Forum: SED Lacks Funds for New Enforcement Law

By Dennis O’Leary, Legislative Counsel

NEW YORK—The State Education Department’s (SED) Office of the Professions held a forum in December to discuss a law that cracks down on professional impostors but appears to lack adequate funding to enforce.

The law, which targets unlicensed people passing themselves off as professionals, went into effect last September when Gov. George Pataki approved it (Chapter 615 of the Laws of 2003).

The Leadership Forum provided an opportunity for representatives of professional associations and the SED to discuss the new law, sponsored by Sen. Kenneth LaValle (with his bill S.4960) and Assemblyman Ron Canestrari (identical bill A.1041-B), which gives substantial civil enforcement powers to the SED to combat illegal practice.

Prior law allowed the SED to investigate allegations of unlawful practice, but without authority to sanction violators, the SED could only refer investigations to the attorney general for civil or criminal prosecution. While criminal referral to the attorney general will continue as an enforcement option under the new law, the SED will now be able to act directly against those who practice a profession without being licensed.

Frank Munoz, executive director of the SED’s Office of Professional Responsibility, explained the provisions and intricacies of the new law, which empowers the department to issue cease and desist orders to alleged violators, impose civil penalties of up to $5,000 per violation, order restitution for victims of illegal practice of a profession, and conduct hearings and appeals, subject to judicial review, in cases where the alleged violator requests a hearing before a hearing officer or appeals to the Board of Regents to contest the enforcement.

The sanctions were designed to protect the public against those who unlawfully practice one of the 44 health, business and design professions under the SED’s jurisdiction, including the profession of public accountancy. But the law adds additional responsibilities for the Office of Professions without providing any additional resources for the office to execute them.

Louis Catone, director of the SED’s Office of Professional Discipline (OPD), told the forum that the additional duties will require more staffing to implement the new law. For example, the SED will need hearing officers to conduct formal hearings requested by alleged violators who contest cease and desist orders. The OPD does not currently have fully empowered hearing officers, but instead has administrative officers who assist professional discipline panels, but who do not have final decision-making powers.

It became readily apparent during the forum that the SED lacks adequate funding to fully implement the new law and that enforcement efforts will occur within strict parameters; complete enforcement cannot be expected without additional money. It also became clear that the fiscal year 2003 state budget, which transferred $5 million from the dedicated Office of the Professions Account to the General Fund, exacerbated the funding problem for the OPD. According to section 97-nnn of the State Finance Law, moneys in the Office of the Professions Account, including fees for professional licensing and registration, “following appropriation by the legislature, shall be available to the State Education Department for services and expenses of the Office of the Professions.”

The New York State Society of CPAs strongly supported the enactment of the LaValle/Canestrari unlawful practice bill. The Society continues to call upon the governor and the legislature to provide sufficient funding to the SED for enforcement of this function to prevent unlawful practice of all professions regulated by the department, including the profession of public accountancy.

“We recommend that appropriate funding for this responsibility be included in your 2004 Executive Budget Request to the state legislature,” Society President Jeff Hoops wrote last year when asking Pataki to approve the bill.

Despite the lack of funding, practitioners should not be reluctant to refer complaints of unlawful practice to the SED under the new unlawful practice law. The SED received more than 7,000 complaints of unlawful practice and professional misconduct in 2002. Projections indicate that that number could increase to more than 9,000 complaints by 2007, not including additional complaints expected as a result of the new law.

Even limited enforcement of the new law, with the imposition of strong sanctions, could prove to be an effective deterrent to would-be violators. But until adequate funding is assured, it is anticipated that only the most egregious cases of unlawful practice will actually be prosecuted by the SED.

To view the text of the illegal practice law, go to www.nysscpa.org. and click on the link to legislative bill number S.4960 under “Government Center.”