POLICY IN THE MAKINGReport Recommends Changes For California BAR Procedures
SACRAMENTO, CA - California auto repair shops could benefit from changes at the state's Bureau of Automotive Repair (BAR) that were recommended to a state senate committee on Dec. 7. If adopted, the changes could potentially improve due process safeguards for companies being investigated by BAR and help clarify what actions would constitute fraud.
The BAR's enforcement monitor, David Howe, of Washington-based consulting firm Strategic Inc., submitted his preliminary draft report to the Joint Committee on Boards, Commissions and Consumer Protection in October. The final version of the report was expected by the end of December, with two more reports due in 2006.
Response from automotive repair industry trade groups was generally optimistic. "We feel it's a positive start," said Shelly Levy, executive director of the Automotive Service Councils of California. "We're looking forward to working with [Howe] throughout the next year, and seeing what the final reports look like next year."
"I think overall we liked some of the suggestions," said David McClune, executive director of the California Autobody Association. "I think they're going to have to be discussed a bit further, though."
The most positive parts of the report, from an industry standpoint, were the recommendations to strengthen the role of the BAR's ombudsman and to eliminate what is known as the "non-adopt" provision, which allows the director of the Department of Consumer Affairs (DCA) to overrule the decisions of administrative judges that hear cases brought by the BAR.
Repair shops have increasingly questioned the BAR's tactics, procedures and ability to effectively understand and regulate the collision repair industry, and relations with the BAR have grown increasingly contentious during the past few years.
In 2003, the BAR underwent review by what was then known as the Joint Legislative Sunset Review Committee, and a number of issues were raised regarding the Bureau's administrative structure and enforcement practices. Howe was appointed as enforcement monitor to evaluate BAR's disciplinary system and procedures.
One of the most frequent complaints against BAR is that the agency's hearing procedures are unfair and violate due process rights and that field investigations are often overzealous. According to the report, BAR investigations are generally conducted fairly, and sanctions are in line with severity of the offenses in most cases. Howe did find, however, that although the current hearing system "passes constitutional muster," it is stacked against licensees.
Enforcement Monitor's Draft Recommendations* Eliminate the "non-adopt" provision from the Auto Repair Act.* The DCA should pay actual legal fees incurred by licensees when BAR is unable to prove a substantial number of allegations at an administrative hearing.* The DCA should enhance the guidelines and authority of the ombudsman.* The legislature and/or the BAR should provide more clarity to the notion of constructive fraud.* BAR should implement minimal, required training in Repair Act standards as a condition for licensing.* The Office of Administrative Hearings should establish a dedicated panel of judges for BAR cases.* Implement recommendations from the Auto Body Repair Inspection Pilot Program Report to the Legislature.* Establish a system to teach and test for minimal proficiencies as a condition for obtaining a BAR license.Currently, serious violations are brought before Administrative Law Judges (ALJs). The DCA, though, can overturn the ALJ's decisions and impose greater - or, in a few cases, lesser - penalties. BAR investigations also can be costly for repair shops. While BAR can recoup its investigative costs from licensees, repair shops cannot recoup legal fees from BAR if they prevail at a hearing. The average cost to BAR for investigating a case referred to the Attorney General was $9,900 in the 2002 to 2003 period.
Of the 26 non-adopt cases reviewed in Howe's study, 65 percent resulted in greater sanctions, which the report concluded, "lends credence to industry concerns that a hearing is risky and will not be fairly adjudicated."
Among Howe's recommendations: exclusion of the "non-adopt" provision from the Auto Repair Act; amending office conference reports to include an acknowledgement that the attendees understood what was discussed; and amending Code 125.3 directing the DCA to pay all legal fees incurred by licensees where the BAR was unable to prove a "substantial number" of the allegations.
Elimination of the non-adopt provision could be particularly helpful to licensees. "When the non-adopt goes away, the ALJ's decision will be final," Levy said. "Right now, somebody who hasn't participated in the hearings - who's just reviewing paper - still has the opportunity to come in and raise the sanctions."
Howe also recommended strengthening and clarifying the role of the BAR's industry ombudsman. "They should be utilizing that person more, and based on that, defining how their position can entail more responsibility. I think that would be something the shops would agree with," McClune said.
Throughout the report, Howe indicated several times that BAR should expand its educational activities and require minimal proficiency testing for licensees. For example, he recommended the definition of what constitutes fraud should be clarified in statue or through a prelicensing testing program. He also called for minimal training in the Repair Act standards to clear up confusion about paperwork requirements, and he suggested that BAR certify automated invoicing and estimating systems for compliance with paperwork standards.
Levy agreed that proficiency testing was a good idea, but emphasized that the industry should establish a training and certification program recognized by BAR, leaving the agency to handle business registrations.
"We do believe that standards should be set to open an automotive repair business and maintain a license so that people are properly equipped and trained," Levy said. "That's something that we're making a move on within the industry. We don't think the BAR should be doing that."
Both Howe and the auto repair industry are in agreement that BAR should not be in the business of setting trade standards, but the bureau is still operating in a gray area when it comes to determining whether a questionable repair stemmed from fraud, an honest mistake or simply a difference of professional opinion. This issue has been complicated by the fact that most of the administrative judges have no particular expertise in automotive mechanical or collision repair.
Howe's recommendations included requiring documents produced by insurance adjusters to be identified and explained as a "visual damage assessment," and implementing recommendations from the Auto Body Repair Inspection Pilot Program Report to the Legislature, including requiring those who have mechanical backgrounds and equipment to evaluate the condition of the vehicle to do the formal estimating of collision damage.
Another possible fix: Establishing a dedicated panel of expert administrative judges to hear BAR cases. Levy, however, had reservations about such a panel.
"Number one, it would be expensive for the state to do so," Levy said. "Secondarily, we're not sure what would constitute an expert ALJ. Where are we going to find them? Do they exist? And that could easily become a double-edged sword on either side. The specialized ALJ's could become prejudiced toward industry or the bar. We're not opposed to it; we just don't know that we can support it yet because it's such a new idea."
The licensing program itself could be modified to require more individuals within a shop to hold a license, including service writers and at least one individual with a financial stake in the business (and thus the beneficiary of any potential fraud). This way, sanctions could be targeted more specifically, and it would be more difficult for revoked operators to engage in "fronting" schemes.
This would bring the automotive repair licensing program more in line with the Smog Check program, and would acknowledge, as the report states, that "many of the problems enforced by the BAR occur at the front counter of an [auto repair dealer] and not the service bay."
McClune said the CAA would need more information before it could endorse an expanded licensing requirement. "It's probably something that our guys would not be in favor of, but I think there would have to be more research to see what the pros and cons to that would be."
No changes to BAR's procedures or policies are expected until after the final reports are presented this year. In the meantime, Howe has also asked to expand the enforcement monitor's case audit and to conduct more ride-alongs with BAR field inspectors.
For a copy of the enforcement monitor's report, visit www.dca.ca.gov/reports/bar_enfmonitoring.pdf.
