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January 2015 Policy Study, Number 15-2

   

SEA 421 Report: Establishing A Process For Self-Certification Registration

   

Self-Certification Registration: Establishing the Process

   

 

Any alternative must seek to balance two extremes:  overregulation and under-regulation.  The former is seen as interference in the way people lead their lives, while the latter fails to provide the necessary public health and safety protection.[38]

 

    • Inquiry No. One: Occupations That “May Be Included” In The SCR Registry

At the August 5th public hearing, occupation representatives reinforced IPLA’s belief about the potential benefits of a SCR structure when they conveyed their members’ interest in using it as a means of regulation.[39] Further, since 2004, at least fifteen[40] occupations unsuccessfully sought licensure from the General Assembly. Despite this apparent interest, this report only establishes the process for a SCR structure and discusses general eligibility standards. It does not identify specific occupations that may use SCR if and when it is authorized statutorily.

 

  • Step 1: Application Process
    • Generally Ineligible Occupations

Rather than describing occupations that may be included in the registry, it is more beneficial to discuss standards that make an occupation generally ineligible. As a general rule, the default assumption is that occupations can use a SCR structure. However, policymakers and the public have always believed certain occupations deserve nothing short of full licensure.

 

Trade associations and other licensing proponents lobby legislators to enact licensing regimes under the assumption of helping the public.[41] Other advocates claim licensing improves “average quality” and eliminates the most egregiously poor or dangerous service providers.[42] Most common is the invocation of the catch-all phrase: licensing is necessary to protect the health and safety of consumers. Despite the rhetorical skepticism, evidence suggests that some occupations should be – or remain – subject to licensing regulations.

 

Somewhat different than the normal practice, applicant-occupations will be asking IPLA to certify rather than license their workers. IPLA and the JCC are still obligated to recognize when an applicant is ineligible because its workers need to be licensed. Factors that IPLA and the JCC should consider for this purpose are as follows:

 

1. Extent of asymmetric information possessed by providers. Asymmetric information occurs when professionals know more about the services they sell than the customers to whom the services are sold.[43] For example, the victim of a car accident is unable to make an informed choice about emergency room in which he ends up. He will be relying on service providers he does not know nor that he chose.[44]

 

2. Extent to which providers have fiduciary responsibilities. Some professionals are fiduciaries, meaning they are entrusted with rights and powers to use only for the benefit of others; in other words, it is more than a basic buyer/seller relationship.[45]

 

3. Extent to which providers possess exceptional powers. Some professionals possess exceptional or “awesome” powers that can be easily misused for unscrupulous reasons. An attorney’s subpoena power is one example.[46]

 

4. Likelihood of severe externalities. Externalities are unintentional consequences of an intentional act. For example, doctors who misdiagnose a contagious disease might be responsible for an outbreak of that disease.[47]

 

5. Public’s desire to protect the disadvantaged. Disadvantaged individuals include those who are underage, disabled, illiterate,[48] incompetent, or otherwise unable to make informed decisions when purchasing professional services. Licensure may be appropriate only if it improves the quality of services to disadvantaged consumers and simultaneously protects society’s stake in their well-being. For example, children are incapable of assessing their teacher’s quality.[49]

 

    • Disparity Assessment: Who Should Remain Licensed?[50]

Again, this report makes no recommendation to deregulate specific occupations. But, occupations that are currently licensed in Indiana should also be considered candidates for a SCR structure. An important policy consideration is the treatment of occupations across various jurisdictions. Data obtained from the disparity investigations should be persuasive when identifying candidates for occupational deregulation; disproportionate treatment of occupations means that some states get along just fine without licensure. The disparity study frameworks are as follows:

 

1. Occupations that are licensed in Indiana and a minority of other states.

 

2. Occupations that experience especially onerous licensing requirements in Indiana compared to other states.

 

3. Occupations that experience especially onerous licensing requirements compared to occupations that have clear public health and safety implications.

 

A review of Indiana’s licensing statutes reveals that eight occupations are licensed in fewer than twenty-five states.[51] The same review reveals eight occupations that other states regulate using certification or registration.[52] Three occupations fall into both categories: Licensed Home Inspector, Residential Care Administrator, and Plumbing Apprentice. As such, these might be ideal candidates for less burdensome regulation. 

 

    • Step 2: Public Meeting[53]

After determining an occupation’s eligibility, IPLA may direct the Jobs Creation Committee (“JCC”)[54] to hear from applicant-occupations and their supporting organization(s) at a public hearing. More than one organization per occupation is eligible for accreditation (e.g., “Indiana Association of Profession X,” “Southwest Indiana Profession X Society,” “National Profession X Council,” etc.). The JCC will hear testimony that will serve as its basis for recommending to IPLA which, if any, supporting organization(s) should be accredited and if the occupation should be included in the registry.

 

    • Step 3: Accreditation

IPLA’s accreditation is the most important aspect of the SCR process. If occupations are without an accredited support organization, then they are ineligible for SCR.

In addition to the JCC’s recommendation, IPLA should consider the following factors about the organization to decide whether or not it should receive accreditation:

 

  • Ability to certify and decertify its members
  • Ability to investigate consumer complaints against its members
  • Administrative functionality including member monitoring
  • Continuing education services
  • Organization’s public reputation
  • Public reputation of its members and the quality of services they provide
  • Length of existence

These same factors should be considered when IPLA decides to suspend or revoke an accreditation.

 

  • Inquiry No. Two: Whether to Provide Title Protection to Those Who Register
  •  

    Yes, individuals who register should receive title protection. For now, the best title option is “state certified.” No existing regulated occupation uses this title. The public will better appreciate the significance of “state certified” if it is used universally by all professionals who use a SCR structure.[55]

     

    Effective title protection is the state’s way of offering a “decision-making tool” to consumers.[56] One who calls himself “State Certified [Professional X]” is able to signal to consumers that he achieved certain qualifications the state considers to represent the highest quality of training or experience. Those without the title are unable to send the same signal. That does not mean, however, that someone without a certification – or title – is precluded from or incapable of competing against SCR professionals in the same market.[57]

     

      • Inquiry No. Three: Effective Enforcement Provisions

    Establishing a registry for professional occupations, including certain healthcare providers, should not adversely impact protection of the public. The existing legal protections for consumers are provided under common law and through existing statutory protections. 

     

    First, every transaction or interaction with a SCR professional would be based on a solicitation for or effectively entering into a contract. Well established common law and statutory protections are available for private legal actions by harmed consumers. Further, the easy access to the various courts is well recognized in Indiana. 

     

    Second, the Indiana General Assembly has provided numerous consumer protection statutes, including IC 24-5-0.5, the Deceptive Consumer Sales Act (DCSA), which gives the Attorney General of Indiana the authority to pursue legal actions against service providers based on general fraud principles.  The DCSA remedies available to the Attorney General include:  injunction, cost of investigation, civil penalties and consumer restitution. Also, the DCSA allows private legal actions by harmed consumers as a result of the conduct or actions of the supplier of consumer services, which includes individuals who would be on the registry.

     

    Third, various federal laws may also be applicable regarding consumer protection of those involved in transactions with SCR professionals, including healthcare providers. Specifically, the Federal Trade Commission’s regulations[58] govern healthcare and other professional service providers. 

     

    IPLA also has a very important enforcement tool: the ability to suspend or revoke a supporting organization’s accreditation.[59] In other words, if the Attorney General’s office receives numerous DCSA complaints about SCR professionals within a single occupation, then IPLA might decide the certification they received – and the entity that provided it – fails to meet IPLA’s accreditation standards.[60]

     

      • Inquiry No. Four: Description of Auditing and Maintenance of the SCR Registry
        • Auditing

    IPLA will retain the authority to “audit” the information and representations of anyone who registers. Whether IPLA must audit every registration is a matter to be determined by the Legislature. For its part, IPLA believes the best course is to engage in random auditing and use best practice methodologies to improve the likelihood of effectiveness.

     

    As part of the registration process, individuals must “swear under the penalties of perjury” to the truthfulness of two things:  (1) that they meet the baseline statutory eligibility standards;[61] and (2) that they have completed the predetermined certification process offered by an accredited organization. Intentional misrepresentations to IPLA will constitute a criminal violation – similar to title protection sanctions. And IPLA should be obligated to inform the appropriate law enforcement agencies if it discovers fraudulent activity.

     

      • Maintenance

    IPLA will coordinate with accredited organizations to assist with maintaining the list of registered professionals. Generally, individuals will remain registered unless they lose their certification. Whether someone becomes or remains “certified” is a private relationship matter between the individual and the accredited certifying organization.[62] As such, organizations must be able to communicate effectively with IPLA when it decertifies its members.

     

      • Inquiry No. Five: The Cost of Establishing and Maintaining the SCR Registry

    IPLA will incur initial startup costs to establish technological requirements of the SCR, including an online portal capable of receiving and sending communications. This portal will be modeled somewhat after what the system used by registered interior designers.

     

    The estimated cost for initial expenses is approximately three thousand seven hundred fifty dollars ($3750).[63] IPLA will incur an additional cost of fifteen hundred dollars ($1500) per occupation added to the registry,[64] and on-going maintenance costs of approximately two hundred fifty dollars ($250) per week.[65]

     

    After the registry includes five occupations, IPLA will need to hire one employee to coordinate and perform auditing and maintenance functions. The cost of this employee will be approximately twenty-two thousand seven hundred twenty-four dollars ($22,724). IPLA estimates it will need to hire one employee for every ten additional occupations added to the registry.

     

      • Inquiry No. Six: Registration and Renewal Fees

    The final step in the SCR process is paying a registration fee, predetermined by the JCC. However, fee amounts might vary across occupations.

     

    Two long-term objectives the JCC should consider when establishing fees are as follows: (1) ensuring that the SCR is revenue neutral, and (2) ensuring that registration fees correspond with IPLA’s administrative expenses.

     

    IPLA will coordinate with the state’s budget agency to determine how and when registration fees will revert to the state’s general fund, as well as the portion of IPLA’s budget appropriation designated to ensure the registry remains fully funded.

     

       

     

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