As a massive public agency with 320,000 licensed agents in California, the Department of Insurance (DOI or CDI) has an extensive infrastructure for the investigation and discipline of insurance producers. As is often true of financial industry regulators, there are marked trends in investigations and discipline in certain areas of public concern.

“Affinity Group” Discount Cases

The Department of Insurance has seen numerous affinity group discount cases reported by insurance carriers against terminated insurance producers. An example of an affinity group discount would be, for example, a student discount, a veteran’s discount, or an educator discount. Agents may apply affinity group discounts without valid proof of eligibility. Some affinity group cases resulted in premium savings for consumers and losses for carriers. Other, more egregious cases, have involved the forgery of eligibility documents, which could open consumers to allegations of fraud and identity theft. Although affinity group discount cases often result in no alleged consumer harm, CDI may characterize these cases as a theft of premiums from the carrier.

Illegal Vehicle Extended Warranty and Home Protection Warranty Sales

The Department of Insurance has strict regulatory requirements for vehicle service contracts (VSCs) sold in California. As for home protection warranties, there are only 14 CDI-licensed home protection warranty companies doing business in California. In California, vehicle service contracts (VSCs) may only be sold by a DMV licensed car dealer. However, in the case of home protection warranties and vehicle service contracts, out-of-state companies sometimes unlawfully sell these products over the internet. Since these companies may operate lawfully in other states, a small number of sales to California consumers may be the result of an unintentional error by the warranty company. However, some entities intentionally target the California market due to its size, risking regulatory punishment. As to these companies, CDI will typically file a Cease and Desist Order to stop sales to consumers, seek fines of $5,000.00 per day of illegal sales in California, and ask for restitution to California consumers.

Annuity Sales to Senior Citizen Consumers

The sales of annuities to consumers 65 years of age or older is strictly regulated by the California Department of Insurance. Violations commonly occur when an agent recommends to a consumer aged 65 or older that they replace an annuity unnecessarily, thereby incurring a surrender charge to the consumer and generating commissions for the agent. Unnecessary replacement of annuities for senior consumers carries a penalty of $1,000.00 for each violation on the part of an agent ($10,000.00 if it is the carrier), and if there is a pattern of such conduct, the fine can rise to between $5,000.00 and $50,000.00 per instance for an agent, and between $30,000.00 and $300,000.00 per violation for a carrier. There are also specific regulations covering the solicitation of senior consumers for the purchase of annuities.

Ray & Bishop, PLC, represents insurance industry agents, brokerages and companies in matters both complex and routine. Our long and extensive experience in insurance regulatory matters shows in the results for our clients.

Physicians who have lost their Medical Board license or find themselves on probation are often legally entitled to petition for license reinstatement or relief from license probation, under Business and Professions Code section 2307. This process is accessible to unrepresented parties through a petition, with instructions, available online. It is preferable, however, to hire an experienced licensing and regulatory law firm such as Ray & Bishop, PLC, to handle such matters. Below are some important aspects of Medical Board petitions for penalty relief – early termination of probation, relief from conditions of probation, and reinstatement of a revoked license.

These Cases Are Usually Not Settled – They Go through Formal Hearing

While there is no prohibition against Board settlement of a petition for penalty relief, these cases are usually decided by an Administrative Law Judge at a formal hearing. In the case of many other licensing agencies, penalty relief petitions may be heard by a board itself at a board meeting (usually in a 20 or 30 minute time slot), but in the Medical Board’s case, these matters are fully litigated. The Administrative Law Judge issues a proposed decision after hearing, which must be adopted by the Medical Board. If the Board decides to non-adopt the proposed decision, the non-adoption proceeds to a panel of the Medical Board for consideration of written and oral arguments.

Each Petition for Penalty Relief is Investigated by a Board Investigator

All of the contents of the Petition for Penalty Relief, the attachments, and the background of the physician or former physician, are thoroughly investigated by a Medical Board of California investigator. The investigation typically involves an interview of the petitioner (the physician or former physician); interviews of individuals who write letters in support of the petition; investigation of the authenticity of all supporting documents; and a thorough background check of the physician or former physician. These investigations can be quite invasive. For example, the Board investigator may check the C.U.R.E.S. report of the petitioner to look for evidence of disability or mental illness.

Not Every Physician or Former Physician Is Eligible for Penalty Relief

Petitions for Penalty Relief can only be filed after certain waiting periods, and if certain conditions are met. For example, a physician whose license was revoked can only petition after three years have passed since the revocation or surrender of the license, however, in certain specific conditions a two year waiting period may apply. For early termination of probation or relief from conditions of probation, the waiting period depends upon the length of Board probation. And a physician or former physician who is on criminal probation, on criminal parole, or under investigation by the Board may be denied penalty relief without a hearing.

The Legislative, Political and Public Policy Landscape for Penalty Relief Petitions is Always Shifting

Pending in the California Legislature is Assembly Bill 1636, which would prohibit the reinstatement of licenses of physicians who have been disciplined for sexual misconduct or were required to register as a sex offender. This legislation comes on the heels of significant media criticism of the Medical Board for perceived leniency in the discipline of California physicians. Such crosscurrents can be difficult to navigate for individuals and less experienced attorneys who lack insight into the Board’s policy judgments based upon the current regulatory environment and public concerns.

Ray & Bishop, PLC, has a deep fund of knowledge Continue Reading Medical Board of California Petitions for Penalty Relief

Nurses from other states sometimes take travel assignments at facilities across California, especially since the demand for nurses has risen sharply due to the COVID-19 pandemic. However, the California Board of Registered Nursing retains the ability to discipline the California BRN license for nurses even when they are disciplined for conduct outside of California against the nursing license in their home state.

One such travel nurse came to us after another state issued a reprimand against this nurse’s license for issues related to documentation of work performance while this nurse was attempting to obtain a Nurse Practitioner certification outside California. The nurse successfully achieved licensure as an NP in the home state, but was subject to a reprimand for the errors. Even though the nurse was not an NP in California, the BRN reviewed these documentation mistakes, reviewed the out of state discipline, and filed an Accusation against the client’s California license. They claimed the nurse must, according to the Model Disciplinary Guidelines, face a minimum discipline of three years’ probation in California and pay costs of more than $4,000 for the costs of prosecuting the matter against the nurse’s license.

We found the Board’s position to be totally unreasonable, and took the case to an administrative hearing before the Office of Administrative Hearings in San Diego. At hearing, the administrative law judge ruled that the nurse deserved only the discipline commensurate to what was ordered in the client’s home state, and reprimanded the client in California. The costs of prosecution were reduced by 90% to only $500. Our representation not only saved this client from probation which would have required her to relocate to California to work full time, but also saved her almost $4,000 in costs that would have been due to the Board of Registered Nursing.

It is important to remember that the Board’s Disciplinary Guidelines description of the “minimum” and “maximum” discipline is advisory and does not carry the force of law. An experienced administrative health care attorney will know when a strong case can be made that the guidelines, as applied, would not serve the principles of public protection that the Board is required to follow.

Alcohol related convictions are among the most serious violations a medical professional can commit, because they call into question both the judgment of the licensee and the safety of patients, in the judgment of California state agencies such as the Medical Board of California, the Board of Registered Nursing, and the Board of Behavioral Sciences. Licensees who commit even one alcohol-related offense can expect a strong push from the agency for probation with terms designed to address substance abuse, such as mandatory testing, alcohol related education, and monitored therapy.

In certain cases, state agencies will try to revoke a license outright and be unwilling to settle, such as when they perceive a pattern of concerning behavior. Multiple DUI convictions will often lead to license revocation.

In 2021, we were privileged to represent an excellent AMFT licensee with the Board of Behavioral Sciences, who despite excellent work evaluations and a track record of candor and excellent performance at their workplace, had suffered two DUI convictions within the span of 18 months. The Board insisted on license revocation. Thanks to the client’s deep commitment to recovery, including AA meetings, voluntary workplace disclosure, and a willingness to accept probationary terms, we were able to convince an Administrative Law Judge to allow the client to continue practicing.

The Board fought this Proposed Decision and issued a non-adoption. However, we successfully reached an agreement with the Board even after the non-adoption to allow the client to practice. We later learned that the client had persevered and obtained a license as a full-fledged MFT.

We are honored to represent the hard-working medical professionals in California, including therapists and associates, even if they have made mistakes that raise concerns with a state agency. Working together to address those concerns, we were able to help this client achieve their professional goals, and we look forward to their continued success.

The Department of Real Estate accused a licensee of fraud, dishonest dealing, and dishonesty after the client failed to report a 2019 conviction for a misdemeanor violation of a Labor Code statute. The licensee had also been convicted of crimes twice before. Alleging a pattern of dishonest behavior, the DRE refused to offer the client a settlement and took the matter to hearing.

At hearing, the Administrative Law Judge rules that the client had not demonstrated dishonesty, and that his conviction stemmed from his failure to secure appropriate insurance for his business. The judge dismissed all allegations related to fraud, dishonesty, or a pattern of dishonest dealing. The judge also ruled that the client had satisfied many of the Department’s criteria for rehabilitation, despite the fact that the conviction was only two years old at the time of the hearing.

Despite the Department’s insistence that the licensee be prevented from practice, the license holder was placed on restriction but allowed to continue transacting real estate in California. This case illustrates the importance of fully evaluating the Department’s criteria for rehabilitation to establish the strongest possible defense, even when the Department’s charges are based on criminal convictions. A strong rehabilitation and mitigation defense can protect licensees even when they face multiple convictions against an inflexible agency.

Ray & Bishop defends real estate broker and real estate salesperson licenses against all allegations of misconduct.

The Board of Vocational Nursing and Psychiatric Technicians, like all state healing arts agencies such as the Board of Registered Nursing and the Medical Board of California, takes the requirements of its probation program very seriously. In 2021, we were able to represent an LVN who tested positive for cocaine while under the supervision of the LVN’s probation program. The Board had the positive drug test and the expert witness testimony of the president of the laboratory and testing company who conducted the test.

The nurse explained to us the circumstances of the accidental exposure. The client’s explanation to the probation monitor (which had to be provided immediately under the terms of probation) was consistent with the explanation to our office. The Board elected to pursue a Petition to Revoke Probation against our client and was unwilling to entertain settlement. We defended the client at an administrative hearing before the Office of Administrative Hearings.

At hearing, our client again testified credibly. The client’s supervisor testified as a witness on her behalf. The Board’s expert admitted, during cross examination, that the circumstances of the ingestion of cocaine, as explained by the client, were unusual but possible. The Administrative Law Judge found the exposure to be an outlier and, rather than revoking the license and ending our client’s career, extended the probation for one additional year. The client was able to return to work.

Even when the agency refuses to accept a client’s explanation, that does not mean that the client is lying or that the client will not be believed by an Administrative Law Judge. This case illustrates the principle that consistency and employer support are important pillars of a license defense case, even when the situation looks impossible to defend. We were proud to represent this client and help them continue to safely practice nursing. Ray & Bishop defends nurse licenses against allegations of substance abuse.

The Board of Registered Nursing accused our client of gross negligence and incompetence in the practice of nursing following alleged failure to obtain or document a specific reading with respect to a patient under her care. To resolve the case, our client was willing to enter into a public letter of reproval, but the Board refused and insisted upon a period of probation. We advised our client not to accept the Board’s offer and instead took the case to hearing. During a three-day proceeding before the Office of Administrative Hearings, the Board presented an expert witness, an investigator, and an eyewitness nurse and doctor from the date of the incident. We presented testimony from three current and former supervisors as to Respondent’s standard of care and level of practice.

Our client, an RN for 40 years, was cleared of all charges and the Accusation was dismissed. The Board’s request for almost $13,000 in costs was denied. Critical to the case was effective cross-examination of the Board’s witnesses, as the eyewitnesses testified largely in support of the nurse’s care on the day in question. The Proposed Decision from the Administrative Law Judge therefore found that the causes for discipline were not met, and recommended the Accusation be dismissed. The BRN upheld the Proposed Decision on review and issued a Final Order clearing the case against our client.  Even when the agency tries to compromise, a skilled, experienced attorney understands when a deal should be accepted or rejected. If your license is under threat of discipline by a state agency, contact an attorney for a case consultation.

Contact Ray & Bishop to defend your registered nurse license against BRN allegations of negligence.

Our firm represented an applicant to the California Department of Insurance who had applied for a Property and Casualty Broker-Agent License for the second time, after previously being denied in 2017.  The applicant had three convictions: two for receiving stolen property, and one for unauthorized use of identity, between 2010 and 2012.  The 2017 application contained a false statement regarding the convictions.  Because of the applicant’s history, CDI refused to offer a settlement, and took the position that the applicant needed to wait even longer before being allowed to produce insurance.

Due to the participation of character references from the applicant’s workplace and strong evidence of rehabilitation, the Proposed Decision from the Administrative Law Judge granted a license with a restriction to obey all laws, and the Department of Insurance adopted the Decision.

Even when the agency refuses to compromise, a skilled, experienced attorney can work with license applicants even with a history of dishonesty or false statements to achieve licensure.  This applicant now works in the insurance agency thanks to their strong case presentation and effective legal arguments.

Ray & Bishop helps Department of Insurance license applicant who have struggled with denials to overcome those hurdles to finally secure licenses.

Our office represented a licensee in 2020 who had earned a license only two years prior, in 2018.  Unfortunately, this client was arrested for DUI just a few months after earning the license, and ultimately pled guilty in 2019.  Having only been licensed for a year at the time of conviction, the client did not realize his reporting duty to the Department of Real Estate and failed to notify the agency of his conviction.  This was the client’s second DUI conviction, having previously been arrested and convicted in 2013.

The Department refused to negotiate with the client and demanded a surrender or a revocation.  Despite the presentation of rehabilitation evidence prior to hearing, no agreement could be reached, and the client’s matter proceeded to an administrative hearing.  The Proposed Decision from the Administrative Law Judge saved the client’s DRE license, granting a license with a restriction, and the Department of Real Estate adopted the Proposed Decision.

Many licensees believe that if the agency decides not to offer a settlement, their licensing case is hopeless, because they are afraid the agency will decide the outcome.  In fact, the Proposed Decision from the Administrative Law Judge is often treated with deference, and on this occasion we were able to save our client’s career.

Ray & Bishop defends licensees facing license revocation before the Department of Real Estate and other state agencies.  See how Ray & Bishop can help defend your California real estate license.

On September 30, 2018, the Governor signed Assembly Bill 2138, which primarily helps many license applicants with criminal records get professional licenses.  AB 2138 took effect on July 1, 2020.

After the change in the law, a plea of guilty or a verdict of guilty can only be used against a licensee or license applicant as a conviction once a judgment has been entered.  (Business and Professions Code section 7.5)   This is an important change for defendants who get deferred entry of judgment, for example.  In criminal courts, individuals granted deferred entry of judgment enter a plea of guilty, but, once they complete the program, the charges are dismissed.  Before-AB 2138, these guilty pleas could be used as “convictions” to deny license applications and punish licensees while these individuals were in deferred entry of judgment programs.  Further, Business and Professions Code section 480(d) explicitly forbids many licensing agencies from using any criminal dispositions other than misdemeanor or felony convictions to deny a license.  (This also can benefit individuals who enter pretrial diversion and never enter a guilty plea, but still have a pending criminal case.)

Under AB 2138, many convictions are no longer grounds for denial if those convictions have been either expunged, or, even if not expunged, are more than seven years old. (Business and Professions Code section 480)  Further, applicants for most licenses no longer need to answer criminal background questions on the initial license application; the agencies instead rely solely upon fingerprint (Livescan) background checks to determine criminal history.  Note: architects, cosmetology board license applicants, automotive repair dealers and some other applicants, however, still must answer criminal history background questions.  Some of the largest groups affected by these changes have been physicians, nurses, real estate salespersons and brokers, attorneys and CPAs.

There are important exceptions, however, to the purview of AB 2138.  New law changes to the Business and Professions Code only apply to agencies that operate under the Business and Professions Code.  So licenses covered by the Insurance Code (insurance producers, adjusters), the Education Code (teachers), the Financial Code (lenders, DFPI-licensed mortgage loan originators), the Health and Safety Code (child care centers, residential care homes for the elderly, foster care, nursing homes) and others are not affected.

Felony financial crimes of any age committed by fiduciaries, contractors, private investigators, funeral directors or real estate licensees can still be grounds for license denial; also, serious felonies (most violent offenses) and sex offenses of any age may result in license denial.  However, an expungement or certificate of rehabilitation can bar the agency from denying a license based upon those crimes.  Agencies are still free to deny a license due to discipline imposed by other agencies, either inside or outside of California.

There are four big takeaways from the implementation of AB 2138.  First, professionals and aspiring professionals who enter deferred entry of judgment, or DEJ, typically cannot have their guilty plea used against them to discipline or deny a license; a guilty plea alone, without a judgment later entered, is not considered a “conviction”.  Second, many convictions older than seven years can no longer be cause for denial of a license application.  Third, expungement, authorized under Penal Code section 1203.4 and 1203.4a, which once provided little relief for license applicants, is a powerful shield against denial of many licenses.  And fourth, most license applications no longer ask criminal conviction background questions, removing a tremendous source of anxiety and confusion for license applicants.

The provisions of AB 2138 and Business and Professions Code 480 are complicated; there are exceptions and special circumstances not covered in this article.  If your license has been denied due to a criminal conviction, contact Ray & Bishop for assistance.