or inappropriate prescribing, each accounting for approximately one-third of sanctioned physicians. After research, the OBME replaced traditional discipline with remediation for these two types of cases. Voluntary remediation programs through which physicians enter into agreements for monitored recovery have resulted in virtually removing these matters from the disciplinary path.

Wisconsin
The State of Wisconsin Department of Regulation & Licensing screens all complaints (initially known as informal complaints) in order to determine if there is a basis for a full investigation. If mediation is determined to be the best starting point for handling a given complaint, it is assigned to a consumer specialist; otherwise, it is assigned to an investigator. If the parties do not wish to engage in mediation or it does not result in resolution, the complaint is returned to the investigative track. Even following completion of an investigation with the result that the disciplinary process is appropriate, some cases can still be cleared up using the informal settlement conference. The Department has institutionalized both mediation and informal settlement conferences following an experimental period several years ago. John Temby, Administrator of the Division of Enforcement writes, "The evaluation of the complaint handling system, including the informal resolution of cases, is an ongoing process. We have concluded that alternatives to discipline work in certain cases and will continue to be an integral part of the complaint handling process. We have also concluded that it is sometimes difficult to convince all parties involved that using alternatives best serves the public interest."

Settlement Conferences

The procedure used by the Department of Licensing in the State of Washington as described by Michael C. Collins is typical of state agency settlement conferences:

When charges have been filed against a licensee alleging violations of the licensing law, the licensee is given an opportunity to meet with a staff attorney and case investigator for a "settlement conference."

The settlement conference is a meeting which is available to a licensee who has been the subject of license disciplinary charges. It is conducted by a staff attorney, and attended by the case investigator, the licensee, and the licensee’s attorney (if represented). The charges and the underlying circumstances are reviewed and discussed. The licensee is given an opportunity to dispute the charges, or in the alternative, to present evidence of any mitigating or extenuating circumstances. If an agreement is reached as to a violation, a stipulated settlement may be offered the licensee in lieu of a formal hearing.

If the licensee agrees to stipulate that a violation has occurred, a disciplinary sanction is proposed. If an agreement is reached, the staff attorney prepares the stipulated order, obtains the signatures of the licensee and the licensee’s attorney, and forwards it to the assigned Assistant Attorney General (AAG). The AAG reviews the order and forwards it to the Director of the Department of Licensing for review and approval.

Some significant elements of the stipulation process include:

If the licensee does not agree to stipulate, the case is referred to a formal hearing before an Administrative Law Judge or licensing board.

Stipulated orders represent approximately 85% of all orders issued. The remaining 15% is the result of formal hearing and proposed decision process, and adoption by the director. The final administrative decision, in both procedures, resides with the director. Stipulations are far less costly to the agency, and permit the agency to more meaningfully respond to a far greater number of consumer complaints with a limited staff.


Definitions

Disciplinary actions most frequently used to remedy infractions of statutes or rules by licensees include:

Screening: the charge is found to lie outside the agency’s jurisdiction.

Dismissal: the charge is found to lack merit.

Letter of concern: written warning advising the licensee to modify specific practices.

Fines: in some states, administrative fines may include consumer restitution.

Censure: the charge is found to have merit and the statute violated; however, the violating behavior did not place the public at great risk. Also called,

Reprimand: an action that may be either public or private.

Probation: a restriction is placed on practice for a specified period of time.

Suspension/Revocation: practice is prohibited for a specified period of time.

Restriction: a restriction (or stipulation) is placed on practice often for the period necessary for rehabilitation/re-education of the licensee.

Voluntary Surrender: the licensee returns the license to practice in the field; this action may or may not be in conjunction with a pending disciplinary action.

The California Department of Consumer Affairs uses the following definitions for its dispute resolution methods:

Conciliation: a process of independent communications between the disputants and a neutral person.

Mediation: a process in which a neutral person facilitates communication between the disputants to assist them in reaching a reconciliation, settlement or other understanding.

Arbitration: a voluntary adjudicative process in which a neutral person conducts a hearing, receives spoken and/or written evidence from the disputants and their witnesses, and renders a decision that may be binding or non-binding depending on the consent of the disputants.

Mediation-Arbitration: a sequential process, using first mediation and, if this fails, the adjudicatory (imposed judgment) process of arbitration.

Resources

Brinegar, Pamela L. and Schmitt, Kara L. (1993) "State Occupational and Professional Licensure." The Book of the States. Lexington, Kentucky: The Council of State Governments, 567-572.

California Department of Consumer Affairs. (1989) Dispute Resolution Programs Act: 1989 Program Survey.

Cohen, Rebecca Arnold and Raines, Dawn. (1994) The Use of Alternative Dispute Resolution by Health Professional Licensing Boards. Citizen Advocacy Center.

Close, Linda. (1994) "New Corrective Action Option." The Journal of Medical Licensure and Discipline. 81.2: 133.

Collins, Anne. (1994) "Overview of the Regulatory Process: Alternative to the Formal Hearings Process," October 1, CLEAR annual conference, Boston, Massachusetts.

Dobson, Donald P.; Resnick, Michael P.; and John J. Ulwelling (1994) "Remediation Versus Discipline in Oregon." Federation Bulletin. Federation of State Medical Boards 81.1: 14-18.

Gorlin, Rena A., editor. (1994) Codes of Professional Responsibility. 3rd Edition. Washington, D.C.: The Bureau of National Affairs, Inc.

Lowery (1989) "Dispute Resolution for Regulators." September 8, CLEAR annual conference, Indianapolis, Indiana.

McManamy, Rob. (1994) "ADR Tidal Wave Closing In." ENR April 18.

McGillis, Daniel. (1987) Consumer Dispute Resolution: A Survey of Programs. National Institute for Dispute Resolution.

Nebiker, Robert; Romelfanger, Mary; Schmitt, Kara; and Brinegar, Pam. (1992) Massachusetts Division of Registration: Evaluation of the Management Structure and the Disciplinary Process. An Interstate Consulting Service Project of The Council on Licensure, Enforcement and Regulation and The Council of State Governments, Lexington, Kentucky.



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