2006 Developments in Pharmacy Law Seminar XVII
Joint Conference of the American Society for Pharmacy Law
& National Association of Chain Drug Stores
Sanibel Harbour Resort & Spa - Fort Myers, Florida
Representing Healthcare Practitioners
and Facilities In State Licensing
Board Proceedings
Raymond P. Pepe
rpepe@klng.com
717.231.5988
BOSTON
DALLAS
HARRISBURG
LONDON
LOS ANGELES
MIAMI
NEWARK
NEW YORK
PALO ALTO
PITTSBURGH
SAN FRANCISCO
WASHINGTON
www.klng.com
Kirkpatrick & Lockhart Nicholson Graham LLP (K&LNG) has approximately 1,000 lawyers and represents entrepreneurs, growth
and middle market, capital markets participants, companies and leading FORTUNE 100 and FTSE 100 global corporations nationally
and internationally.
K&LNG is a combination of two limited liability partnerships, each named Kirkpatrick & Lockhart Nicholson Graham LLP, one
qualified in Delaware, U.S.A. and practicing from offices in Boston, Dallas, Harrisburg, Los Angeles, Miami, Newark, New York,
Palo Alto, Pittsburgh, San Francisco and Washington, and one incorporated in England, practicing from the London office.
This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should
not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.
© 2006 KIRKPATRICK & LOCKHART nicholson graham llp. all rights reserved.
Representing Healthcare Practitioners and Facilities
In State Licensing Board Proceedings
By RAYMOND P. PEPE
Proceedings before state professional licensing boards may involve disciplinary proceedings, disputes
regarding the issuance of licenses, certifications or approvals to individuals or facilities, and proceedings
pertaining to the development of policies and regulations. The effective representation of healthcare
practitioners and facilities in these proceedings depends in large measure on the understanding and proper
application of principles of state administrative practice and procedure unique to each of these types of
proceedings as applied in the context of healthcare law.
Critical Issues in Disciplinary Proceedings
IDENTIFYING AND PROTECTING THE INTERESTS OF DIVERSE PARTIES
Because disciplinary board proceedings may involve multiple parties, including licensed or certified
practitioners, assistants, technicians, facility owners and other persons, it is essential at the outset of any
proceeding to identify how the interests of various parties will potentially be affected and to explore the
benefits and costs of using separate counsel for all parties versus common counsel for all or some subset of
the affected parties. The ethical issues regarding when the representation of two or more parties is
permissible, the types of notifications and cautions necessary regarding any use of common counsel, and
the need for joint-defense agreements to protect attorney-client privilege are generally well understood.
What is less well understood is the need to forge constructive working relationships among counsel for
multiple parties and the strategic advantages that may be obtained through the use of separate counsel even
when separate representation does not appear to otherwise be required or warranted.
One of the greatest risks of using separate counsel for parties whose interests diverge is that the zeal of
counsel for individual parties to protect their specific interests will generate a suboptimal outcome for all
parties to a proceeding. While inevitably in some circumstances the representation of individual interests is
of necessity a zero-sum game, in far too many other instances the failure of counsel to work together
cooperatively to promote the common interest of all parties forfeits opportunities to resolve controversies in
a more desirable manner. Unfortunately, there is no general formula or specific approach to follow to avoid
these problems. Instead, it is imperative for parties to proceedings to select mature representatives with
sound judgment who can work together well and effectively pursue opportunities to promote the common
interests of all parties to proceedings, while at the same time being realistic and honest in recognizing the
pragmatic imperatives essential to protecting the interests of their individual clients. Counsel should also be
selected with experience in dealing with licensing board proceedings in the jurisdiction involved, because
the customs and practices of boards is often unique and not well documented.
Even where the interests of multiple parties to proceedings do not materially diverge, it is also worth
considering at the outset of any engagement whether the use of separate counsel will be strategically
beneficial. For example, where the outcome of proceedings turn on the credibility of parties not themselves
the target of disciplinary complaints and who face little realistic risk of sanctions, but whose interests
technically diverge from those of other parties, the perceived independence and reliability of testimony
offered by such parties may be enhanced by separate representation. In addition, during the investigatory
stages of proceedings and in the course of the consideration of settlement options, the use of separate
counsel for such parties may open-up avenues of access to information and create alternative channels for
communication that may not be equally available to counsel for the primary target of disciplinary
proceedings.
Raymond P. Pepe is a partner in the Harrisburg Office of the law firm of Kirkpatrick & Lockhart Nicholson Graham LLP, 17 North
Second Street, 18th Floor, Harrisburg, PA, 17101-1507. Mr. Pepe can be reached on 717.231.5988 or at rpepe@klng.com.
IDENTIFYING SOURCES FOR THIRD-PARTY RECOVERY
Various forms of insurance coverage may be available to parties to disciplinary proceedings and for other
persons affected by the outcome of such proceedings. Coverage that may be available includes not only
professional liability insurance, but may also involve errors and omissions policies, officers and directors
coverage, business interruption insurance and fidelity policies which may provide coverage for losses
incurred due to unlawful conduct or a breach of fiduciary duty. Far too often, however, parties either fail to
recognize that coverage may be available either to cover losses incurred or the cost of representation, or
conclude that coverage is not available based upon a cursory review of policy provisions and discussions
with the representatives of agents or representatives of insurers who may be either ill-informed or less than
candid in discussions of policy provisions. The failure to promptly evaluate and identify sources of
coverage also often leads to the loss of otherwise available coverage when notice is not provided in a
timely manner to insurers regarding claims.
To evaluate the availability of insurance coverage, at the outset of any significant controversies, a careful
assessment should be conducted of current and prior insurance policies and guidance sought regarding any
ambiguous policy provisions. Where the consequences of adverse outcomes in disciplinary proceedings are
substantial, it may be worthwhile to have a review of available insurance coverage reviewed by specialized
counsel experienced in the protection of policyholder interests.
To the extent coverage may be available, care should be taken to ensure that written instructions are
provided insurance brokers directing them to provide appropriate written notficiations to affected carriers.
In this regard, it is important to recognize that many brokers may not operate as agents of various insurers
and only as sales representatives, and therefore notice to a broker may not constitute notice to the insurer.
Accordingly, it is important to follow-up any initial discussions with brokers regarding the provision of
notice to carriers to ensure that notice is actually provided and to ensure that brokers do not make
independent judgments in questionable cases regarding the availability of insurance benefits.
In addition to evaluating potential sources of insurance coverage, parties to disciplinary proceedings should
also determine whether proceedings trigger any relevant hold harmless or indemnity agreements.
Depending upon the facts and circumstances, indemnities may be available for violations of professional
standards that occurred in a healthcare facility prior to the purchase of the facility or its assets. Likewise,
when help-supply services are utilized to provide practitioners, assistants, technicians or other employees,
the agreement with the help-supply agency may provide indemnities for misconduct of the personnel
supplied by the agency.
DEVELOPING STRATEGIES BASED UPON A RISK-ASSESSMENT
While some healthcare licensing boards have adopted schedules of fines and sanctions associated with
various types of violations, more typically no formal guidelines or standards exist to guide a board in
imposing sanctions for misconduct. Instead, the only guidance provided is frequently simply the maximum
permissible sanctions authorized by law. As a result, in many jurisdictions even minor violations result in
the issuance of a rule to show cause why licenses or permits should not be suspended or revoked for alleged
violations and why the maximum permissible fines and monetary penalties authorized by law should not be
imposed. In these circumstances, it is critical at the outset of any engagement to initiate research regarding
the types of sanctions historically levied by the board for the type of conduct alleged. Even where boards
maintain formal penalty guidelines, such research is warranted to determine whether and to what extent
actual board practices deviate from published standards. Unfortunately, this research may need to be
performed on site since frequently these types of administrative decisions are not published or reported
electronically. Such research should never be discounted, however, since it often reveals information
remarkably inconsistent with demands made by prosecuting counsel.
Research regarding the likely range of sanctions that may be imposed by boards will provide guidance
helpful in determining whether and to what extent to vigorously contest allegations of professional
misconduct or to initiate settlement discussions with board counsel. In addition, such research typically
provides valuable insight critical to the successful negotiation of settlement agreements and may provide a
basis to contest the imposition of sanctions inconsistent with board precedents. Under the law of most
states, it is arbitrary and capricious for boards to deviate substantially from its precedents and established
practices without good cause.
In addition to reviewing the pattern of sanctions imposed by licensing boards, it is also important to
evaluate the potential collateral consequences of adverse board actions. For example, under CMS Medicare
Provider Agreements and State Medicaid Provider Agreements, changes in information regarding adverse
legal actions previously reported must typically be updated within 30 to 90 days of the changes occurring.
Once this information is reported, CMS or State Medicaid agencies may initiate proceedings to revoke
provider agreements. If this occurs, federal and state law typically prevents the transfer of a pharmacy or its
assets to certain related parties to avoid the impact of any debarment. Comparable provisions are also often
included in other public and private participating provider agreements.
Mortgages, franchise agreements and loan documents may also require the prompt reporting of disciplinary
actions taken against healthcare practitioners and personnel. Once reported, lenders may enjoy broad
discretion to declare defaults and accelerate loan payment obligations. Fortunately, the prompt reporting of
disciplinary proceedings and the full disclosure of the outcome of proceedings often enables facilities to
avoid the revocation of provider agreements or debarment from participation in public healthcare benefit
plans. Conversely, the failure to promptly report such information and incorrect characterization of the
outcome of proceedings may in itself provide a basis for suspension or revocation of provider agreements
or debarment, even for violations which in themselves may be comparatively minor.
CLEARLY DEFINING ADMINISTRATIVE PROCEDURES
State administrative procedures acts and rules of procedure may vary substantially from jurisdiction to
jurisdiction and many licensing boards may not have clearly established rules of procedure to govern
disciplinary proceedings. Board rules of procedure may also provide certain options to parties to
disciplinary proceedings, such as allowing matters to proceed before hearing examiners who will issue
reports and recommendations for review by boards or alternatively allowing contested proceedings to be
conducted directly before boards. Options may also exist to seek informal conferences with designated
board members or third parties to seek the informal resolution of proceedings in a manner similar to
mediation. Developing the most effective and suitable approach to the representation of parties to board
proceedings requires an understanding of the options available.
At the outset of proceedings, a thorough review should be conducted regarding applicable rules of
procedure and administrative practices with a focus on identifying service requirements, deadlines,
discovery mechanisms (if any), requirements for pre-hearing reports and conferences, the availability of
various types of procedural and dispositive motions, opportunities for briefing and argument, and posthearing remedies, including requests for reconsideration of adverse determinations. Because board
practices are often highly informal and subject to change, in order to clearly understand and be able to take
advantage of available procedural options, there is no substitute for a pre-hearing conference in which a full
discussion of procedural requirements occurs.
In pre-hearing conferences, it is essential to obtain not only a clear understanding of the applicable rules of
procedure, but also to identify the expectations and particular requirements of individual hearing officers or
boards. Care should be taken, however, not to make premature commitments regarding the management of
a case that may limit available procedural options. Instead, the goal should be to clearly understand the
applicable administrative rules and requirements, while preserving as much flexibility as possible to change
strategies and procedural approaches to a case as proceedings unfold.
One important goal to pursue in evaluating relevant administrative procedures is to ensure a fair and level
playing field upon which to mount a defense of disciplinary charges. While due process requires a
separation of functions between prosecutorial and adjudicative officers, the disqualification of board
members or hearing officers subject to potential bias, prohibits ex parte communications, and limits the use
of administrative notice of facts and information outside the official record, the extent to which these
protections exist in practice may deviate substantially. Understanding the extent to which such protections
are actually provided in any particular jurisdiction is both helpful in developing strategies for the
presentation of a defense, but may also provide potential grounds for a successful appeal of any adverse
adjudications. Careful attention to due process requirements and a frank discussion of the mutual
expectations of adverse parties may also make participants in disciplinary proceedings more attune to the
necessity to conduct fair and impartial hearings.
An additional goal that should be pursued in discussions regarding rules of administrative procedure is to
take appropriate measures to protect the confidentiality of information. These measures, where appropriate,
should not only insure that potentially damaging information is submitted under seal, but also that
appropriate orders and authorizations are obtained for the disclosure of protected health care information
subject to HIPPA protections.
TAKING FULL ADVANTAGE OF AVAILABLE DISCOVERY
In many types of disciplinary and licensing proceedings, nothing approaching discovery available under the
applicable rules of civil procedure exists. Instead, evidence likely to be presented at a hearing by
prosecuting counsel can sometimes only by identified by allegations included in disciplinary complaints or
rules to show cause, pre-hearing reports and through the filing of freedom of information requests.
Assertions of privileges to preserve the confidentiality of investigative reports and the attorney work
product of board counsel may also severely limit access to information in advance of hearings.
The absence of traditional discovery mechanisms in professional licensing proceedings may or may not
pose problems depending upon the facts or circumstances of particular cases. The inability of counsel
defending parties to disciplinary proceedings to obtain access to evidence likely to be presented in a
hearing is typically mirrored by the inability of prosecuting counsel to similarly obtain information from
parties subject to disciplinary complaints and from prospective witnesses. How the risks and benefits
associated with the limited access to pre-hearing information affects a particular case requires a careful
exercise of judgment by counsel.
To the extent access to evidence likely to be presented by board counsel in advance of a hearing is
determined to be important to the presentation of an effective defense, several options should be considered
to obtain the required information. Requests should be routinely made to conduct file reviews of all public
information available regarding parties to proceedings in the possession of licensing boards. Motions can
be filed with hearing officers or boards requesting the issuance of pre-hearing orders requiring the
disclosure of witnesses, exhibits, expert reports and any and all exculpatory evidence in the possession of
prosecuting counsel and investigators. In conferences with hearing officers or boards, requests can be made
that pre-hearing reports disclose the scope, extent and anticipated content of testimony likely to be
presented. While hearing officers and boards may refuse to grant such requests, even in the absence of
established board practice to the contrary, it should not be assumed that such requests will not be fruitful. In
addition, denials of requests for information essential to a fair and impartial hearing may provide a basis for
the pursuit of subsequent appeals.
EXPLORING SETTLEMENT OPTIONS
Except in unusual circumstances, it is rare for licensing boards to pursue disciplinary action
againsthealthcare practitioners and facilities without substantial justification for doing so. While
extenuating and mitigating factors may exist, and disputes may exist regarding the appropriate
interpretation of relevant laws and regulations or the scope and extent of appropriate sanctions, it is rare to
be called upon to defend parties to disciplinary proceedings who are without substantial responsibility for
activity the licensing boards characterize as professional misconduct. Accordingly, in many circumstances,
the negotiation of consent orders terminating proceedings represents a preferable alternative to proceeding
with contested hearings, especially when the costs and potential collateral consequences of participating in
contested proceedings are taken into consideration.
The principal difficulties encountered in negotiating reasonable settlements to disciplinary complaints
include: dealing with overly aggressive prosecuting attorneys unwilling to agree to a reasonable
compromise; requirements that parties agree to standard terms and conditions in consent orders that appear
unreasonable; or settlements structured in a manner that may trigger more serious consequences for
healthcare practitioners and facilities in the form of the termination of provider agreements or potential
criminal prosecution.
Some options to consider to increase the likelihood of a favorable consent agreement are to request an
informal conference before an individual member of the board authorized to conduct such proceedings and
make recommendations for settlement (and who is then typically recused from participation in any
subsequent contested hearing if settlement negotiations are unsuccessful); to request mediation before a
neutral party familiar with pharmacy operations; or to recommend the preparation of investigatory reports
to be used exclusively for purposes of settlement discussions prepared by independent experts. The latter
approach may be particularly useful when disputes arise regarding contested standards of industry practice
in specialized areas in which board members may not have significant experience.
In drafting settlement agreements, care should also be taken to limit the admissibility of any admissions
contained in settlement agreements only to proceedings to enforce the agreements and to include where
possible within the text of agreements or in supporting documentation authorized for disclosure any
mitigating circumstances pertinent to violations for later potential use in response to inquiries that may be
generated by public and private health care benefit plans and certification agencies.
DETERMINING THE ROLE OF HEARING EXAMINERS
In jurisdictions in which the option to proceed before a hearing examiner or directly before a licensing
board exists, electing the best option for a particular case may represent one of the most difficult challenges
faced in the defense of disciplinary proceedings, especially because a decision regarding the best venue
may depend upon the personal characteristics and experience of hearing officers and board members.
Generally, proceeding before hearing officers typically represents the best option if (1) complex factual
evidence will be presented subject to conflicting interpretations; (2) threshold legal questions exist that fall
outside the expertise of board members to effectively resolve; (3) multiple witnesses and exhibits are likely
to be presented; or (4) emotionally charged and adversarial confrontations with complaining witnesses are
likely to occur. In these circumstances, the availability of a detailed written record and proposed report to
the licensing board from which parties may take exceptions provides a better opportunity for effective
advocacy and careful reconsideration of relevant facts and circumstances. Proceedings before hearing
officers, however, are also likely to be much more protracted and expensive, a factor that may be very
important to affected parties.
In contrast, proceeding directly before licensing boards may represent the best option where (1) the primary
issue presented involves the scope and extent of sanctions to be imposed and witnesses are likely to
persuasively present evidence of mitigating circumstances; (2) an understanding of the practical problems
faced in day-to-day pharmacy operations will be helpful in obtaining a favorable resolution; or (3) giving
board members an opportunity to personally evaluate the demeanor and credibility of witnesses is
important. In deciding to proceed directly before a licensing board, however, counsel must consider the
potential that board members (who typically are only nominally compensated) will react unfavorably to the
need to participate in a hearing and the possibility that their clients may not present sympathetic figures
when presented for direct scrutiny.
MAKING EFFECTIVE USE OF STIPULATIONS
Notwithstanding how thoroughly a case is prepared, witnesses are always likely to make unanticipated
statements and admissions when presented for direct and cross-examination. While sometimes such
unanticipated testimony can be very beneficial to the outcome of proceedings, often the opposite occurs.
The demeanor of witnesses (especially defendants who feel they are being unjustly subject to disciplinary
proceedings) may also detract from the effectiveness of a defense. Accordingly, it is usually desirable to
narrow the scope of contested facts as much as possible through the effective use of stipulations. Narrowing
the scope of contested issues may also reduce the cost of proceedings and better focus adjudicators on the
resolution of critical factual questions without getting lost in irrelevant and extraneous details.
Unfortunately, it can sometimes prove to be difficult to persuade state board counsel to agree to any
extensive set of stipulated facts. This may occur because board counsel face crowded dockets and lack the
time and resources to work on stipulations or due to their fears (which are often justified) that stipulations
(often prepared by more seasoned adversaries) may prejudice their ability to obtain favorable rulings and
stiff penalties. Some alternatives to increase the likelihood that useful stipulations will be generated are
recommendations made to hearing examiners or board representatives in pre-hearing conferences that
scheduling orders be issued mandating the exchange of agreed upon and contested findings of facts and that
parties meet and confer, beginning at dates substantially in advance of the scheduled hearing, to discuss
stipulations and settlement options.
UNDERSTANDING THE RELEVANCE OF THE RULES OF EVIDENCE
In virtually all jurisdictions, the rules of evidence do not apply in administrative hearings and hearsay
evidence is admissible. Care should be taken, however, to not lose sight of the role played by the rules of
evidence in ensuring the reliability of evidence and in using instances of non-compliance with the usual
rules of evidence to suggest that certain types of testimony should be given reduced probative value or
disregarded.
In several jurisdictions, the so-called legal residuum rule provides that although admissible in
administrative proceedings, hearsay evidence if properly objected to is not competent to support a finding
of fact based solely upon such evidence, and if admitted without objection may support a finding of fact
only if it is corroborated by other competent evidence in the record. Often the legal residuum rule is
articulated as a requirement for constitutional due process, especially in proceedings involving property
rights such as occur in licensing board proceedings, but in other states, such as California, New Jersey and
Florida, various permutations of the rule are embodied into state statutory law.
In jurisdictions subject to the legal residuum rule, it is obviously critical to properly object to hearsay
evidence. In other jurisdictions, however, the principles that underlie the rule should be articulated as a
basis for giving hearsay evidence less probative value than other evidence and to disregard such evidence
unless independently corroborated.
Similar issues arise with respect to other rules of evidence. For example, in some jurisdictions rules
limiting the use of judicial notice are not applicable in administrative proceedings. This represents a
particularly thorny problem in pharmacy board proceedings where board members may be tempted to use
their independent knowledge and expertise as a basis upon which to make determinations. To reduce the
possibility of the misuse of administrative notice, and to discourage boards from relying upon evidence
outside of the record, pre-hearing orders can be used to establish comparable requirements prior to the
taking of administrative notice by a hearing officer or board. For example, in the same manner as required
for the judicial notice of facts not within the record of proceedings, prior notice and an opportunity to rebut
any administrative noticed facts can be required.
PRESENTING EXCULPATORY AND MITIGATING EVIDENCE
Unlike criminal trials which typically have bifurcated proceedings to determine guilt and to impose
sanctions, in most circumstances state licensing boards use the same record for the purpose of determining
whether unprofessional conduct has occurred and to determine the appropriate sanctions. This clearly poses
a challenge to counsel defending healthcare practitioners and facilities because an effort to directly present
character witnesses may create a presumption, even if unstated, that the unprofessional conduct has
occurred and that parties are pleading for lenience.
Clearly the best way to avoid this dilemma is to ask a hearing officer or board to conduct bifurcated
proceedings. If such requests are rejected or are not practical in the circumstances, it may be necessary to
find creative ways to present character testimony and make the hearing officer or board aware of mitigating
factors without clearly acknowledging or suggesting that the evidence is being presented for such a
purpose. This can be accomplished by background testimony regarding the long history of operations of a
facility or the conduct of an individual without disciplinary complaints or by presenting evidence regarding
the location or services provided by a facility suggesting that its continued operation is critical to the
continued provision of healthcare to certain communities.
It may also be useful in disciplinary proceedings to describe actions taken by a facility after complaints
have occurred to avoid future complaints in the same area. If presented skillfully, such testimony rather
than appearing to provide an admission of guilt may instead illustrate the commitment of a facility to
establishing good business practices and suggest to a hearing officer or licensing board the type of order to
issue in lieu (in whole or in part of civil penalties), i.e., a mandate to prepare and submit for review a
facility compliance plan.
LICENSING CONTROVERSIES
Licensing board proceedings concerning the issuance of licenses, approvals and certifications unrelated to
disciplinary matters, but instead relating to the actual physical requirements for the operation of facilities,
the granting of reciprocal licensing privileges or other regulatory matters, pose at least one important set of
issues that may be less relevant in disciplinary proceedings, namely, the applicability and validity of nonregulatory statements of policy or guidance documents, or of board practices imposed uniformly but
not reduced to written directives. Healthcare practitioners and facilities often protest the application of such
requirements and question their legal validity. State precedent has emerged in three primary directions with
respect to administrative requirements not imposed by regulations. Recognizing how to handle
controversies regarding such administrative requirements requires an appreciation of the relevant state law.
In some jurisdictions, policies that are treated as binding norms which are not properly incorporated into
published administrative rules are treated as void and unlawful and may not be properly relied upon as a
basis for refusing to issue a license or for imposing conditions upon a license. In such jurisdictions, the
relevant documents or policies should be identified and documented and appropriate motions objecting to
their use filed. Upon appeal, unless the reliance upon the documents or policies constituted harmless error,
adjudications relying on such documents or policies may generally be vacated.
Other jurisdictions recognize the practical need for policies and guidance documents not incorporated into
regulations, and afford these documents two substantially different degrees of recognition. In most
jurisdictions, if an agency adopts statements of policies or guidance documents not intended to have the
force and effect of administrative regulations, such documents may be treated as valid statements of
policy or interpretative rules, but may not be binding upon a hearing examiner or board and are never
binding upon a court considering an appeal. Instead, in many circumstances a hearing examiner or board
enjoys the discretion to apply or not apply such policies or documents to the extent appropriate. Even
where a hearing officer or board determines its actions are bound by such documents or policies, however,
upon appeal a court may decide whether or not the application of the policy is reasonable and appropriate
without affording the document or policy any significant degree of deference. In such jurisdictions,
practitioners must stress the non-binding nature of the documents or policies and suggest reasons that the
documents or policies do not provide the most reasonable and appropriate interpretation of statutory
requirements in a particular setting.
One final set of state practices is highly problematic. Some states treat policies not incorporated into valid
administrative regulations as mere interpretations of validly adopted rules and hold that an agency s
interpretation of its own rules must be upheld unless clearly contrary to law, unconstitutional or arbitrary
and capricious. In such jurisdictions, the best approach is to illustrate that the challenged policies are not in
fact mere interpretations of existing rules, but instead represent new rules that have been invalidly adopted.
RULEMAKING AND POLICY SETTING PROCEEDINGS
Rulemaking typically poses significant challenges for healthcare licensing boards because in most
jurisdictions boards are not provided the staff and resources necessary to develop any significant regulatory
initiatives and board members are nominally compensated appointees who lack the expertise, time and
background necessary to function as their own regulatory staff. These problems may pose particularly acute
challenges for licensing boards in jurisdictions in which tradition or practice prevents boards or their staff
members from issuing advisory opinions regarding various issues without the adoption of formal
administrative rules.
At least two alternatives are available for individuals and organizations promoting the adoption of new
regulatory standards in jurisdictions in which boards lack the capacity or willingness to initiate rulemaking
proceedings. It may be possible either to take advantage of formal or informal options for negotiated
rulemaking or to petition boards to consider and adopt specific proposed rules.
In recent years many jurisdictions have adopted formal negotiated rulemaking laws. Unfortunately, many
of these laws have remained largely unutilized because of fear of their often highly detailed prescriptive
procedural requirements. Upon closer examination, however, the procedures mandated by these laws are
often less burdensome in practice than seems apparent, especially when agencies are engaged in adopting
technical rules sometimes typical in licensing board practice that do not involve controversial public policy
issues. Accordingly, for major regulatory initiatives of significant importance to healthcare practitioners
and facilities, consideration should be given to utilizing formal negotiated rulemaking requirements.
An alternative to formal negotiated rulemaking that may be considered in many jurisdictions is the use of
informal advisory committees to develop proposed rules for consideration by licensing boards. Fortunately,
most regulatory negotiation statutes provide optional, not mandatory, procedures for boards to work
cooperatively with stakeholder groups to develop proposed rules, and in most jurisdictions, there are no
formal restrictions or limitations upon the development and use of advisory committees to develop
regulatory proposals for consideration by licensing boards.
Finally, the option of formally proposing rules for consideration by agencies by way of petition should also
be considered. Many states authorize rulemaking petitions whereby parties may draft detailed rules and
present the rules to boards for consideration by way of petition. Typically a board will then study the rules
and make a determination about whether to publish the rules for notice and comment either as submitted or
with modifications adopted by the board. This option may be attractive because it allows proposed rules to
be quickly promulgated for notice and comment without the necessity of a licensing board formally
endorsing the recommendations. Instead, all that is required is for a board to conclude that the topic and
recommendations have sufficient merit to be promulgated for notice and comment.