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Joint | March 16, 2015 | Committee Room | Evaluation Oversight Committee

Full MP3 Audio File

The meeting of the joint legislative program evaluation oversight committee comes to order at 2:05 PM. Almost on time. I'd like to take, I'd like to begin by introducing our sergeant of arms. First from the House, Reggie Sills, over here to my right, Marvin Lee behind me, and Terry McCraw is over there. Thank you, Terry. From the Senate, Canton Lewis. ?? There you are. How are you Canton? Steve McCague, and Dave Hoth. Thank you, gentlemen. I don't think we have pages at this point. Am I correct? One reminder, please I know you've already done it but please check to make sure your noise making devices are in the non noise making mode. That includes you too, George. First item on the agenda. I just, my fountain pen just came loose and I probably have ink all over my shirt. Yuck. Oh, well. Oh, well. Approval amendment of the February 23 amendment, minutes. Any corrections? Amendments, changes? Being none, I'll entertain a motion to approve. Senator Bingham to approve. I don't think that needs a second, or does it? It does not. All those in favor say aye. Those opposed no. The ayes have it. The minutes are approved, and before we begin I'm gonna turn to my cochair Senator Hartsell for any opening remarks. None, terrific. First thing on the agenda is to amend our 2013 to 15 PED work plan to authorize and evaluation of county departments of social services administration of the North Carolina Medicaid program. This is an amendment at a member's request. Do you all have copies of the motion? No. We need to pass out the motion. Here we go. We can make the motion. I'll take a motion from the members of the committee. Senator, oh Senator, I didn't mean to demote you. Representative Davis is recognized. [SPEAKER CHANGES] Thank you mister chairman. At this time, mister chairman, with your permission, I'd like to make a motion to amend the 2013-15 work plan to direct the program evaluation division to evaluate the effectiveness and efficiency of medicaid eligibility determination in North Carolina. This evaluation will study the accuracy, consistency, and timeliness of Medicaid eligibility determinations made by county departments of social services, including an examination of their processes, management, and performance. The program evaluation division will make a preliminary report to the joint legislative program evaluation committee by June 1, 2015 and a final report to this committee, the joint legislative oversight committee on health and human services and the fiscal research division by February 1, 2016. Thank you mister chairman. [SPEAKER CHANGES] Thank you. I'm gonna ask Mr. Turcotte to explain the motion, please. [SPEAKER CHANGES] Thank you mister chairman, members. I'm John Turcotte, director of the Program Evaluation Division. This motion came about at the request of chairman Horn. The, there is legislation Senate bill 14, and in the process of considering Senate bill 14 there was an amendment adopted to the effect to require the state auditor's office to conduct this audit, and Representative Horn wanted to know if PED could conduct the same kind of review, and we can do the review. It is a study of how counties administer Medicaid eligibility, and as the motion explained, it has us looking at the, at a sample, a representative sample of the counties based upon their size and urban, rural

and so forth, and within each of the counties that selected, the idea is to do a random sample so that we can get a statistically reliable estimate of the numbers that we come up with, be it performance, time to conduct an initial eligibility determination, time to conduct re-eligibility determination. And what we will do, as the motion calls for, we'll do a preliminary review and give this committee, in June, a briefing on what we plan on doing in detail in the review. Out of this, the Legislature should be able to know if there are efficiency problems out there, and if there are, what is the scale of the problem. Or you could put it differently, if they're not, if they are very efficient, how efficient are they, and if there are any problems that we come up with relative to variation in procedures or processes in the counties. They'll be called--we'll call attention to that, and as we usually do, we'll make recommendations for administrative consideration and for legislative consideration. Mr. Chairman, that's the explanation. SPEAKER CHANGES Any questions, comments? Senator Tarte? SPEAKER CHANGES Yes, Mr. Chair. One thing--in terms of scope, there's been things written, I believe, that state that due to volume we're not necessarily checking eligibility, and that people are just being assigned and enrolled. And will this study enable us to determine if that's the case and to the degree? SPEAKER CHANGES Yes, Senator Tarte, it will. We will look at any feature, any characteristic, any variable that affects the workload on Medicaid eligibility. If there is a workaround, a work-through, a pass-by, however it's termed on the county level, we will find it. As you recall, last year, or it may have been longer than that, there was a tremendous surge that occurred, and some of the counties were unable to handle it. This is when the DHHS changed their systems. And this all came about at a bad time. And at the time, they had--some of the counties had to staff up and hire additional staff to carry on the eligibility determinations, but we actually lost--we're on the verge of losing our certification on the food stamp side because of some of this. And I really can't speak to the policy intent behind this, but the project would yield that, we would be able to tell you thatm with some precision. Now, if you would, just bear with me just a second, if we found it in our sample, this does not mean that every county in North Carolina did those things. But we can find out the circumstances and conditions where they did occur and why they occurred. SPEAKER CHANGES Further questions or comments? Seeing none, the motion before the--I'm sorry. SPEAKER CHANGES Mr. Chairman-- SPEAKER CHANGES Mr. Bingham, I apologize. SPEAKER CHANGES --may I ask a question. SPEAKER CHANGES Yes sir. SPEAKER CHANGES Mr. Turcotte, just from--this is the first I've heard of this, and so just from observation it seems like this would be a tremendous undertaking. And you are in--your feelings are that you'll have this done when? SPEAKER CHANGES My feelings don't matter. Pardon me for being flippant, Mr. Chairman, members. I've assigned already a team to do this. Carol Shaw, who has experience in that. In fact, Carol did a study of social service public health departments not too long ago. She's looked at the Medicaid structures across the country. She's an expert in Health and Human Service policy. And Dr. Pam Taylor, who is our methodologist, will also work on this, as will Dr. Brent Lucas. And who am I missing? Oh yes, Jim Horne, who's a CPA. So we have an all-star team on it. This--I wouldn't say it comes at a good time, because there's never a good time for us, but we had anticipated some high-priority project like this would come up during the session, and we've already planned for that. And it turns out our contingency plan is working. So we can handle it, Mr. Chairman and Senator Bingham. As I often tell you, unfortunately there's very few things that we can't do that relate to audits and reviews and evaluations. SPEAKER CHANGES Follow up? SPEAKER CHANGES Thank you, Mr. Chairman. The question following this would be, if in fact you do

…find some rather severe discrepancies. What would you expect would be your next plan to resolve this? I mean this could get into something, I mean, it just appears to me. But I know you've got an extremely competent staff. I mean I certainly understand that. [SPEAKER CHANGES] Well, if we encounter discrepancies or deficiencies, we call those findings. And we will describe the condition for you, where it exists, where we found it, under what circumstances. We also give you our criteria. If we say there's discrepancies, I think we owe you an explanation as to why it's a discrepancy, what standard, what law, what procedure we're applying. Also we will tell you what the significance of it is. That is, so what? So it happened. Is it happening often enough, and is that happening across the state or across the sample significantly so that you should really worry about it seriously. And then the final part is a recommendation. That is, given all of that, what would PED recommend? And when we get to the recommendation phase, we always consult the agencies, stakeholders, and this case, the county offices, and find out what the conditions were and the circumstances, and if they have ideas about what to do about it, we'll obtain those ideas, and they'll be reflected in the recommendation. We also check clearinghouses, best practices, projects like this that have been done in other states as well. [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] I just wanted to thank you, Mr. Turcotte. That is very helpful. You've got a lot in front of you, but we appreciate it. Thank you, Mr. Chairman. [SPEAKER CHANGES] Thank you Mr. Chair. I wanted to ask a question in terms of, how will this relate to Medicaid reform, if at all? I know a lot's going on in that area, too. [SPEAKER CHANGES] Excuse me, how would it related to Medicaid? [SPEAKER CHANGES] Medicaid reform. [SPEAKER CHANGES] I don't know. I'm sure that in looking at ways to change Medicaid, be it organizationally or if you go from the provider-based fee-for-service arrangement to something else, I don’t really don’t think it will affect that. But it certainly would give you an idea of, since we have a state policy and then we have local controlled administration of Medicaid, how would that play out in any reform, if there is such a thing, reform. I don’t know what that means. It depends on… [SPEAKER CHANGES] I might add as well, we need to know what might require reforming. [SPEAKER CHANGES] Yeah. It might enhance it or tell us what needs to be reformed in that respect. [SPEAKER CHANGES] I do know, Rep. Buttefield, other states have a unified system, where the employees are all state employees, and in our state, we use local social service employees to do it. So there could be some variation among the counties. All of that, I think, would be important. [SPEAKER CHANGES] One more question. Sen. Tarte. [SPEAKER CHANGES] Yeah, Mr. Chair, thank you. I just now have the motion in front and we’re looking at it, it says, the evaluation points are really going to be around effectiveness and efficiency, but given what we've been discussing, would it not be that maybe the most important point is the ethicacy? If you could speak to that. [SPEAKER CHANGES] Ethicacy in terms of the criteria upon which the eligibility is made or? [SPEAKER CHANGES] Follow up, just clarification. [SPEAKER CHANGES] No, are we doing it correctly and in the right way. [SPEAKER CHANGES] Yes, sir. We will do that. If there is a best practice. And as I said to Sen. Bingham, whatever the basis of comparison is, what the Bright Line standard is, we will look at the procedures that are in place, and the findings that we have and compare them to that. And at this point, I don't know what we're going to find. But yes, sir. We certainly would do that. [SPEAKER CHANGES] No further…Rep. Dollar. [SPEAKER CHANGES] Just a couple of quick things. One to partially answer Rep. Farmer-Butterfield's question: They were state employees at one time and then the decision was made a number of years ago to phase that out and let them be county employees. It sort of took that financial burden off the state. And I can't recall whether that was connected at all with the change of taking the local match requirement for Medicaid off or not. Or it may have been unrelated to that.

TPKMEF [0:00:00.0] …And then the other thing is it’s my understanding that they are supposed to have the backlog finish by the end of June I mean obviously we will see that clearly they are making progress on that and hopefully that will be case. [SPEAKER CHANGES] Thank you, to vote the motion and discussion all those in favor say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Those oppose no, the ayes have it, and the next item on the agenda. Members today we are considering the affects of a recent Supreme Court decision, North Carolina Board of Dental Examiners versus a Federal Trade Commission, we have a presentation by Council about this case and another by PED on a very timely and recent, on the timely and recent PED report on Occupational Licensing Board as you all may recall, we are gonna review that so that things will freshen your mind. We also hear from the Dental Board to State Bar and from other boards and citizens requesting to speak about the case, we have some 10 folks signed up to speak. Finally, we will also show a video of a presentation about this case, it was made this past week to the Senate Program Evaluation Committee by the distinguished former Dean of the UNC School of Law Judith Welch Wegner. So with that we are gonna begin now, I’m gonna give you one __[01:26], all of you that desire to speak on or not on the committee, there is an old country phrase that goes, “The bind can only grass but the??”, we are scheduled for three hours I don’t know about you and that sounds like a whole lot longer than mine can bear. So I’m gonna ask you in your presentations to do what you would normally do to a legislator. A snappy beginning, a strong closing, and keep them really close together. So with that we will first start with Karen Cochrane-Brown from the Research Division to present the legal summation of Supreme Court decision. Thank you Mr. Chairman. [SPEAKER CHANGES] Thank you Mr. Chair, with that beginning maybe I should just say are there any questions? Well, as the Chair indicated that I’m Karen Cochrane-Brown, I’m a Staff Attorney in the Research Division here, and I have been asked to give a brief summary overview of the U.S Supreme Court decision in the case of the North Carolina Dental Board against the FTC. I will apologize to begin with to some of the Senate members who heard a much better version of this presentation by Dean Wegner last week but I hope to point out and focus on some issues that maybe a particular interest to legislators so with that we can begin. So this overview is basically gonna have an introduction, I’m gonna focus on what this specific issue was before the court what they actually were deciding, to give you a more detailed explanation of the background of the case what the facts were, how it procedurally got to the Supreme Court. A very, very brief overview of Federal Anti-Trust Law, an explanation to the Courts holding and importantly I wanna point out some of the things that the court did not say in this opinion which I think are significant. And finally, I will be happy to answer any questions. So some of you maybe wondering why I’m giving this presentation and that’s really good question, I think the answer has to do with my role as Council to the Joint Legislative Administrative Procedure Oversight Committee which I have staffed since 1996 soon after it was created along with Pro Chair Hartselle who is also the Co-Chair of APL and has been on APL since its inception. And since 2009, APL has included within its charge the over side of Occupational Licensing Boards and every year APL receives annual reports from the licensing boards and frequently gets lots of questions and issues raised about the operation of licensing boards. In 2012, APL made a recommendation that was included in 2013 regulatory reformat and that recommendation ask PED to conduct a study of the structure operation of independent occupational licensing boards and that study was performed and the report was issue this past December and in few minutes you are gonna hear from Chuck Heffernan who will go over there and report with you again but the point was that APL has been looking at this issue of the oversize of occupational licensing boards for number of years and this is not new and this… [0:05:00.3] [End of file…]

This case has bearing on that fact because the bottom line much of the court's opinion had to do with the lack of oversight by the State of this board. So, with that, the important thing to sort of keep in mind is that the court wasn't just looking generally at the operation of the board. The court was looking at a very specific issue and the specific issue that they were asked to review was whether the North Carolina dental board, whether their actions in restraining the non-dentist teeth whiteners were protected from anti-trust regulation under the doctrine of state-action immunity. In other words, the question is, is the dental board exempt from from federal anti-trust laws when taking action against non-dentist teeth whiteners because it's a state agency? Just to go over the background of the case, and this was very important to the court. The court spent a lot of time talking about the specific facts in this case. Under GS 90-22, our dental board is created and is composed of 8 members. 6 of them are dentists, one is a dental hygienist, and one is a consumer. Interestingly, the statute requires that the dentists and the hygienist must be both licencees and actively practicing. So, a faculty member in one of our dental schools could not be a member of our dental board. A retiree from dentistry who had been licensed in our state could not be a member of the board. You have to be actively practicing. In addition, the members are elected by licencees in the state and the elections are conducted by the board with no involvement or oversight by the state. Another feature in our statute is that the consumer member is not allowed to vote on the issuance, renewal, or revocation of a licence for a dentist or a hygienist under our statute. Article 2 of chapter 9 basically creates a system in which the principle duty of the dental board is to create, administer, and enforce a licensing system for dentists. The factual background of this case is also very interesting. You should keep in mind that the holding does not implicate all of the actions of the dental board. Our dental board is authorized to do a number of things and this holding doesn't affect all of their activities. This was directed at a specific set of actions that they took in the early 2000's. So the record that was before the court revealed that in the 1990's, dentists in North Carolina began providing teeth whitening services. Around 2003, non-dentists entered the market and started offering these services at lower prices. The record shows also that dentists in the state began to complain about this to the board and most of those complaints centered around the fact that the non-dentists were providing the services at a lower price. The board then conducted an investigation that was headed by one of the dentist members. The court then noted that neither the hygienist nor the consumer member of the board participated in this investigation. In 2006, the board began sending out cease and desist letters and sent 47 of these letters to non-dentist teeth whiteners. The court also noted that in some of the letters they claimed that even the sale or use of teeth whitening products bought by non-dentists was a misdemeanor. The board also contacted the cosmetic arts board since some of the people providing these services were providing them in spas. They advised the cosmetic arts board that they should warn their licencees not to offer these services as this was the practice of dentistry. Finally, the record shows that the board sent letters to mall operators, advising them that they might want to rethink their leasing space to teeth whiteners. These were often being provided by kiosks in malls. The board attempted to stop the practice by doing that, as well. So the procedural history of the case is that in 2010, the Federal Trade Commission, which is the federal agency charged with enforcing the anti-trust laws filed a complaint against the dental for violation of anti-trust laws.

A hearing was held under the Federal Administrative Procedure Act, before an administrative law judge. That Administrative Law judge issues findings of facts and conclusions of law, and concluded that the board unreasonably restrained trade, in violation of antitrust laws, in connection with the teeth whiteners. The FTC approved the ALJ’s opinion, and ordered the board to stop sending cease-and-desist letters. Interestingly in the FTC order, they made it clear that they were in no way suggesting that the board had to stop its appropriated activities, that they were still able to in any way enforce the laws of North Carolina against dentists as the law in North Carolina provides as long as they were doing consistently with that. They also said they were not enjoining or suggesting the board should not be able to send letters to non-dentist teeth whiteners, advising them that it was the board’s opinion that they were in violation of law, and that the board intended if they did, to pursue injunctive relief against those teeth whiteners. So the FTC was clear that they were not attempting to stop the board from doing what they believe the law of North Carolina authorized the board to do. I’m just going to very briefly go over a little of federal antitrust law that’s involved in this case. I will not pretend that I know anything more than a sort of broad overview of this area of the law. But the two federal laws that were implicated in this case, Federal Trade Commission Act, and the Sherman Act. As you can see, they generally are laws that are intended to prohibit any practices or activities that undermine the free market in our country. These laws were enacted by Congress, pursuant to their authority under the Commerce clause in the US Constitution. And significantly, in 1943, the Supreme Court recognized that Congress’s authority in enacting these laws, did not extend to preventing actions by states as sovereign entities. So the case in which this was decided was Parker v. Brown, and in that case, the court respected the principle of federalism generally, and they stated that they recognized and would confer immunity on the anti-competitive conduct of states, when those states are acting in their sovereign capacity. So this is known as the State Action Immunity, and this was the immunity the dental board claimed before the court. So now to the Court’s holding. The first thing the Court found was that the dental board was not the state for this purpose, that it was not clear that the state had blanketed its sovereignty over the dental board for this purpose. And interestingly, it did not say they were not a state agency. In no part of the decision does the Court say that the dental board is not an agency. It just says, for this purpose, for the purpose of what they did with the teeth whiteners, they were not acting as the state in that context. Next, the Court noted that for some non-sovereign actors, it is possible for them to get state action immunity, if they meet a test that was enunciated in another case. I’m not going to go through that case, but basically the test that they Court had set out in the other case for non-sovereign actors, is basically a two prong test, and the first prong is that whatever the action is, the challenge restraint must be clearly articulated, and firmly expressed as state policy. It has to be very clear that the state authorized the actor to do this. The second prong of the test is that the policy must be actively supervised by the state. In applying the two pronged test, the Court acknowledged the board statutory authority potentially could be broadly read to a policy to prevent the authorized practice of law, thereby maybe satisfying the first pronged test. However there was no evidence and the board did not claim that the state had actively supervised the board. So the Court said while it was clear that North Carolina prohibits the unauthorized practice of dentistry, the dental practice act is silent on whether that broad prohibition covers teeth whitening. The Court also noted an interesting fact that might have helped the dental board in this case, and that is that--

The board could have adopted rules and our law under our law that presumably is what the board should have done. If they were interpreting teeth whitening as the practice of dentistry they could have adopted a rule and that would have brought them under some state supervision. Because under our rule making process in North Carolina any rule adopted by the dental board would have had to go the rules review commission which is an independent body that the members of which are appointed by the legislature. That review independent of the board might have helped show some supervision of this policy and some endorsement of this policy by the state which the court found to be absent. So the dental board argued in this case that entities designated as state agencies are not required to be actively supervised by the state in order to receive state action immunity. And clearly the court disagreed with this. The board essentially was relying on another case that involved municipalities. And in that case the court had held that municipalities were sub-state entities that were only subject to the first part of the test, that clear articulation prong of the test. And the court talked a lot about the fact that municipalities sort of have the democratic component that people actually have to re-elect the people that make municipal decisions and support that and if they don't agree their actions they can get rid of them. That's not the case with an independent board like the dental board. The court also and I included a couple of quotes from the court here. Significantly they said immunity does not derive from nomenclature alone. So they clearly rejected the boards argument that because the state had designated it as a state agency that was sufficient for them to get the immunity. They said the immunity doesn't rise from the nomenclature, when a state empowers a group of active market participants to decide who can participate in the market and on what terms the need for supervision is manifest. So the board also argued in denying state action immunity the court would discourage citizens on state agencies that regulate their occupation and the potential for money damages would discourage them from participating in state government. The court noted that this case did not involve money damages. So that really wasn't relevant here. And the holding does not address whether immunity form damages might be available in another case. So that really wasn't the point, at issue in this case. The court also acknowledged that the state can provide for the defence in indemnification of agency members in the event of litigation. In North Carolina in chapter ninety three B there is a provision that authorizes occupational licensing boards to purchase liability insurance for it's members. So that is in part covered by our law. So clearly the reason the dental board was not entitled to the state action immunity was because they lacked active supervision by the state. The court declined to go into any detail about what was specifically required to meet this test. But it did outline some elements of it. And one is that the supervisor must review the substance of the anti-competitive action. They basically want some method by which the state policy makers have actual knowledge of what this non?? is doing and that they endorse it. The supervisor must have the power to veto or modify the action. So in the event in the case of rule making had the board adopted a rule and the rules review commission found that they lacked statutory authority to adopt that rule the rules review commission essentially has that veto power a rule cannot go forward if it's not approved by the rules review commission. So I think that might have been the supervision the court might have envisioned. The court also said the mere potential for the state supervision is not enough. Clearly our law provided for the potential for supervision. They could have adopted a rule that could have gotten some oversight by the state. They could have sought injunctive relief which would also have resulted in some oversight by the courts of the state. That wasn't sufficient because the board obviously found a method to act without using those means. Finally, the court says that the supervisor may not be an active market participant.

The court made a big point of the fact that in this case, even though the, the eight, the board is a state agency it is composed entirely of aftermarket participants who have an economic interest in the decision that they made in this case, and that's what I think the court found troubling. So the, the bottom line, sort of holding of the court is that if the state wants to rely on aftermarket participants as regulators, it must provide active supervision if state action immunity under Parker is to be invoked. So there were three dissenters in the case. Justice Alito wrote the opinion for the three dissenters, Justice Alito, Scalia, and Thomas dissented. Their dissent seemed to be premised on thinking that the board was relying mostly on the, on the composition of the board to, to reach its decision. I'm not sure that really was the case. I'm not sure they were focusing so much that the board was composed entirely of market participants. I think they were more concerned that there was not active state supervision of what the board did. But the since basic premise is that under Parker, the anti trust laws do not apply to state agencies. The dental board is a state agency, therefore, end of story. The dissent said that the majority went way too far in this and they should've stop once they concluded that this was a state agency. They also suggested that the majority's approach would be difficult to apply because it's not clear who's a market participant and how many are too many to be on the board. [SPEAKER CHANGES] I need to interrupt you for a second. Representative Dollar? [SPEAKER CHANGES] Thank you mister chairman. I've got to run out to another unavoidable meeting. I apologize for that, but if I could just ask a quick question and maybe this will be a quick answer, maybe not, but just so I understand, because I had a moment to read the case the other week. Would it be fair to say, generally fair to say that based on the majority's opinion, either one of three things could potentially happen that would bring teeth whitening under the purview of the dental board assuming they wanted to pursue that in some way. One would be taking a look at the composition of the board itself. The other thing would be if they pursued the matter through the rules review commission and established rules and therefore checked off the supervision piece of it, or the third thing would be if the general assembly made a statutory change with regard to who has jurisdiction over teeth whitening. So any of those three would, would it be fair to say would likely satisfy the court on the matter? Because it seemed to me that it was a fairly narrow decision, just to get your comments on that. [SPEAKER CHANGES] Thank you Representative Dollar. [SPEAKER CHANGES] If I may, wouldn't there would be a fourth one you mentioned, if the court should intervene. Okay. Please respond. [SPEAKER CHANGES] Thank you. I hesitate to answer absolutely yes to the three or four suggestions that you make because I don't think the court wanted to say, just do this and that would satisfy it. I think any of those things would have helped. I think the thing that would have helped most would have been to come to the general assembly and include in the statute a prohibition against teeth whitening as, as the practice of dentistry. In that case it would have been clear that the board had legislative authority to do this. I think that would have been the strongest indication of state supervision in this case. Alternatively, I think probably what the court thought they should have done was to use the statutory release which is currently in the statute which is to seek injunctive release. Had they gone to the court and sought injunctions against the teeth whiteners, instead of sending the cease and desist letters, which they did not have specific authority in the statute to do, I think that would have, had been compelling to the court. But I can't say with any certainty what the court would have required in this case. But I agree with you. I think it's somewhat narrow in terms of they looked at these facts and decided these case, the case based on the facts of this case, and different facts might have yielded a different result. [SPEAKER CHANGES] Thank you. Please continue. [SPEAKER CHANGES] Thank you. So finally, I think it's important to think about what the court did not say in this case

And these are just some of the things that I'd noticed the court did not say and so that we don't sort of expand this opinion to maybe meaning more than it actually does. The court did not say, significantly, that the dental board was not a state agency for any purpose. I think they would agree that for the purpose of licensing and disciplining dentists, they clearly are a state agency and they clearly have statutory authority to do that. The court did not say that the state may not include aftermarket participants on occupational licensing boards or other state agencies. The court spent some time talking about the value of having the expertise of people with knowledge in the industry involved in the decision making process. The court did not say that the dental board would be subject to antitrust violation for performing its clear statutory duties of issuing licenses and disciplining licensees. The court did not say that the dental board is powerless to take any action against non dentists as I just, in response to Representative Dollar's question, I think that there were clear things that the board could have done that more likely and most likely would have fit within the expectation of the court, in this case. And finally the court did not say what specifically constitutes active state supervision. And with regard to this, it could be argued that North Carolina law which requires agencies to adopt rules when they are interpreting statute, and provides for independent review of those rules by an agency appointed by the legislature may be exactly the kind of supervision that the court envisioned in this case. In addition, statutory authority given to the board in dealing with non dentists requires that they seek injunctive relief. In this case, the dental board chose not to use any of the powers available to it which would have invoked some oversight by the state, and I think that was what the court was responding to mostly in this case. Mister chair, I think I've stayed within the time you hoped, you asked me to stay within and I would be very happy to try to answer any questions at this point. [SPEAKER CHANGES] Any questions from members of the committee? Seeing none, thank you very much Ms. Brown. Appreciate that a lot. I think we can all see the far reaching consequences of the action of the court decision in this case. With that said, let's bring up Chuck Hefren to review the PED's report on occupational licensing that we went over in December. Some of us were here, some of us were not. Mr. Hefren. [SPEAKER CHANGES] Good afternoon mister chairman and members. My name is Chuck Hefren. I'm the principal evaluator with the program evaluation division. Today I'm presenting you with the results of our evaluation of occupational licensing agencies in which we concluded that they should not be centralized, but stronger oversight is needed. My presentation will take about fifteen minutes, after which I would be happy to answer questions at the direction of the chair. You should have in your packets a copy of the report, the slides for today's presentation, and three handouts. As statutorially directed, the program evaluation division performed an evaluation of the structure, organization, and operation of the various occupational licensing agencies or OLAs as defined in chapter 93B of North Carolina's general statutes. Based on the statutory definition, the program evaluation division included 55 OLAs in the evaluation. As identified on the blue handout, each of these OLAs are fully independent state agencies which do not receive any state general revenue or operate within legislatively established budget constraints. In addition, the yellow handout lists the licensed occupations that are regulated by state level agencies as reported to the department of commerce. These 151 licensed occupations were not included in the evaluations because they are not regulated by an occupational licensing agency. The regulation of occupations is intended to protect the public by offering some assurance that the

Individual, is competent to provide certain services, and by providing a means to discipline individuals who fail to comply with the occupational standards. Occupational regulation can be achieved in several ways. The determination of the most appropriate form of regulation is generally based on the perceived threat to public health, safety, and welfare. As shown in the exhibit, licensing is the most restrictive form of regulation, because it requires permission from a state government agency to be gainfully employed in the occupation. Licensure is most often used when there is a high risk of harm to the public if the work is performed by someone lacking the requisite competencies. The regulation of licensed occupations is performed through the licensure and enforcement functions. The licensure function establishes minimum requirements for prospective licensees and continued licensure, and is usually based on some combination of formal education, experience, and an examination. The enforcement function helps insure compliance with applicable laws, rules, and professional standards. All OLAs are responsible for investigating alleged violations of both licensed and unlicensed activity. OLAs reported that in fiscal year 2013-14, disciplinary actions result in the revocation, suspension, or surrender of 717 licenses, and the issuance of 701 injunctions and cease-and-desist orders for violations of associated with unlicensed activity. As shown in the exhibit, and specifically identified on the green handout, 46 of the 55 OLAs are statutorily required to have more than half of their board members licensed in the occupation which they regulate. Concerns have been raised that the effectiveness of an OLA’s regulatory activities may be compromised when the boards are controlled by the professionals being regulated. OLA’s justified boards composed primary of licensed members as being necessary to make competent decisions regarding the qualifications of individual practitioners and the validity of alleged violations. Our evaluation identified six findings. The program evaluation division concluded that transferring the regulatory authorities of administrative responsibilities OLAs to a single state agency may not result in an improved performance and would likely entail high implementation costs to realize potential gains in efficiency. Finding two determined to provide adequation info the monitor and evaluate OLA performance. The program evaluation division identified three deficiencies in the current statutory requirements that result in state level oversight. First, the regulatory ?? are subject to statutory reporting requirements are not clearly defined and listed. Second, these reporting requirements do not provide sufficient information to monitor and evaluate performance. Third, there’s no requirement to conduct external reviews to make sure the reported information is accurate, and key regulatory activities are being performed as designed. As a result, potential issues that may be effecting public health safety and welfare may be left unattended. In finding three, we reported that there is inadequate oversight to insure the effectiveness of each OLA’s enforcement function. The enforcement function includes a complaint process, which provides consumers and other practitioners with the ability to identify potential violations of applicable laws and regulations. The program evaluation division identified three areas where--

Original statutory requirements can help ensure the effectiveness of each OLA's enforcement function. First, there is no established information requirements and instructions for complaints submission. Second, there is no requirement to notify a complainant of the final determination. Finally, there are no uniform information retention standards for the complaint process. The lack of uniform standards for each OLA's complaint process increases the risk of public harm because there are no assurances that violations can be readily reported or whether complaints are being investigated and enforced as designed. Finding four determined that establishment of an occupational licensing commission can strengthen state level oversight while maintaining the benefits associated with independent OLAs. An occupational licensing commission would not function as a centralized licensing authority, but could assist the general assembly and OLAs in improving the effectiveness and resolving disputes. As shown in the exhibit, an occupational licensing commission could help improve the performance of OLAs in the following four areas. First, an occupational licensing commission could help OLAs realize operating efficiencies by facilitating the sharing of services. Second, an occupational licensing commission can help improve oversight by collecting and maintaining the necessary information to determine whether each OLA is effectively protecting the public. Third, establishment of an occupational licensing commission can help to ensure the effectiveness of the enforcement function by assisting the public and OLAs in the determination of jurisdictional authority for submitted complaints. And fourth, an occupational licensing commission can serve to improve state level oversight by helping OLAs resolve scope of practice disputes. Finding five reported that 12 OLAs did not provide sufficient information to justify continued licensing authority. Occupational licensing protects the public from harm by requiring that all practitioners meet the same set of minimum standards. To meet our statutory requirement, our assessment evaluated whether the threat of public harm justifies the societal costs. We determined that licensing authorization should be continued for 45, excuse me, 43 of the 55 OLAs. Based on the evidence provided by the OLAs, our assessment also concluded that additional review should be conducted as a condition of continued licensing authorization for the other 12 OLAs. Finding six identified ten OLAs that should be consolidated with another licensing entity. Our evaluation assessed whether each OLA had the necessary resources to effectively regulate a licensed occupation. For OLAs with insufficient financial resources, consolidation with another licensing entity in the same industry provides the opportunity to limit the administrative burden on licensees and improve the effectiveness in protecting the public from harm. For example, many OLAs reported that they did not have an online complaint intake capability because they lacked the necessary resources to invest in the appropriate IT upgrades. Other OLAs reported that due to insufficient staffing, board members are currently utilized to investigate complaints. Consolidation may allow for the utilization of staff with specific expertise required to more effectively perform this process. Based on these findings, we have six recommendations. Recommendation one, to provide greater transparency and

And improve the overall effectiveness of the OLAs, the general assembly should establish an occupational licensing commission. The occupational licensing commission should not function as a centralized licensing authority, but should be responsible for assisting the general assembly and OLAs to more cost effectively protect the public. The commission should be task is the single repository of the financial and performance information necessary to evaluate OLA effectiveness. The commission should also be responsible for providing non binding mediation services to address scope of practice disputes and to provide the general assembly with an annual report which identifies issues that may warrant their consideration. We recommend that the occupational licensing commission be administatively housed in a department of commerce and staffed, with staffing and operations funded from OLA receipts. Recommendation two is for the general assembly to consider amending state law to more clearly define and list the licensing entities that are subject to statutory reporting requirements. Recommendation three is to amend state law to include OLA complaint processing requirements. Recommendation four is for the general assembly to consider amending state law to require that each OLA contract for periodic performance audits. The program evaluation division also recommends that the general assembly conduct a review of the 12 identified OLAs to determine if continued licensing authority is warranted. Finally, the program evaluation division recommends that the operations of ten occupational licensing agencies be consolidated with another licensing entity. To assist the general assembly subsequent to the release of the report, we accepted written responses to the findings and recommendations from each of the OLAs. Each of their responses combined in a single document is available on our website. At the January 21 meeting of the joint program evaluation oversight committee meeting, committee referred a report to the joint administrative procedure oversight committee and to the standing committees with jurisdiction for consideration. Mister chairman, I am now available to take questions at your direction. [SPEAKER CHANGES] Thank you very much, Mr. Heffernan. Questions from the committee? Senator Pate. [SPEAKER CHANGES] Thank you mister chair. Mr. Heffernan, if we establish a facility for providing some guidance to these different boards that you're talking about, the 12, could that not be viewed as another layer of administration instead of an assist to the boards that we want to help? [SPEAKER CHANGES] Go ahead. [SPEAKER CHANGES] We recommend establishment of an occupational licensing commission. The funding would be, we estimate the funding would be less than 1% of their receipts and would help them improve the efficiencies for many boards would result in increase, more reduction in costs than an annual charge. An occupational licensing commission can also facilitate scope of practice disputes without unnecessary legislative or judicial involvement and finally an occupational licensing commission can reduce the administrative burden on occupational licensing commissions because it would provide a single repository for them to provide the necessary performance and financial information for the general assembly and other stakeholders to evaluate whether they are effectively protecting the public's health, safety, and welfare. [SPEAKER CHANGES] Further questions? Representative Hurley. [SPEAKER CHANGES] Thank you mister chair. Can you tell us about the ten that might be consolidated?

Yes, the ten occupational licensing agencies that we identified for consolidation, they can be found, they're identified in Appendix B of our report, and the criteria we used is we basically looked at what we thought they had the financial wherewithal to effectively regulate the occupation. So we used two metrics to make that determination. The first is we looked at the annual revenues generated by the occupational licensing agencies, and the second criteria we used is we looked at whether they had sufficient resources as measured by the ratio of net assets to expenditures to determine whether they had sufficient resources to invest in necessary equipment upgrades to effectively provide the services needed to regulate the occupation. [SPEAKER CHANGES] Senator Bingham? [SPEAKER CHANGES] Thank you mister chairman. On the mediation of scope of practice, what was your, how did you intend on recruiting, or what was your ideas about being, who you would choose as a team to make those kind of decisions, because I know this will get into very, very technical and expertise, et cetera, especially in this mediation. What was your thoughts on that? [SPEAKER CHANGES] Well, what we recommend is the occupational licensing commission would be responsible for developing that process. How they go about developing that process would be left up to their expertise and consideration. A viable alternative, I think, would be to contract for a qualified mediator in these services to perform that service. [SPEAKER CHANGES] Representative Farmer-Butterfield. [SPEAKER CHANGES] Thank you mister chair. I noticed in here that you had something about the Texas system and how they're doing it. Can you explain that a little bit? [SPEAKER CHANGES] In developing our concept for an occupational licensing commission, we utilized two sources. The first was a, the Texas health professions council which has been in effect since 1993, and they are, essentially have the same authority as what we envision for an occupational licensing commission. Based on their annual reports, they advertise that they have more than, that their contribution to improvements and efficiency have more than made up for the cost, and they identify sharing of services for IT, developed, mutual development of some risk management practices, relating, say, worker's compensation and, and unemployment insurance, et cetera. And development and mutual, and sharing of training services. We also used a report that was conducted by the PEW foundation in 1998, and they recommend, this is an alternative, to ensure that these independent occupational licensing commissions have adequate oversight to ensure that they are effectively protecting the public. [SPEAKER CHANGES] Any further questions? Senator Tarte? [SPEAKER CHANGES] Yes, thank you mister chair. One question if you could maybe give us a little bit of insight to. How do we, either through the consolidation of the licensing boards, and or the commission provide the right level of subject matter expertise to, and avoid the self interest of the hierarchy of the groups? And as an example, maybe ophthalmologists, opticians, and then, or ophthalmologists and then opticians. If you roll it up, the higher group is always going to lean towards supervising or minimizing scope of service for the lower skilled set. [SPEAKER CHANGES] Well, I hope I'm, I, first of all, the occupational licensing commission, we have some guidance in its composition to try to ensure that its primary, it's controlled by public members, but it has some level of participation by members of licensed occupations to ensure the necessary expertise is available for them to make decisions. Again, the decision on elimination of licensing authority for a given occupation should be occupation specific

specific. And it should be focused on whether the threat to public health safety and welfare justifies the increased cost to society. Those increased costs are associated with studies have shown the cost to services increases by about fifteen percent when you have licensed occupations. It limits a persons ability to work in a given occupation. It restricts mobility and in some instances limits the level of innovation in a given occupation. So again using that criteria we envision that the occupational licensing agency would basically provide the staffing services to the designated subcommittee so they can make an informed decision. [SPEAKER CHANGES] See no further questions. Mr. Hilpern thank you very much for your presentation. We are now going to recognize Bobby White chief operating officer of the North Carolina board of dental examiners to explain the effect of that court decision and potential actions. [SPEAKER CHANGES] Thank you Mr. Chairman, members of the committee. I guess I'm here to answer the question that's on everyone's mind. What in the world were you guys thinkin? And so I'll attempt to do that and in order to do that I think that we first need to give a little overview of what the FTC order itself is. I'm going to talk about three things today. The order that the supreme court affirmed that is the order that came out of the trial that we are ordered now it's enforced against us. The dental boards response to that and what we think we need to do going forward. First of all it's important to note the things we can still do. The order from the FTC does not prohibit the board from investigating teeth whitening. It does not prevent us form filing a court order to seek injunction against teeth whitening kiosk operations where we find them. It does not prevent us from turning evidence over to law enforcement if we think a criminal action is involved or cooperating with law enforcement. It does not prevent us from pursing administrative remedies. It does not prevent us from giving notice of intent of doing any of these things. And it does not prevent us from sending letters to operators of whitening businesses to say our opinion they are violating the dental practice act. What we cannot do is prohibit, impede, restrict or discourage the provision of teeth whitening services or ordering a teeth whitening provider to cease. And we cannot communicate that to a third party in any way either. So, after all this is said and done after an eight year battle within the FTC realm. The difference comes down to the fact that we can send a letter saying in our opinion we think your violating state law and we're going to sue you. But we cannot send the letter that says in our opinion we think your violating state law and we think you should cease. In essence that becomes the difference. One of the things that's interesting about going to the FTC is that the facts that you go in with and the facts that you come out with are two very different things. Early on in the proceedings the FTC ruled the board was not a state agency therefore not immunized by the sate action doctrine. And thus, here's one of the things that's surprising this is from the very holding of the FTC itself. Thus whether non-dentist teeth whitening constitutes the removal of stains, accretions, and deposits from human teeth and thereby constitutes the illegal practice of dentistry is not and will not be addressed. So at the basic level the FTC never rules whether or not teeth whitening as it's practiced in malls and kiosks violates North Carolina state law. It also rules that the North Carolina state board is prohibited from using public protection as a means of defending itself in this arena. It says the specifically respondent boards enforcement of the dental practice act was necessitated by serious and well know dangers of unsupervised teeth whitening. However it's well established that a restraint on competition cannot be justified on the basis of social welfare concerns. So early on in the hearings with the board three things the board had, we thought were just kind of rock bottom principles for us. One that the board is a state agency and that we have a clearly authorized statute that creates us. Secondly that we have a clearly articulated statute that the board has been asked to enforce and that statute says that removal

Stains, deposits, accretions for human teeth is the practice of dentistry. We were not allowed to argue that, we didn’t even reach that point. And thirdly, the board went into all of this because of public protection. While it is true that a lot of our complaints came from dentists and dental hygienists, a number of them came from the public, and a number of them came from the public who were harmed by these practices. But we were never allowed to even consider or produce evidence with regard to public protection. So the board that’s under this order, from the FTC, that we must report all activities with regard to any actions we take with tooth whitening between now and December 11, 2031. So we have begun that process. Now it’s worthy to note, people have said a lot about these cease and desist letters that we send. Of course that’s a vehicle that a lot of boards have used down through the ages. We did send these cease and desist letters, but early on in the process, when it became apparent to our staff, and to our legal counsel, that these letters were a problem for the FTC. We changed the letters completely, and we said, well we will change the letter to make it absolutely certain that this is not an order, it’s not something that the board is practicing, or planning on enforcing that you have other rights and obligations. We went ahead and redesigned the letter, showed the FTC, “look if the letter’s a problem, then we’re going to stop, we’re going to send the letter that comports with what you think we should do.” The FTC said, “well that wonderful, but that won’t work”. We said, “What do you mean? You said there’s a problem, so we fixed the problem.” They said, “You fixed the problem, but you have to consent. You have to consent to the jurisdiction definition of the Federal Trade Commission. That’s the thing we really want you to do. So you go back and take this case with a lot of waste where the FTC never even reaches the idea of teeth whitening is being a practice of dentistry, as defined by statuted NC, and a potential harm or real harm to the public. And the fact that we’re not able to present any evidence on that, and the fact that we changed our policies and our letters to comply with the FTC, but they said that’s not good enough, you’ve got to consent to the jurisdiction of the federal government over you in this matter. We did not think we had the ability or authority to do that kind of consent on behalf of the state of NC people. Our board members took an oath, they took it very seriously to uphold the laws of North Carolina. We considered ourselves a state agency, and for purposes that Ms. Cochrane-Brown said we still remained a state agency and the FTC concedes that we are. But we did not think that we could, in fact, abandon our duty to protect the public in the face of a clearly articulated statute and say that this board and perhaps all other boards were under the jurisdiction of the Federal Trade Commission. So that is when the fireworks started. Once we said that we could not consent to the FTC’s jurisdiction, that’s the whole administrative lawsuit and everything else began to come our way. There is in your packet, a press release that the board approved and sent out after we found the outcome in the case. Won’t bore you with reading that, but I’ll call it to your attention, and we believe this as a matter of fact, as a legal matter, the board entered this case believing that federal antitrust laws were not intended to second-guess how states structure their boards that are occupational licensing boards, and as a factual matter, the board has always considered this to be a matter of public health, but public health concerns are not allowed to be expressed by the federal trade commission, and so they were rejected, and so was the board’s evidence of public harm, real public harm and potential public harm. We’re not alone in our belief that this is case, if you go to the briefs that were filed in this case, the Attorneys General of 23 states, the National Governor’s Association, the National Conference of State Legislators, the Council of State Government, plus 16 other groups cited and believe the board had a very valid case. So we weren’t out there tilting at windmills on our own. We had lots of company with us. But this is a novel theory that the FTC had been trying to get into the courts for some time. The winds blew perfectly, it was a perfect storm with what was going on in North Carolina, and so we decided that it would, rather than consent to the FTC’s jurisdiction, we simply felt that they would have to prove in a Court of Law, and of course now, on this side of the Supreme Court, holding we know that to be the case. But as we go forward, Ms. Cochrane-Brown--

We’ve already stated a number of things the board plans to do. One is, of course, that we will more frequently consider the rule-making process when the board interprets the statute. The board relied on its expertise in light of the statute. The statute says if you remove stains, secretions, deposits from human teeth, you are practicing dentistry in NC. That seems almost intuitive. It seems like common sense, but we’re not going to make that assumption anymore. We will simply goes to the rules review commission when the board is interpreting statutes to make sure that we have, in fact, presented our interpretation to a third party, the state supervisory board, in one way so that we can make sure we’re doing the right thing. The other thing that we’re going to do is we will no longer send a cease and desist letter, you can count on that. That will not be happening. Instead, the board will apply for injunctive relief with courts and of course, this may lead to more litigation, but in fact, the courts do provide, we think, the supervision that’s anticipated by the federal trade commission in its holding. One of the things that bothers our board and Dr. Stanley Allen, if I may introduce him, he’s the president of our board. Dr. Allen, if you’d raise your hand, please. Dr. Allen is president of the board. He practices dentistry in Greensboro, NC. And one of the things that is problematic to our board is the fact that this has been cast by the FTC as an economic interest case. Our board members all came to the board because they were interested in public service. And if those of you who are elected members, if you’ve ever thought about a situation or know one of your colleagues, that you come here, you put your life out on the line to help people, to help the people of NC...and then your motives are twisted and next thing you know, in the papers or in the media somewhere they’re accusing you of some motivation that was not your own. That’s certainly [SPEAKER CHANGES] That doesn’t happen, does it? [SPEAKER CHANGES] I’m thinking that it does, Mr. Chairman. [SPEAKER CHANGES] Sorry to interrupt. [SPEAKER CHANGES] But no, I think that elected officials can really relate the board at this point. We never had any indication, we never had any economic interest in this case whatsoever. As a matter of fact, we were encouraging teeth whitening people who were asking, we’d say look, go down to the legislature and get an exemption. Get them to say tooth whitening is not the practice of dentistry; we would be happy for you to practice teeth whitening so long as we knew it was not in violation of state law, but if the board took that oath and also, like I said, at the very almost gut level, they did so for public protection. And yet their motives have been misconstrued so that they are now seen as being only economically interested in these kind of things. This puts board members at a psychological quandary because they come to our board trying to help and to enforce state law to help the citizens and public of NC, and get accused of other kinds of motives, which really lessens the interest that people have and may have in serving on these boards. And that’s one of the chief outcomes of this case that I think our board at a very visceral level with what this committee knows about. Does that answer any questions? [SPEAKER CHANGES] I thank you, Mr. White. Any questions from the members of the committee? Seeing none, Mr. White, I appreciate your time. Next up is Mark Merritt, Vice President of NC State Bar Association. Mr. Merritt. [SPEAKER CHANGES] Good afternoon, thank you Mr. Chairman. I am Mark Merritt. I am vice president of the NC State Bar and for my regular job, I’m an anti trust lawyer in Charlotte with Robinson, Bradshaw and Hinson. I know a lot about the dental board case because my firm, on behalf of the state bar and some other state bars, filed an amicus brief in support of the dental board’s position before the US Supreme Court, so our viewpoint is that the Supreme Court got it wrong. So what brings us here today is the fact that like the dental board, we have to deal with this new decision from the United States Supreme Court.

So what is the state bar? The state bar is charged by statute with regulating the legal profession, and in doing so, we focus on protecting the public. If you look at the regulatory function of the state bar, it falls into three major categories. We administer discipline through our grievance committee for those lawyers who violate the rules of professional conduct. We provide ethical guidance to attorneys through our ethics committee, and we’re statutorily charged with preventing the unauthorized practice of law. We have the right under statute to sue people who are involved in the unauthorized practice of law, to enjoin the unauthorized practice of law. We do this, like the dental board, through volunteers, lawyers who volunteer their time, who are elected by the peers, from districts around the state. So our structure in terms of regulation, would be by what the Supreme Court would consider to be market participance, so we share that characteristic. We do our work through committees. The ethics committee, which deals with rules, ethics, they promulgate the rules that govern the conduct for lawyers, and give advice for how to meet those rules. The grievance committee which evaluates claims misconduct against lawyers, and ultimately prosecutes claims for disbarment and suspension before the disciplinary hearing commission. And then finally, the unauthorized practice of law committee, which investigates claims of the unauthorized practice of law, and is statutorily allowed to sue people who are practicing law without a license. The state bar meets four times a year. We donate our time, we take our role very seriously, and a role, like those of the dental board, is to protect the public. How is the state bar different? We’re not really an OLA, because we don’t issue any licenses, and even though we are created by statute, we are functionally part of the judicial branch, and we’re accountable to the North Carolina Supreme Court. The Supreme Court reviews all of the rules and regulations of the state bar, and has the right to approve or disapprove of those regulation. So we have active state supervision by our Supreme Court, as part of our judicial function, which is really not typical of a lot of the other agencies who may speak to you today. We also share our jurisdiction with every judge in the state of North Carolina. Judges have the ability both in state and federal court to regulate the conduct of the attorneys who appear in their court. Our ability to regulate lawyers has always been a shared function with the judiciary. The state bar does not issue any license, nor do we determine the initial fitness of lawyers to practice law. The board of law examiners handles that function. However, once someone becomes an attorney, we do regulate their conduct. So we’ve been talking about state action immunity and I’m not going to spend a lot of time on this because it’s already been covered by the prior speakers, but it’s essentially what courts held prior to the dental board case, that if you’re a state actor, if you acting pursuant to statutory authority, to displace competition or monopoly, that was immune from the federal antitrust laws, it was based on principles of federalism, that if the state was acting, it wasn’t something that fell within Sherman act. The thing I want to emphasize here is that the issue of state action immunity is a defense to the antitrust laws. I’m an antitrust lawyer, there are a lot of defenses to the antitrust law. This is a single defense that’s available to a state agency, and I think the fact that a single defense is now unavailable doesn’t mean every time and agency is acting without state supervision, that somehow what it does becomes a violation of the antitrust laws. To the contrary, I think most state agencies act in close conformance with their statutory mandates. It’ll be a rare case where they violate the antitrust laws. There are a number of ways to manage antitrust risk, apart from the state action immunity, some of which I’ll speak about in just a minute. So what the dental board case requires, we’ve already touched on, is that statutory authorization to displace competition with regulation or monopoly. And then we have for State agencies controlled by market participance, that there be this meaningful level of active state supervision, where the deficient decisions are subject to supervision by some state supervisor that’s not an active market participant, and they can veto that decision. What’s troubling about the dental board case is that the Supreme Court didn’t pay any deference to--

The state agency's definition of its authority. The supreme court concludes essentially that teeth whitening isn't the practice of dentistry, even though the statute in North Carolina said that the removal of stains, accretions, or deposits from human teeth is the practice of dentistry. I think what this tells you as legislators is that when you define an area of professional regulation, you have to really define it with specificity, because certainly in this case, the supreme court read the dental board's authority in a way that was incredibly narrow and that I personally can't square with the statute. I don't know how teeth whitening does not fall within the removal of stains, accretions, or deposits from the human teeth. And if you go back and read the opinion, you won't see that language quoted by the majority in their case. They just sort of gloss over that fact. The courts and the FTC were troubled by the fact that the dental board sent out cease and desist letters without the statutory authorization to do so, and so you have the situation where it's fine to go sue somebody, but you can't tell them that you're gonna sue them and you really mean it. So that's one of the distinctions, and I would urge legislators, if you want state agencies to have the authority to send cease and desist letters, that you just give that authority explicitly. For example, the state bar, we have the authority to do that by virtue of our regulations that have been approved by the supreme court. The supreme court is a sovereign actor under the state action immunity doctrine, so that's an authority we have, but we'd like to have it put in our statute. The FTC and the courts were also troubled by evidence that the dental board was motivated by economic self interest and not by protecting the public health, and finally, the FTC and the courts were troubled by what they viewed as a lack of investigation into consumer harm and the lack of reliance on rule making before the dental board took enforcement action by sending the cease and desist letters. So what can you do as legislators? The first critical step is to clearly define those areas in which a state agency or licensing board has the authority to displace competition with regulation. The level of specificity the supreme court seems to require is quite high. For governing statutes for a state agency, we need to spell out the enforcement authorities with greater particularity and if the general assembly concludes that we want our state agencies to have the ability to send out cease and desist letters as well as to file lawsuits, I think you need to do that with specificity. How about the state bar? Where do we look at our statutory authorities and have areas where we may see particular need in order to avail ourselves of state action immunity and the, the really pretty narrow areas where it may come into play? As we know, the definition of the practice of law, we believe it's now about 80 years old. That was before there was an internet, and one of the areas where the state bar would like to have legislative clarity is to deal with what we call internet service providers of legal documentation. The rocket lawyers, the legal zooms of the world. The state bar has never contended that providing forms on the internet or even providing scrivener services constitutes the practice of law. When we look at the statutes that authorize us and that define the practice of law, we believe that when you answer questions in a certain way online, and that as a result of that, serious legal decisions are made for the person answering the questions that constitutes giving legal advice, and it's the practice of law. And we believe that we should have the ability to regulate, but we would ask that our authority in that regard be more clearly spelled out. With respect to active state supervision and the state bar, I struggle with what active state supervision means, because the dental board articulated what it means in different ways. I note on this slide three different places in the supreme court's opinion where it talks about active state supervision, and they're not entirely consistent. There are times, it seems, that the active state supervision needs to be sort of flexible and context specific, and then there are other times where it seems that the supreme court envisions something a little bit more granular, and this is just an issue we're gonna have to struggle with as we have cases interpreting the dental board case. But it

XWBXYM [0:00:00.0] I appreciate your patience and your participation, I’m gonna call Mr. Steve Stroud from the Locksmith Licensing Board first person to present. [SPEAKER CHANGES] Thank you Sir, thank you Mr. Chairman, I had 10 minutes and I got files… [SPEAKER CHANGES] Sorry. [SPEAKER CHANGES] Real quick, I’m Steve Stroud, I’m the current Chairman of the Locksmith Licensing Board and I’m also Owner and President of Tarheel Safe & Lock Company in China Grove, North Carolina. I have been a locksmith for about 30 years now. Quickly, our board is consisted of nine members, three appointed by the Senate Pro Tempore, three appointed by the Speaker, and three by the Governor. Six of those nine are licensed locksmiths, we feel very strongly as the loggers do that we are best equipped to monitor our profession. One thing I want to mention is when I say I’m a locksmith most of you are gonna think about yourself or a family member that had a key locked in a car that is the old time locksmith who came out with a modified code hanger over your car and all that kind of stuff, it’s going way beyond that I don’t even touch a car, I do corporate work mostly, grocery store chains and another things, mostly commercial work, but it goes down to, “Do you want someone come into your house to make a re-key your house, the security of our family does not licensed or your business or whatever the case maybe?” Now, we are in the access control it’s gotten the whole lot more professional that it used to be that you go to bicycle shop coming out working on the chain and door bell. We feel again that we are the professionals that need to be oversee and the others like us, we do supervision, we do have Attorney General staff members meets with us and in every meeting we have a face-to-face or we do some phone call meetings. He’s always on the phone with his loggers speak and keeping us in line. So I think we have proper supervision, on PD study I think it hit us on the down cycle, we have a three year license, every three years we renew so that means to bulk of the licensed locksmiths are renew in every three years, they call us on the second, into the second year, we didn’t have as much many as we like, we didn’t have allow that really gave us the authority to do what we want to do to regulate these issues. We thank to your friend Stam Bingham with some proposals he brought through the last year, they took effect this passed October. So now, we got some laws that just took effect that we feel that we can better regulate our group as far as scammers that’s the problem throughout North Carolina but it’s also a problem throughout the United States. If you go out on your phone sometime when you didn’t got anything to do I know it’s not during the day but tonight before you go to bed Google a locksmith when you are at home or wherever you are at, you will come up with a lot of $15 service calls and guarantee you if you call them you will spend a lot more than $15 by the time they get done, that’s one of the things that we are having a big issue with right now, these companies coming in and advertising $15 service call and by the time they get done its $400. And one of our weaknesses about the enforcement most of our…We can enforce own licensed people, we cannot enforce unlicensed, we don’t have the statuary authority, we have to refer that to local law enforcement, one of our big push is right now is educating local law enforcement that they are actually is a law besides Chapter 20 and Chapter 14 that they can enforce to stop somebody. [SPEAKER CHANGES] One minute. [SPEAKER CHANGES] I have a lot other things, one thing we have done we are just in the process this week of hiring some private investigators to work in regions to help us please some of these sayings that are going on and I think that’s… [0:05:00.3] [End of file…]

All right Mr. Straum, thank you, but I would encourage you if you've got if you want to submit any written testimony some suggestions, write a letter we'll make it available all members of the committee. So, we take this very seriously we appreciate you being up here. We'll take care of that. All right, next person is Anita, excuse me, Alita Hill from the interpreters and translators transliteraters licensing board. Hello Alita. [SPEAKER CHANGES] Hello. Good afternoon Chairman Heartso, Chairman Horn, members of the committee. Thank you for the opportunity to address you today. My name is Alita Hill and I am an American sign language and toe fitting practitioner. Fully licensed in both North Carolina and Arizona. I currently reside in the represented district 104 and senate district 39. My thirty years of experience as a nationally certified professional sign language interpreter has included interpreting for the president and the first lady of the United States. Presidents of student government organizations, iconic stars on Broadway and Shakespeare productions, deaf students in high school plays, international conferences, parent teacher conferences, medical continuing education classes for deaf physicians, pre-school classes for energetic four year olds, court ordered psychological competency evaluations and patient doctor consultations evaluating stage four cancer treatment options. I have represented colleagues specializing in legal court interpreting settings in another state doing their licensing rule making process. I stand before you today in support of the program the evaluation divisions recommendation. To establish an occupation licensing commission. With oversight authority over occupational licensing entities like the North Carolina interpreters transliteraters and licensing board one of the twelve. Licensing for sign language interpreters and transliteraters is a crucial mechanism for ensuring public safety. Over thirty states have or are in process of establishing interpreter licensing boards. In 2003 the North Carolina legislature appropriately established one here probably making North Carolina one of the first states in the nation to do so. It is important that interpreting services are provided by persons who have attained a minimum standard of competency so that deaf consumers and the broader public are protected from those who are unskilled and unqualified. The Americans with disabilities act the ADA a very significant piece of federal legislation denotes the right of deaf persons to have communication access provided via the services of a qualified interpreter yet the ADA lacks a refined definition of the term qualified. With license ensured the licensing board helps to more explicitly define qualified interpreter and thus adding protection for this vulnerable population and businesses and entities providing the services. When interpreting services are provided by unskilled practitioners or relatives of deaf patients for example in rehabilitation centers or hospitals the consequences frequently are negative and harmful resulting in severe compromise of health outcomes for the patient. One example I'll site, in Florida a deaf patients son was asked to facilitate communication during discharge. This after the patient was repeatedly denied his request of a qualified interpreter during his entire hospital stay. After litigation this patient received monetary compensation for harmful experiences citing terror, frustration, emotional anguish while receiving medical treatment without understanding of much of what was going on. In the state of Florida at the time there was no state interpreter licensing board to establish minimum competencies however the Florida licenser is currently looking at a current bill. The North Carolina interpreter transliterater licensing board certainly needs oversight so that it performs it's duty to ensure that safe interpreting and transliterater services are provided to the state. To full fill this obligation a board must operate and perform effectively however this twelve year old board is ineffective in that it seemingly has no bi laws and lacks basic understanding of parliamentary procedure. It has made it easier for unskilled under qualified [SPEAKER CHANGES] One minute. [SPEAKER CHANGES] persons to provide interpreter services. They have ignored legal counsels advice to solicit public comment from stakeholders in the deaf community as well as interpreters and there are others. I just want to wrap up because I only have a minute. There is

Currently, Iowa board of interpreters. There is an example where a high school student petitioned the board. I don’t know the merits of the case, per se, but the petition was heard, and a decision was rendered and for a board to effectively promote itself in a way that even a high school student can access it means that it is possible to have a functioning performing interpreting board. In closing, the world witnessed a multi-faceted multi-layered breakdown in safety and security involving a sign language interpreter at Nelson Mandala’s memorial service in South Africa. Presidents past and present, global business leaders, and top celebrities shared the stage and a in close proximity a sign language interpreter who had a schizophrenic break. [SPEAKER CHANGES] Your time has expired. Thank you very much. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] I do want to announce and remind presenters that we’re open to written presentations. Some folks have brought some copies of their presentation. Members of the audience, other members can pick those up if they would like. Moving on, Becky Garritt, from the board of recreational therapy licensure. Becky, you’re welcome to speak from back there if you’d rather. [SPEAKER CHANGES] Thank you. Thank you for allowing me to have a few comments today. I’ve presented a view on writings, so I won’t go over that again, but we’re one of the twelve boards that was identified for possibly more oversights, so I wanted to talk a little bit about that. The year that we were reviewed in 2013 was a very unique year for us, so we wanted to give an honest look at who we are, because that year was a little different for us. We’re not a typical service in healthcare and we’re not in private practice, so we’re covered service and often get blanket, standing orders from physicians, so therefore we did our complaint services a little different because all our complaints usually come through our HR departments, through hospitals, and agencies where we’re employed, so not the general public, so I understand from Mr. Heffernan that is something that needs to be standardized and we have done that and will be included on our website to take complaints from the public, so we hope we have addressed that. To the recommendation to return us to a certification board, we think would only allow for increased violations, certification board for many years, and what happened with that was the state personnel and all other agencies just merely changed the job title. They were call rehabilitation therapists, or recreators, and they hired high-school degree people, and we constantly got complaints and reports of patient abuse and misuse of that and we did nothing, and could do nothing, because it wasn’t that they were using the title. So to return back to that would be a real disservice to the public, and an increase of violations. Recreational therapy practices frequently with high risk types of activates and intervention that we use, aquatic therapy, horseback riding, sports, that allows for a lot of injuries. So if you have a person who was not trained adequately in those services, you could only see the possibility of risk being increased even higher. In answer to some of the questions had to today in terms of the composition of our board, we are appointed from the Governor, the Speaker of the House, the president Pro Temp. We’re an eight member board. Two are practicing licensed recreation therapist, one recreational therapy assistant, a public member, we have a consumer of recreation therapist member, and a physician, so we have covered our board in a well-rounded way, and not being just practitioner and market representative. The bureau of laborers says that rec therapy is growing by 10-12%. Here in North Carolina, we’re experiencing about 15% annually. For growth, we have nine educational programs, college programs in North Carolina. North Carolina is the leader in rec therapy nationwide, so we have most of the schools putting caps on their attendance, because we have a lot of out-of-state people coming to North Carolina. Just for the fact that, one, we have licensure, and two, we have so many good reputations for colleges and universities, so we certainly see it would be a backstep to return to certification. That’s all I have. Thank you. [SPEAKER CHANGES] Thank you. Thank you very much. Appreciate that a lot and Christian from the board of--

Trainer examiners. (SPEAKER CHANGES) Mr. Chairman and members of the committee my name is Ann Christian I serve as legal counsel to the North Carolina Board of athletic trainer examiners. The board wishes to recognize the program evaluation division's demonstrated commitment to the tremendous task of studying many hundreds of governing agencies. It's important today to remember that when the P.E.D. began it's task no clear statutory list existed defined or setting out the entities that would be the subject of study, once we appreciate the fact that the P.E.D. first identified a specific set of 55 independent occupational licensing boards or agencies for study it then needed to draw upon a comprehension of all that these O.L.A.'s do and why they exist. This involved learning their history in purpose, understanding the nature of each occupation, analyzing each budget, reviewing the membership, understanding the operation, recognizing the complexity of each board's role in North Carolina's commitment to ensure standards of competence for providing services and protection of the public from harm. Finally, the P.E.D. was called on to judge, to categorize, and to recommend the need to extinguish some boards and to consolidate other specific boards. The Board of Athletic Trainer Examiners was recommended to be consolidated with an unnamed other regulating entity. The N.C.B.A.T.E. received this recommendation with appreciation and concern. First of all, the board was grateful for the P.E.D.'s endorsement of the board's purpose, for it recognized the licensure of the occupation should continue, and therefore the board does not require to quote the P.E.D. report further legislative review in order to ensure there's a need for licensure. The P.E.D. gets it, many parents have thought twice about letting their children participate in sport, allowing them to be tossed high in the air chancing a neck-breaking landing resulting in spinal core injuries or they have been particularly worried about their sons playing football with good reason. The sport comes with risk, most dramatically demonstrated by problems with concussions. Each year students playing football die from concussions, including a recent death here in Wake County. However, each year we submit many do not die, or receive debilitating injuries that these young people would suffer for the balance of their lives because of the presence of trained personnel on the field where the ever-present danger of injury or death exists but the fact is taxpayers cannot afford to place a neurologist or medical doctor on the field but they can do the next best thing, they can place a Licensed Athletic Trainer in the school to teach students how to prevent injury, they can place a Licensed Athletic Trainer on-site to see the situation and know the players, to quickly evaluate that particular athlete who appears to be injured or even near death, that L.A.T. may provide immediate care for the injured athlete or access immediate care from the medical doctor via a pre-arranged designated relationship. It's achieved because L.A.T. and the medical doctor have entered into a relationship, a protocol for the doctor to take the L.A.T. call immediately, hear the professional's description of the symptoms and proceed to guide on the field, life-saving or quality of life-saving care and rehabilitation from injuries, pre-arranged immediate care. But next, with concern the N.C.B.A.T.E. received the P.E.D.'s recommendation that the board be consolidated with another regulating entity. While appreciating that the P.E.D. completed a tremendous amount of work in a short amount of time to develop the report it made, the recommendation that the board be consolidated is not a completed recommendation. Essentially the P.E.D. is proposing a change without providing a description of the alternative. Faced with this incomplete recommendation there exist no real way to asses if the change would be better. Without a concrete proposal of what the new system would be it's impossible to make a fair and accurate assessment of the pros and cons of consolidating the board. The board is hard at work, it's financially sound, it's fully funded by it's members with no plans to approach the general assembly for a fee increase, it's responding to complaints, some about competence, some about Title nines. With title nine in play. ::END AUDIO::

Responding to ethical complaints alleging prohibited sexual relationships. It knows that keeping a record of ethical violations from one employer to another is most important. Scientific studies revealing the detrimental impacts of sports injuries are supporting the demands for more care and support of athletes. We ask that it not be consolidated. Thank you. [SPEAKER CHANGES] Ma'am, your time has expired. Thank you very much. Appreciate your patience with us. Next we have from the board of plumbing, heating, and fire sprinkler contractors, John Nick Felton who will also speak on behalf of the state board of examiners of electrical contractors. Thank you Mr. Felton. [SPEAKER CHANGES] Thank you, mister chairman and members of the committee. We feel, these two, I've been, this is my 43 years representing occupational licensing boards. I've gotten a lot more experience and a lot less hair since I've started. We wanna say a few things quickly to you in the interest of time. First of all, these two boards feel like they're run like a business already, and it'll be a big mistake to add additional bureaucracy layers to carry out this task, and the money that would be necessary to pay for it has to come from some place. With the due respect to Mark, Mary, and the bar with regard to preclearing all the injunction cases, we've got 50 to 75 cases a year. Chuck Heffernan reported there are 700 of those cases all told. It's not feasible and efficient or timely to try to add another layer to preclear those things when the court can tend to it. So we would suggest that that is probably not needed. With respect to Mr. Heffernan's report, I'd like to comment briefly that all that report really involved in an effort to get it done on the timeline that was provided to him, Mr. Heffernan did four interviews and sent out a survey to 50 some boards, and that is simply not enough to make an earthshaking recommendation. But in the name of moving quickly here and helping this body do the right thing with some of these issues, we have put together a draft bill, and we have provided that bill to the two chairs, House, and Senate for your consideration. I wanna talk about that bill. First of all, we have taken on the task of figuring out who is a board and who isn't, because that seemed to be a problem. The bill would spell out that the injunction power is one of the things that defines it. Self funded by fee is another criteria and we think that we can solve the question of who is a, who is a board through this bill. It should not be that difficult. Secondly is the reports. Right now, we're having to do 16 or 18 different reports during the course of the year, all these boards. It's just, it's too many and the auditor already pointed out that some of these are not getting read anyway. So what we have proposed in this bill is to consolidate the key ones into one report, along with our audits, and have that report go principally to an APO committee of this body. This is the group that ought to be doing oversight anyway. We can do that without your more bureaucracy. The others can refer to office management budget, whoever, can refer to those things, and the bill will address those things in the process. We've also taken on flagging the issue of per diem for board members. It hasn't been changed in as long as I can recall. We'd invite you to provide authority to these boards to set it anywhere from $200 down to zero as their funds and their board members would allow. There's a section in this draft that would clarify on the ethics training that these board members not have to redo in front of our board with me leading a discussion the, some of the things that are already covered in the course that they are required to take for the ethics commission. We think that can be straightened out. Venue is another thing that we flagged. Many times we have a licensee that has a hearing before the board in Raleigh and in the current law, it forces him to take the appeal to the court back home. Some of them want to go to court back home, feeling that a local judge would be helpful, but others don't want to spend the extra money to hire another lawyer back there or to pay the one in Raleigh to go back there and they'd really rather be here, so we think venue should be sorted out so that the licensee has a choice where he wants to go and have his appeal per. Likewise, on our injunction cases, we would invite you to change and clarify that statute to allow all these boards to carry out those cases either in the county where the offense occurred or where the board has its office. We think if you can, that'll simplify things considerably. So we, in a nutshell, there are a number of things that we can do here and we're prepared to help with that with the experience that we've brought to bear, and we think that the other folks that follow me will tag some of the bases that

Need to be tagged about the limits on that Federal Trade Commission decision and put it in its proper perspective. Thank you for your time. [SPEAKER CHANGES] Thank you, sir very much. And that, you said you had a bill. ?? Yes you did. I just ?? Right. After we have a draft out, then we'll share that with members of committee. Next presenter is Maryam Behr from the real estate commission. [SPEAKER CHANGES] Hello everyone. I am Maryam Behr. I am the executive director of the North Carolina Real Estate Commission and an I very much appreciate the opportunity to be here and to speak with all of you today. I know it's been a long afternoon for you. The Supreme Court decision in the Dental Ward was based on a set of facts that do not reflect how most of your occupational licensing boards operate in the state. To explain I'd like to briefly discuss the role and structure of the real estate commission, which is representative of most of your occupational licensing boards. The real estate commission happened to have been created in 1957. And it currently licenses approximately 94,000 real estate brokers. Including residential and commercial brokers, property managers and vacation rental managers. The general assembly created the real estate commission to assure that our citizens are protected in what is typically the largest financial transaction of their lives. And that is the purchase or sale of their house and the purchase or sale of a business that they might own that involves real property. That transaction and all of those transactions that I've discussed play a huge role in the economy of our state. The economic impact of real estate transactions is enormous. Brokers handle money from residential sales transactions where people are buying or selling. They also play a vital role in commercial transactions. And they receive a number, millions of dollars actually, from tourists from around the world who are coming to North Carolina to enjoy our beautiful beaches, our mountains and our golf courses in the Piedmont. The commission takes very seriously its responsibility to ensure that consumers are protected so that North Carolina will continue to be a destination location. As you consider where to go from here, I'd like to take a moment to talk about where we already are. The commission and most of the state's occupational licensing boards already have direct and active supervision from the state in a number of ways. First, the governor and the legislature appoint each of the real estate commission's nine members. This is very typical for most occupational licensing boards. Unlike the dental board, no real estate commission member is elected. Three of our nine have to be licensed by law. Two of our nine have to be public members by law. And the other four are appointed the discretion of the appointer, whether that's you all through the legislative appointments or whether that's the governor. Real estate commission members meet in Raleigh every single month. Sometimes twice a month. And make all of the policy decisions for the board. They review our financials every time they come. They establish standards and they make the decisions on consumer complaints. These are not handled by staff. They are handled by your appointees. Additional oversight of the legislative and executive branch comes from the dozens of reports that have been alluded to. Depending on how you count, it ranges from 12 to 22 different reports that I as the director am responsible for filing, either quarterly or monthly or annually, depending on the nature of that report. Those reports currently go all over the place. So I'm filing with the auditors office, the secretary of state, OSBM, the department of revenue, the department commerce, the attorney general, and the APO. And that is not a comprehensive list. So it's a lot for your boards to keep up with. And these reports then land on those chairs of those offices and some folks look at 'em and some folks don't. So we think that those reports could become a lot more useful tool for all of you if they were consolidated to the extent that that makes sense. It doesn't for all of them, but a number of them could be consolidated into one fairly comprehensive report. Could come to the APO, could be posted anywhere, could be sent to all those other boards and agencies if you want us to send them there. And provide all of the information you need. Then if you establish standards for what to do with any ??? [SPEAKER CHANGES] One minute remaining. [SPEAKER CHANGES] That would give you the tools that you need to respond appropriately when you have an issue. I'd like to just tick off the other ways that you have oversight already existing. Primarily you have rule making oversight through the rules review commission so that any standard developed by a board.

is reviewed by an independent agency. We also have judicial review, whether we're talking about an application case, a disciplinary case, or a situation where somebody is asking for a ruling of some sort about what's appropriate conduct. All of that goes through the courts system. Likewise, the real estate commission does not send cease and desist letters, we act through the courts system and have oversight from the courts to determine whether unlicensed practice is going on or isn't. We don't decide those things, the courts do. So, I'll conclude by saying that there is a solid foundation already on the laws and books - [SPEAKER CHANGES] Time has expired. [SPEAKER CHANGES] And I thank you so much for your time. [SPEAKER CHANGES] Thank you very much, Miss Bear. From the board of pharmacy, Mr. Jay Campbell. [SPEAKER CHANGES] Chairman Horn, Chairman Hartsell, members of the committee, thank you for the opportunity to make a few comments. I have submitted my remarks in writing and I do thank Mrs. Gilbert for her able and quick assistance with that submission. The Board of Pharmacy wishes to focus on one particular question, and it is this: does the United States Supreme Court's decision in the Dental Board case compel this general assembly to add additional bureaucratic layers in order to provide active supervision of occupational licensing boards in this state? The answer is no. And you don't have to read tea leaves to arrive at that answer. The answer is clearly provided in the Federal Trade Commission's own order in the Dental Board case; the very order in which the FTC imposed a remedy for lack of active supervision at issue in the case. Put simply, that remedy is for the Dental Board to follow the procedures already in place in the Dental Practice Act; in the Administrative Procedures Act. The Dental Practice Act permits the Dental Board to directly regulate only those licensed to engage in the practice of dentistry. Where unlicensed practice is concerned, the Dental Practice Act states that the Dental Board can act to stop such practices by seeking an injunction from the superior court. The Federal Trade Commission found that the Dental Board had disregarded that procedure by issuing its own cease and desist orders to what the Dental Board believed were unlicensed practitioners rather than by following the statutorily-mandated procedure to seek an injunction. Although the Dental Board responded that its letters were not actually orders, it agreed that only the superior court could issue an order to halt unlicensed practice. The FTC found that the letters were worded in such a way as to appear to be orders of the Dental Board. But the FTC's order sets forth the procedure that the FTC required the Dental Board to follow. It prohibited the Dental Board from ordering non-dentist providers to cease their practices, and instead required the Dental Board to follow the existing statutory procedures to seek injunctions against unlicensed practice. Specifically, the FTC ruled that the board could follow their statutory procedures to investigate non-dentist providers for suspected violations of the act, file an action for an injunction against non-dentist providers for suspected violations and provide prior notice to those non-dentist providers on that board's belief that there were violations, and that board's good faith intention to see an injunction against the practices. In short, the FTC endorsed the existing statutory framework as providing adequate active supervision by neutral third-party state actor, superior court of the Dental Board's activities in enforcing the Dental Practice act against unlicensed practitioners. Therefore that case instructs that the general assembly already has appropriate procedures for oversight of occupational licensing agency activities if those procedures are followed. With respect to suggestions today about Attorney General rules review commission pre-clearance of unlicensed practice actions, would submit that in public health context where by board operates, if you have an unlicensed doctor, an unlicensed pharmacist, unlicensed nurse, practicing those professions inappropriately, there are real public health issues that are in play immediately and creating additional layers beyond what the FTC says is required in court supervision, could be unsafe. I do want to iterate what Miriam said, this body has already provided mechanisms for active supervision by neutral third-party state actors for any other agency action authorized by statute. The Supreme Court itself recognized that rule-making by occupational licensing boards in North Carolina is subject to active, substantive supervision by the Rules Review Commission - [SPEAKER CHANGES] One minute remaining. [SPEAKER CHANGES] Anytime a rule is -

BSSLTN [0:00:00.0] …And affected individual has immediate recourse to judicial review by neutral or third party state actors and anytime a licensee use disciplined that licensee has recourse to judicial review by neutral or third party state actors. Supreme Court has reminded us that Occupational Licensing Boards have to turn short corners substantively and procedurally when exercising their authority, this body has clearly and completely provided for active supervision to ensure that those corners are indeed sharply turn, thank you Mr. Chairman. [SPEAKER CHANGES] Thank you very much Mr. Campbell and Choy representing the licensing board for general contractors, good afternoon. [SPEAKER CHANGES] Good afternoon Chairman Hartselle, Chairman Horn and members of the committee, I wanna thank you very much for the opportunity to speak with you today, I’m an Attorney who represents licensing boards here in North Carolina, I’m here today on behalf of licensing board for general contractors, I also in my practice represent individuals and businesses in front of other licensing boards that I do not represent, and also there is been a lot of discussion about we are making today I would like to note that I’m a House Speaker appointee to the Rules Review Commission and though any opinion that I do express today with regards to comments made regarding we are making on my own and not that of the North Carolina Rules Review Commission. I’m not here today to rehash or repeat what is already been spoken off, the first half of our meeting we talked about the Dental Board case, the second half of the meeting seems to be a lot of discussion about the PED report regarding Occupational Licensing Boards. So I would like to combine my comments combine the two. I would like to emphasize that active state supervision which you have heard and mentioned over and over today already exists for every single licensing board in North Carolina. As I mentioned the licensing board for general contractors that board was created in 1925, it’s a nine member board, all of them are appointed by the Governor, there are approximately 33,000 licensees with this board and the threshold for licensing where it would require somebody to hold a license is where the cost of the undertaking is $30,000 or more. The General Assembly and certainly the board has absolutely no interest in licensing the handy man or the person that comes to perform minor repairs at a home or business but if someone is building a home, constructing a building for people children will go in and out off without that individual being licensed showing that they can pass an exam, showing they have financial responsibility and that is where the board can take action and that is through again, you have heard several times today is through the authority to seek a court injunction. The FTC itself thought this would be sufficient oversight and again it’s already in the statue. You have also heard with regards to oversight numerous comments about the rule making process in North Carolina, this process is set out by statue and requires a vast majority of state agencies and to my knowledge every licensing board to go through rule making if it wishes to implement a rule that interprets a board statue. At the very end of the rule making process the 10 member commission half appointed by the Speaker, half appointed by the Senate which is housed within a state agency, the Office of Administrative Hearings and that agency…Excuse me! That commission determines and the statue says, “It must determine whether a rule needs all of the following criteria.” And there are only four criteria whether it’s within the authority delegated to the agency clear and unambiguous, reasonably necessary, and was adopted in accordance with the rule making process. After that review the Rules Review Commission must either approve or object to that rule. So I started this absolutely is another example of active states supervision. So enclosing, as you consider how the Dental Board case impacts licensing boards, I would like for you just to consider whether the Occupational Licensing Commission that was referenced in the PED report… [SPEAKER CHANGES] One minute. [SPEAKER CHANGES] Thank you Sir, House and Department of Commerce staffed with up to eight full time employees… [0:05:00.3] [End of file...]

PYNXXD [0:00:00.0] …Did by North Carolina citizens, these citizens are licensees of the state that is how licensing boards are able to obtain any revenue whether or not that commission is the least restrictive and least burden someway to address any concerns that you may have or going to dental board case, thank you for your time. [SPEAKER CHANGES] Thank you very Miss. Choy. And our last schedule presenter is Mike Toddy. I’m up for that Toddy, Representative the Acupuncture Licensing Board, Mr. Toddy. [SPEAKER CHANGES] Mr. Chairman, thank you to the members of the committee, thank you as well and I appreciate that I do stand between all of you and the hot Toddy. My name is Mike Toddy; I have practice law in North Carolina for more than 17 years largely representing licensed individuals and companies before Occupational Licensing Board. I’m also a licensed entity myself and then I’m subject to the regulations of the state bar and so that you know that regulation doesn’t end when I go home, my wife actually works for the state bar. I’m here today on behalf of the North Carolina Acupuncture Licensing Board and they are more than 500 licensed acupuncturists, I wish to acknowledge and express appreciation for the time and commitment and the work that the committee and the staff have put into researching, writing, and establishing guidelines for accessing the operation of North Carolina’s occupational licensing boards. The Acupuncture Board and its licensees are contingent of the concerns that the committee and the program evaluation division have to ensure that North Carolina’s occupational licensing boards are working efficiently and effectively to protect the citizens of North Carolina. After reviewing the findings and recommendations from the December report, the Acupuncture Board is concerned regarding the future regulation of acupuncturist and the potential negative impact on the public. The board is on the list of occupational licensing boards being recommended for consolidation, it is the only board regulating independent health care providers on the consolidation list. On behalf of the Acupunctures Board I would like to take this opportunity to offer some additional insight into at least two areas where the board feels that the committee or staff may not have had sufficient information available regarding the acupuncture profession. First the Acupuncture Licensing Board regulates a medical profession; acupuncture is a healthcare system that has specific diagnostic parameters and treatments. Acupuncture’s diagnostic parameters and treatments are unique and offer safe and effective healthcare to the citizens of North Carolina. We feel strongly that effective regulation and in turn protection of North Carolina citizens can only come from those who have specific in-depth knowledge of the profession that is acupuncturist themselves. The University of North Carolina Board of Governors overseas acupuncture colleges in the state, acupuncture colleges must meet the same educational standards as the schools of the University of North Carolina System, Duke University, and the states other colleges and universities. The four years Masters Degree Program approved by the Board of Governors is an extensive training program in Asian Medicine Theory and Western Biomedicine. The intensive and comprehensive curriculum includes and supervises clinical internship of more than 800 hours. The recommendation that the Acupuncture Board should be combined with another board that regulates occupations in the same industry does not adequately acknowledge this specific and unique professional skills and training of acupuncturist as independent medical care providers. By way the example, the North Carolina Medical Board and the North Carolina Board of Chiropractic Examiners each regulate the practice of medicine in our state. Just like in the practice of acupuncture these healthcare systems have their own distinct diagnostic and treatment parameters, each of these professions provides healthcare from their unique approach to improving health. We believe that most people would think it inappropriate and potentially dangerous for medical doctors to regulate chiropractors and for chiropractors to regulate medical doctors. For exactly the same reasons, we believe it would be equally inappropriate and possibly dangerous for medical doctors or chiropractors to regulate acupuncturist. All three are medical professions but each profession requires unique and specific training to be safe and effective for North Carolina citizens. Second, the Acupuncture Board agrees that the value of independent regulation must warrant its cost, to that end the board respectfully inserts that the cost of independent regulation of acupuncture meds as a medical profession has been carefully considered and approved by the General Assembly in the past. [SPEAKER CHANGES] One minute remaining. [SPEAKER CHANGES] Thank you, more importantly perhaps the North Carolina Acupuncture Board has consistently demonstrated it’s ability to manage itself as a good steward of the public’s trust both financially and professionally since… [0:05:00.4] [End of file...]

CIOPGH [0:00:00.0] …In 1993, so in 21 year since the board has not ask for any public support and there isn’t any reason to believe that need will rise in the future. The board has no time needed financial assistance from the state. In summary, the North Carolina Acupuncture Licensing Board regulates independent medical professionals providing healthcare to North Carolinians across the state, the Acupuncture Board believe strongly that consolidation of the regulation of acupuncturist would provide less protection for our citizens, we believe that if the regulation of this medical system and it’s providers has transferred to another board whose members are not educated in acupuncture and age medicine regulation of this unique and important medical practice would degrade putting North Carolina… [SPEAKER CHANGES] The time has expired. [SPEAKER CHANGES] Thank you very much, my comments are in writing and can be provided to you. [SPEAKER CHANGES] Thank you very much. All the people have signed up ahead of time but this is a public hearing of sorts and I know that there are, I advice that there is at least one person or maybe others that from the audience would like to address this committee, if so would you please step-up to the microphone, identify yourself by name and if you are representing an organization please let us know which one that is. [SPEAKER CHANGES] Yes, thank you so much to the Chairman of the Committee, my name is Susan Delaney, Naturopathic Physician and I’m representing the North Carolina Association of Naturopathic Physicians. [SPEAKER CHANGES] You are representing whom? [SPEAKER CHANGES] The North Carolina Association of Naturopathic Physicians. [SPEAKER CHANGES] I can’t spell it. [SPEAKER CHANGES] N-A-T-U-R-O-P-A-T-H-I-C, naturopathic. [SPEAKER CHANGES] Thank you very much, I’m sorry, I’m little hard here. [SPEAKER CHANGES] Well, that’s okay it’s been a long day. [SPEAKER CHANGES] Yeah. [SPEAKER CHANGES] And I’m not here like the other speakers to defend the board but I was asked by the Senator Bingham to come and speak about my experience with other established licensing boards on this issue of perceive competition by other established boards. Briefly I wanna talk about who we are and then these two issues of public health and safety, we have been trying for 14 years to establish a Naturopathic Licensing Board in the state of North Carolina. We are being Naturopathic doctors, medically trained doctors from four year medical schools, five are currently are in the United States, three in Canada, and these schools are regulated by the Department of Health and Education. So most of the doctors in the state they are 45 of them carry a license in another state and the 20 other states, licensed states and provinces. So the issue for us begin in 1999 with a public health and safety issue when a little child Rosy Kolitwenzew died in Buncombe County under the hand of, under the care of an unlicensed provider, he was currently to year and a half in prison and later we found out he returned to practice in North Carolina until recently. Then in 2012, another case came for us from Representative Insko who said that, she sent me the case and Rebecca Richards is the case who wants to follow complaint by a naturopathic doctor supposedly practicing in the state and we refer the case to the North Carolina Medical Board and rightfully said, “We have no jurisdiction over this case.” So at least two cases of harm and many other complaints are coming to us and so we feel like we need to establish a board of naturopathic licensing and unable to do so because of other competition. And there are also barriers to practice and those are these trained naturopathers unable to fully practice the extend of their training, they cannot accept positions at Duke University, Bowman-Gray, or UNC because we are not legally licensed in the state, the students from these other universities, from these medical universities who are from North Carolina cannot return to North Carolina and become citizens and establish themselves with their family again and finally with the doctors who have been practicing here myself for 28 years it creates a sense of insecurity and instability, we do the very best we can but these are issues that do concern us that we don’t have a Naturopathic Licensing Board and because of competitions are perceived competition in the state. [SPEAKER CHANGES] Thank you very much. Your last name again, would you spell that for me as well? [SPEAKER CHANGES] Yes Sir, D-E-L-A-N-E-Y. [SPEAKER CHANGES] Okay, thank you very much, is there anyone else wishing to address the committee? Seeing none… [0:04:57.2] [End of file…]

I want to remind everyone that the Senate Oversight Committee on PED held a meeting last week and there was a video made of a presentation by Professor Judith Welch Wegner, who's a former dean of UNC School of Law. It is excellent. It's only about ten minutes. I'm gonna ask you to take ten minutes, go to the website of this committee, and take a look at that video. I think it will help you-- We're not gonna show it. It'll help you understand some of the nature of this issue. But, I don't see any point, really. We can all look at it. We've been here for two and a half hours, pushing three hours. Some of us drove a number of hours to get here. Some of you all drove a number of hours to get here. So, go to the committee website. Under the handouts for this meeting you're gonna see that video. I strongly encourage you to look at that video. So, before we close and I tell you when we're gonna meet again, are there any comments or questions from members of the committee? Say none. Co-chair? None. So, therefore we will meet again on April the thirteenth, or earlier if the urge moves us. So, as they say, stay tuned with that. Meeting adjourned. Thank you very much for your patience.