When the repair industry publicly questioned the practices of the state's automotive repair fraud watchdog at hearings before the Joint Legislative Sunset Review Committee in 2003, questions arose involving the standards of proper collision repair, the definition of fraud, the expertise of BAR employees evaluating repair quality and the apparent lack of due process afforded those who were found to be in violation of the law.
California Senate Bill 1542, the result of the Sunset Review hearings, appointed an Operations and Administrative Monitor who would, for two years, examine the operations at the BAR and report its findings back to the legislative committee. The monitor was required to investigate and report on many of the problems and complaints raised about the BAR during the committee hearings. The draft report of the BAR Enforcement Monitor is the summary of those findings and can be viewed at www.dca.ca.gov/reports/bar_enfmonitoring.pdf.
The initial investigatory work focused on six key questions, which incorporated the objectives of SB 1542 as well as stakeholder expectations:
1. Does the BAR disciplinary process provide for due process? The disciplinary process starts with the indication of compliance issues at a licensee, usually triggered by a consumer complaint. There are only 260 program reps to police over 41,000 ARDs and smog check stations in California.
Recommendations include having an acknowledgment at the end of an office conference report that the attendee understood what was discussed and the purposes of the conference. The legislature should direct the DCA to pay all actual legal fees incurred by licensees where the BAR was not able to prove a substantial number of allegations in an administrative hearing and that the DCA should enhance the guidelines and authority of the ombudsman.
2. Should the Repair Act include a specific definition of fraud?
The legislature and/or the BAR should provide more clarity to the notion of constructive fraud, recommended the Enforcement Monitor.. This can be accomplished by amending the actual statue to include specific examples of what behavior is a violation with a qualifier that the examples are not exhaustive or all-encompassing.
Furthermore, it was recommended that BAR educational materials such as the Write-it-Right series of publications could be expanded to include sections on what fraud is (both constructive and actual), what reasonable care entails, real-world examples of how ARDs get into trouble with the fraud statutes, simple steps and safeguards for running a business, operating work order systems, etc. while avoiding committing fraud violations. This can also be accomplished in a program of basic licensee training.
3. Are regulators enforcing documen- tation and paperwork standards that don't exist?
Does the BAR enforce standards that are divorced from the original intent of the Act? The original Automotive Repair Act, passed in 1972, leaves the original intent of the Repair Act as a target for comparing how today's program is operated and how discipline is meted out lacks relevance. In addition, many of the Act's provisions that are characterized as being out of touch or minutiae have been in the Act since the beginning. Paperwork standards and the seemingly "persnickety" rules for how estimates and invoices are written up and submitted seem to be at the heart of some discomfort among industry.
According to the report, the current, and original intent of these statutes was to standardize and clarify how auto repair diagnoses are communicated to consumers to eliminate misunderstandings that could potentially turn into complaints, demands for rework, refunds, and small claims filings. The intent of the statutes is also to bring the entire industry up to an acceptable standard of professional conduct.
The BAR should implement minimal, required training in Repair Act standards as a condition for licensing, recommended the Enforcement Monitor.
4. Is the system of sanctions commensurate with the degree of violation?
Non-adopt decisions refer to a feature of the Administrative Procedure Act (Section 11517(c)(2)(E) that allows an agency to reject the proposed decision [of the Administrative Law Judge], and decide the case upon the record.
The report states that due to the effect of the non-adopt provision in the APA, some cases are sanctioned at a greater level than what is proposed in administrative hearing. This lends credence to the concern of industry that a hearing ultimately may not result in an unbiased decision. In addition, while the majority of cases are decided within (or even less than) established disciplinary guidelines, it is not unknown for sanctions to exceed what the facts and precedent would suggest is fair.
These conclusions lend support to the notion that the disciplinary system, while it passes constitutional muster regarding due process, is slightly stacked in favor of the State. Simple measures to improve fairness, if they can be implemented without degrading the enforcement powers of the agency, are warranted.
Therefore, it is recommended that the Legislature exclude the non-adopt provision from the Auto Repair Act.
5. Should the BAR be in the business of setting and enforcing trade standards?
On this issue, the Office of Administrative Hearings should establish a dedicated panel of judges for BAR cases. This will create a panel of judges more familiar with auto repair cases, standards and issues and result in better decisions. This panel will also be able to identify and address true trade standard cases.
A second suggestion was to implement recommendations from the Auto Body Repair Inspection Pilot Program Report to the Legislature. These recommendations include: to consider requiring that those who have the mechanical background and equipment to properly evaluate the true condition of the vehicle do the formal estimating of collision damage; and documents produced by insurance adjusters should be identified and explained as a .visual damage assessment.
6. Is the BAR doing enough to prevent violations other than applying sanctions? The BAR should establish a system to teach and test for minimal proficiencies. Passing the test should be a condition for obtaining a BAR license. The BAR should augment their current education programs and licensing system address training, testing and licensing.
All service writers should be required to hold a BAR license, which would be subject to discipline in the same manner as current ARD registrations and smog check licenses including revocation.
When violations occur, the BAR would be able to target disciplinary efforts at responsible individuals as well as at business entities. This allows the BAR to do selective targeting of disciplinary efforts. This can be important in a large ARD such as a dealership. For example, rather than be faced with the dilemma of revoking the license of a large dealership and making all the employees unemployed, the BAR could suspend or revoke the license of a service writer, fine the beneficial owner, and put the business license on probation.
By requiring this minimal level of training about state standards, it will help ensure a minimal level of proficiency without costing industry much down time. Individual licensees, such as service writers, will be much more aware of what the standards are and how to comply with them, the business benefits of compliance, and how the BAR operates. These individual licensees will have a greater incentive to adhere to the Auto Repair Act because they will be personally accountable.
The BAR can more accurately target sanctions to the responsible parties and those that financially benefit from violations can be disciplined with more consistency than is currently the case.
Areas for further study
The Enforcement Monitor suggests that the following areas be studied in subsequent reports during 2006: arbitration programs; refine explanation of fraud; system certification, expand case audit; and conduct additional ride-alongs.
Hearings on the report are scheduled to take place on December 7.