Existing law authorizes a board, defined as a licensing board or agency having jurisdiction over a licensee, as specified, to cite and fine a licensed health care practitioner who is in default on a United States Department of Health and Human Services education loan, including a Health Education Assistance Loan. Existing law authorizes the board to deny a license to an applicant to become a health care practitioner or deny renewal of a license if he or she is in default on a loan until the default is cleared or until the applicant or licensee makes satisfactory repayment arrangements. Existing law requires a board, prior to taking these actions, to take into consideration the population served by the health care practitioner and his or her economic status. Existing law requires that each board that issues citations and imposes fines retain the money from these fines for deposit into its appropriate fund.

This bill would repeal these provisions.

Existing law authorizes a board, defined as a licensing board or agency having jurisdiction over a licensee, as specified, to cite and fine a licensed health care practitioner who is in default on a United States Department of Health and Human Services education loan, including a Health Education Assistance Loan. Existing law authorizes the board to deny a license to an applicant to become a health care practitioner or deny renewal of a license if he or she is in default on a loan until the default is cleared or until the applicant or licensee makes satisfactory repayment arrangements. Existing law requires a board, prior to taking these actions, to take into consideration the population served by the health care practitioner and his or her economic status. Existing law requires that each board that issues citations and imposes fines retain the money from these fines for deposit into its appropriate fund.

This bill would repeal these provisions.

Existing law authorizes a board, defined as a licensing board or agency having jurisdiction over a licensee, as specified, to cite and fine a licensed health care practitioner who is in default on a United States Department of Health and Human Services education loan, including a Health Education Assistance Loan. Existing law authorizes the board to deny a license to an applicant to become a health care practitioner or deny renewal of a license if he or she is in default on a loan until the default is cleared or until the applicant or licensee makes satisfactory repayment arrangements. Existing law requires a board, prior to taking these actions, to take into consideration the population served by the health care practitioner and his or her economic status. Existing law requires that each board that issues citations and imposes fines retain the money from these fines for deposit into its appropriate fund.

This bill would repeal these provisions.

 THIRD READING  

Bill No: AB 508

Author:

:

Vote:

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 6/5/17

AYES: Hill, Fuller, Dodd, Galgiani, Glazer, Hernandez, Newman, Pan, Wilk

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 76-0, 5/4/17 (Consent) - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill repeals provisions of law authorizing boards to cite and fine, or deny licensure or licensure renewal, to a health care practitioner if he or she is in default on a United States Department of Health and Human Services education loan.

ANALYSIS:

Existing law:

1. Provides for the licensing and regulation of various professions and businesses by some 26 boards, 3 committees, 9 bureaus, 2 programs, and 1 commission (all defined as boards) within the Department of Consumer Affairs (DCA) under various licensing acts within the Business and Professions Code (BPC).
2. Authorizes a board to cite and fine a currently licensed health care practitioner if he or she is in default on a United States Department of Health and Human Services (HHS) education loan, including a Health Education Assistance Loan (HEAL). (BPC § 685)
3. Allows a board to deny a license to an applicant to be a health care practitioner or deny renewal of a license if he or she is in default on a HHS education loan, including a HEAL, until the default is cleared or until the applicant or licensee has made satisfactory repayment arrangements. (Id.)

This bill repeals BPC Section 685 which permits boards to cite and fine, or deny licensure or licensure renewal, to a health care practitioner if he or she is in default on a HHS education loan.

Background

The authority to discipline healing arts licensees and deny applicants for defaulting on an HHS loan was established by SB 2019 (Speier, Chapter 683, Statutes of 2002). At the time, the author stated that $173 million was owed nationwide by health care practitioners in defaulted educational loan debts, $40 million of which was estimated to be owed by California practitioners.

However, it is not clear that the loans targeted by that bill are the same loans currently in existence. For example, according to the U.S. Department of Education (USDE), the HEAL Program was only available from fiscal year 1978 through fiscal year 1998 (on July 1, 2014, the HEAL Program was transferred from the HHS to the USDE). It is no longer possible to obtain a new HEAL Program loan.

Currently, the loans offered by the HHS (through the Health Resources & Services Administration (HRSA)) appear to be aimed at improving health workforce shortages and providing educational opportunities for disadvantaged students from diverse backgrounds. For instance, under the Health Professions Student Loans (HPSL) program, HRSA provides “grants to participating schools to offer long-term, low interest loans to needy students, enrolled full-time or half-time in a dentistry, optometry, pharmacy, podiatric, or veterinary medicine.”

The Medical Board of California, for example, has not issued citations and fines for many years pursuant to BPC Section 685. The Board of Psychology, Board of Veterinary Medicine and Board of Optometry have also not taken any action against an applicant or licensee for being in default on a loan pursuant to this law in many years, or possibly never, as current staff had no record of action taken. It remains unclear whether any healing arts boards authorized within the BPC has taken enforcement action or denied licensure based on HHS loan debt at all in the past many number of years, appearing to render BPC Section 685 obsolete.

The author states that the authority granted to licensing boards is unnecessarily punitive, and problematic when one considers that recent reporting from Fortune shows that nearly 40 percent of students are failing to make on-time payments which puts them on the road to default. The author cites information from the USDE that over 1 in 5 borrowers are in default on federal loans and the debt burden for graduate students, especially for medical professionals, is significant as well. The author also notes that the American Association of Medical Colleges reports that in the year 2013, 86 percent of medical school graduates held debt at graduation, 40 percent with over $200,000. These loans can sometimes lead to financial hardships down the line which ought not to affect someone’s ability to practice their profession.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 6/28/17)

California Chapter of the American College of Emergency Physicians

California Health+ Advocates

California Optometric Association

California Veterinary Medical Association

Mental Health America of California

Service Employees International Union Local 1000

OPPOSITION: (Verified 6/28/17)

The Honorable Jackie Speier, Congressmember, 14^th District, California

ARGUMENTS IN SUPPORT: Supporters cite the high average student loan debt of health care professionals in calling this bill a welcome and necessary effort to guarantee that California continues to have the healthcare workforce it needs. Supporters note that the current ability for boards to cite and fine or deny licensure entirely is punitive and harshly punished individuals struggling to pay off their debt.

ARGUMENTS IN OPPOSITION: Congressmember Speier writes that HEAL loans likely remain in default and cites a 2014 ABC News story to state that “the amounts in default by California healing arts professionals ranged from a few thousand dollars to hundreds of thousands.” The Congressmember also states that existing law deals with debt-burdened practitioners by allowing health board to take into account the economic circumstances of a licensee and the population he or she serves in determining penalties. She notes that the “obvious intent” of
SB 2019 was to “permit concerns about access to care by underserved communities, and for physicians who may simply be in distress, to be explicitly taken into account. Paradoxically, the practical impact of the abolition of the existing law and authority may be to allow relatively affluent licensees serving relatively well-off communities to skirt their duty to repay student loan debt while also shortchanging the federal government of funds that might otherwise be used for similar programs.”

ASSEMBLY FLOOR: 76-0, 5/4/17

AYES: Acosta, Aguiar-Curry, Arambula, Baker, Berman, Bloom, Bocanegra, Bonta, Brough, Burke, Caballero, Calderon, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dababneh, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Eduardo Garcia, Gipson, Gloria, Gomez, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Travis Allen, Bigelow, Cristina Garcia, Patterson

Prepared by:

6/28/17 14:42:47

**** END ****

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Jerry Hill, Chair

2017 - 2018 Regular

Bill No: AB 508 Hearing Date: June 5, 2017

Subject: Health care practitioners: student loans

SUMMARY: Repeals provisions of law authorizing boards to cite and fine, or deny licensure or licensure renewal, to a health care practitioner if he or she is in default on a United States Department of Health and Human Services education loan.

Existing law:

1. Provides for the licensing and regulation of various professions and businesses by some 26 boards, 3 committees, 9 bureaus, 2 programs, and 1 commission (all defined as boards) within the Department of Consumer Affairs (DCA) under various licensing acts within the Business and Professions Code (BPC).
2. Authorizes a board to cite and fine a currently licensed health care practitioner if he or she is in default on a United States Department of Health and Human Services (HHS) education loan, including a Health Education Assistance Loan (HEAL).
   (BPC § 685)
3. The board may deny a license to an applicant to be a health care practitioner or deny renewal of a license if he or she is in default on a HHS education loan, including a HEAL, until the default is cleared or until the applicant or licensee has made satisfactory repayment arrangements. (Id.)

This bill:

1. Repeals BPC Section 685 which permits boards to cite and fine, or deny licensure or licensure renewal, to a health care practitioner if he or she is in default on a United States Department of Health and Human Services education loan..

FISCAL EFFECT:

This bill is keyed fiscal by Legislative Counsel. According to the Assembly Committee on Appropriations analysis dated April 26, 2017, this bill has no fiscal impact, as it eliminates oversight responsibilities for a federal health loan that no longer exists.

COMMENTS:

1. Purpose. The Author is the Sponsor of this bill. According to the Author, “the authority granted to licensing boards is unnecessarily punitive. The authority granted to these Boards is problematic when one considers that recent reporting from Fortune shows that nearly 40% of students are failing to make on-time payments which puts them on the road to default. According to the Department of Education over 1 in 5 borrowers are in default on federal loans. The debt burden for graduate students, especially for medical professionals, is significant as well. For example, the American Association of Medical Colleges reports that in the year 2013 86% of medical school graduates held debt at graduation, 40% with over $200,000. These loans can sometimes lead to financial hardships down the line which ought not affect someone’s ability to practice their profession.”
2. Background. The authority to discipline healing arts licensees and deny applicants for defaulting on an HHS loan was established by SB 2019 (Speier, Chapter 683, Statutes of 2002). At the time, the Author stated that $173 million was owed nationwide by health care practitioners in defaulted educational loan debts,
   $40 million of which was estimated to be owed by California practitioners.

However, it is not clear that the loans targeted by that bill are the same loans currently in existence. For example, according to the U.S. Department of Education (USDE), the HEAL Program was only available from fiscal year 1978 through fiscal year 1998 (on July 1, 2014, the HEAL Program was transferred from the HHS to the USDE). It is no longer possible to obtain a new HEAL Program loan.

Currently, the loans offered by the HHS (through the Health Resources & Services Administration (HRSA)) appear to be aimed at improving health workforce shortages and providing educational opportunities for disadvantaged students from diverse backgrounds. For instance, under the Health Professions Student Loans (HPSL) program, HRSA provides “grants to participating schools to offer long-term, low interest loans to needy students, enrolled full-time or half-time in a dentistry, optometry, pharmacy, podiatric, or veterinary medicine.”

Further, it is unclear whether any healing arts boards authorized within the BPC have taken enforcement action or denied licensure based on HHS loan debt at all in the past many number of years, rendering BPC Section 685 obsolete.

1. Arguments in Support. Supporters cite the high average student loan debt of health care professionals in calling this bill a welcome and necessary effort to guarantee that California continues to have the healthcare workforce it needs. Supporters note that the current ability for boards to cite and fine or deny licensure entirely is punitive and harshly punished individuals struggling to pay off their debt.

SUPPORT AND OPPOSITION:

Support:

California Chapter of the American College of Emergency Physicians

California Health+ Advocates

California Optometric Association

California Veterinary Medical Association

Mental Health America of California

Service Employees International Union Local 1000

Opposition:

None on file as of May 30, 2017.

-- END --

Date of Hearing: April 26, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 508

Author:(Santiago) – As Introduced Ver:February 13, 2017

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill repeals the authority for a licensing board under the Department of Consumer Affairs (DCA), as defined, to cite and fine a licensed healthcare practitioner or deny an initial license application or renewal for a healing arts license if the applicant or licensee is in default on a federal health education loan

FISCAL EFFECT:

No fiscal impact. This bill eliminates oversight responsibilities for a federal health loan that no longer exist.

COMMENTS:

1. Background. Existing law requires several professions to acquire a license to legally practice, including many of the healing arts. Many of the professional licenses are administered by licensing boards, bureaus, and other entities within the DCA. The DCA licensing entities are established to protect the people of California through adequate regulation of businesses and professions engaging in activities that risk harm to the health, safety, and welfare of the public.

Healing arts boards (except for the Board of Chiropractic Examiners) also have an authority that is not directly tied to consumer protection. Currently, the boards are authorized to issue a citation or a fine to a licensee or deny the license renewal of a licensee who has defaulted on a United States Department of Health and Human Services (HHS) education loan, including a Health Education Assistance Loan (HEAL). According to the U.S. Department of Education, the Health Education Assistance Loan (HEAL) Program was only available from fiscal year 1978 through fiscal year 1998. It is no longer possible to obtain a new HEAL Program loan.

1. Purpose. This bill is author sponsored. According to the author, “…the deficiency in the current law is that it gives licensing Boards excessive authority to punish professionals on the basis of loan default, which is not an important factor in the practice of health professions. Legislative action is required because it’s the only way to remove these unnecessarily punitive laws. According to recent reporting from [National Public Radio], other states that have similar laws…have also begun to review their policies surrounding this issue. In fact, last year Montana became the first state in the nation to repeal their law and we believe it’s time for California to do the same. When these laws were passed it was common belief that people behind on their payments were careless borrowers and harsh punishments were needed to motivate borrowers to pay. We know…student debt is a burden for lots of people, many of whom are honest borrowers who struggle to make a living even beside their student loans. California should not be in the business of disciplining working professionals struggling to pay off their debts, especially those who provide a vital service to the public such as nurses, dentists, and doctors.”

Analysis Prepared by: Daisy Gonzales / APPR. / (916) 319-2081

Date of Hearing: April 18, 2017

ASSEMBLY COMMITTEE ON HIGHER EDUCATION

Jose Medina, Chair

ABPCA Bill Id:AB 508 (

Author:Santiago) – As Introduced Ver:February 13, 2017

SUBJECT: Health care practitioners: student loans

SUMMARY: Repeals the authority for a licensing board under the Department of Consumer Affairs (DCA), as defined, to cite and fine a licensed healthcare practitioner or deny an initial license application or renewal for a healing arts license if the applicant or licensee is in default on a federal health education loan, as specified.

EXISTING LAW:

1. Provides for the licensure and regulation of various professions and vocations by boards, bureaus, and other entities within the DCA. (Business and Professions Code (BPC) Section 22, 100-144.5)
2. Categorizes licensed professions into two general types, healing arts and professions and vocations generally. (BPC Section 500 et seq)
3. Authorizes a board to cite and fine a currently licensed health care practitioner if the licensee is in default on a United States Department of Health and Human Services (HHS) education loan, including a Health Education Assistance Loan. (BPC Section 685(a))
4. Authorizes a board to deny an application for a health care practitioner license or deny renewal of a license if the applicant or licensee is in default on an HHS education loan, including a Health Education Assistance Loan, until the default is cleared or until the applicant or licensee has made satisfactory repayment arrangements. (BPC Section 685(b))
5. Provides that, in determining whether to issue a citation and the amount of the fine to a licensee or to deny an application or renewal of a license, a board shall take into consideration a) the population served by the health care practitioner and b) the health care practitioner’s economic status. (BPC Section 685(c))
6. Defines, for purposes of discipline based on default on a health education loan, the following terms: (BPC Section 685(d))
7. “Board” means a licensing board or agency having jurisdiction of a licensee, but does not include the Board of Chiropractic Examiners.
8. “Health care practitioner” means a person licensed or certified pursuant to Division 2 (Healing Arts) of the BPC (Sections 500-4999.129), or licensed pursuant to the Osteopathic Initiative Act.

FISCAL EFFECT: Unknown.

COMMENTS: Background. In California, many professions require a license to legally practice, including many of the healing arts. Many of the professional licenses are administered by licensing boards, bureaus, and other entities within the DCA. The DCA licensing entities are established to protect the people of California through adequate regulation of businesses and professions engaging in activities that risk harm to the health, safety, and welfare of the public.

Healing arts boards (except for the Board of Chiropractic Examiners) also have an authority that is not directly tied to consumer protection. Currently, the boards are authorized to issue a citation or a fine to a licensee or deny the license renewal of a licensee who has defaulted on a federal HHS education loan. The law also authorizes the boards to deny the license of an applicant in default on an HHS education loan. This bill would repeal that authority.

Purpose. This bill is author sponsored. According to the author, “…the deficiency in the current law is that it gives licensing Boards excessive authority to punish professionals on the basis of loan default, which is not an important factor in the practice of health professions. Legislative action is required because it’s the only way to remove these unnecessarily punitive laws. According to recent reporting from [National Public Radio], other states that have similar laws…have also begun to review their policies surrounding this issue. In fact, last year Montana became the first state in the nation to repeal their law and we believe it’s time for California to do the same. When these laws were passed it was common belief that people behind on their payments were careless borrowers and harsh punishments were needed to motivate borrowers to pay. We know…student debt is a burden for lots of people, many of whom are honest borrowers who struggle to make a living even beside their student loans. California should not be in the business of disciplining working professionals struggling to pay off their debts, especially those who provide a vital service to the public such as nurses, dentists, and doctors.”

Loan Debt. An overwhelming majority of students carry debt upon graduation from college. According to research published in 2014 by The Institute for Access and Success (TICAS), in 2012, 71% of all students graduating from four-year colleges nationwide had student loan debt. That represents 1.3 million students graduating with debt, up from 1.1 million in 2008 and 0.9 million in 2004. About one-fifth of 2012 graduates’ debt was comprised of private loans. Private loans (non-federal) are typically more costly and provide fewer consumer protections and repayment options than safer federal loans.

TICAS also noted that graduates who received Pell Grants, most of whom had family incomes under $40,000, were much more likely to borrow and to borrow more. Among graduating seniors who ever received a Pell Grant, 88% had student loans in 2012, with an average of $31,200 per borrower. In contrast, 53% of those who never received a Pell Grant had debt, with an average of $26,450 per borrower — $4,750 less than the average debt for Pell recipients with debt.

The Association of American Medical Colleges found that, in 2014, 79% of graduates left school with debt of $100,000 or more, with 43% leaving with $200,000 or more. The Association of American Medical Colleges also found no correlation between specialty choice and potential debt. While costs may factor into some students' decisions, about 98 percent of students ranked "personality fit" as the number one indicator of specialty choice.

Federal Health Education Loans. The authority to discipline healing arts licensees and deny applicants for defaulting on an HHS loan was established under AB 2019 (Speier), Chapter 683, Statutes of 2002. At the time, the author of AB 2019 stated that $173 million was owed nationwide by health care practitioners in defaulted educational loan debts, $40 million of which was estimated to be owed by California practitioners. According to the author of AB 2019, “these individuals are hard-core defaulters who may only respond to strong local pressure, including revocation or suspension of their license to practice."

However, it is not clear that the loans targeted by that bill are the same loans currently in existence. For example, according to the U.S. Department of Education, the Health Education Assistance Loan (HEAL) Program was only available from fiscal year 1978 through fiscal year 1998 (on July 1, 2014, the HEAL Program was transferred from the U.S. Department of Health and Human Services to the U.S. Department of Education). It is no longer possible to obtain a new HEAL Program loan.

At the time AB 2019 was enacted, the HHS published a list of practitioners who defaulted under the HEAL program in the federal register. Currently, the U.S. Department of Education does not publish this information, but, pursuant to 42 U.S.C. 292h(c), it plans to in the future (82 FR 7807).

Currently, the loans offered by the HHS (through the Health Resources & Services Administration (HRSA)) appear to be aimed at improving health workforce shortages and providing educational opportunities for disadvantaged students from diverse backgrounds. For instance, under the Health Professions Student Loans (HPSL) program, HRSA provides “grants to participating schools to offer long-term, low interest loans to needy students, enrolled full-time or half-time in a dentistry, optometry, pharmacy, podiatric, or veterinary medicine.”

Arguments in support. The California Optometric Association writes that, “…many healthcare providers are burdened with enormous student loan debt upon graduation. For instance, in California, a doctor of optometry pays an average of $152,000 in graduate school tuition alone. Figures estimate the national student loan debt is a staggering 1.3 trillion dollars, second only to mortgages. Repayment of loans is directly correlated with employment. Health care professionals depend upon licensure in order to practice, which enables them to repay their student loans. Health care practitioners should not be penalized for falling into arrears. There already is a shortage of healthcare providers in California, let us not increase the numbers by denying licensure to qualified professionals based upon non-payment of school debt.”

REGISTERED SUPPORT / OPPOSITION:

Support

California Chapter of the American College of Emergency Physicians

California Health+ Advocates

California Optometric Association

Service Employees International Union SEIU Local 1000

Opposition

None on file

Analysis Prepared by: Kevin J. Powers / HIGHER ED. / (916) 319-3960

Date of Hearing: April 4, 2017

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Rudy Salas, Chair

ABPCA Bill Id:AB 508

Author:(Santiago) – As Introduced Ver:February 13, 2017

NOTE: This bill is doubled referred, and if passed by this Committee, will be referred to the Assembly Committee on Higher Education.

SUBJECT: Health care practitioners: student loans.

SUMMARY: Repeals the authority for a licensing board under the Department of Consumer Affairs (DCA), as defined, to cite and fine a licensed healthcare practitioner or deny an initial license application or renewal for a healing arts license if the applicant or licensee is in default on a federal health education loan, as specified.

EXISTING LAW:

1. Provides for the licensure and regulation of various professions and vocations by boards, bureaus, and other entities within the DCA. (Business and Professions Code (BPC) §§ 22, 100-144.5)
2. Categorizes licensed professions into two general types, healing arts and professions and vocations generally. (BPC §§ 500-11506)
3. Authorizes a board to cite and fine a currently licensed health care practitioner if the licensee is in default on a United States Department of Health and Human Services (HHS) education loan, including a Health Education Assistance Loan. (BPC § 685(a))
4. Authorizes a board to deny an application for a health care practitioner license or deny renewal of a license if the applicant or licensee is in default on an HHS education loan, including a Health Education Assistance Loan, until the default is cleared or until the applicant or licensee has made satisfactory repayment arrangements. (BPC § 685(b))
5. Provides that, in determining whether to issue a citation and the amount of the fine to a licensee or to deny an application or renewal of a license, a board shall take into consideration 1) the population served by the health care practitioner and 2) the health care practitioner’s economic status. (BPC § 685(c))
6. Defines, for purposes of discipline based on default on a health education loan, the following terms: (BPC § 685(d))
   1. “Board” means a licensing board or agency having jurisdiction of a licensee, but does not include the Board of Chiropractic Examiners.
   2. “Health care practitioner” means a person licensed or certified pursuant to Division 2 (Healing Arts) of the BPC (§§ 500-4999.129), or licensed pursuant to the Osteopathic Initiative Act.

THIS BILL:

1. Repeals the provisions authorizing boards to cite and fine a healing arts licensee or deny a healing arts initial license or renewal on the basis of default on the health education loans noted in numbers 3) and 4) above.

FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Counsel.

COMMENTS:

Purpose. This bill is author sponsored. According to the author, this bill “will protect the professional licenses of people who are struggling financially by ensuring their licenses will not be suspended or revoked because they have defaulted on federal student loans. Under current law, some licensing Boards have this authority. I believe that California should not be in the business of disciplining working professionals struggling to pay off their debts, especially those who provide a vital service to the public such as nurses, dentists, and doctors. By removing a person’s ability to earn a living by practicing their profession, the state also removes their ability to repay their loans or other bills which contributes to the cycle of debt.”

Background. In California, many professions require a license to legally practice, including many of the healing arts. Many of the professional licenses are administered by licensing boards, bureaus, and other entities within the DCA. The DCA licensing entities are established to protect the people of California through adequate regulation of businesses and professions that engage in activities that risk harm to the health, safety, and welfare of the public (BPC § 101.6).

While the typical focus of licensing is consumer protection, occupational licensing has been used for more general public welfare purposes (although also sometimes indirectly benefiting consumers). For instance, the Contractor’s State Licensing Board has the authority to work with the Labor Commissioner and discipline licensees for failing to carry workers’ compensation insurance (BPC § 7011.4).

Healing arts boards (except for the Board of Chiropractic Examiners) also have an authority that is not directly tied to consumer protection. Currently, the boards are authorized to issue a citation or a fine to a licensee or deny the license renewal of a licensee who has defaulted on a federal HHS education loan. The law also authorizes the boards to deny the license of an applicant in default on an HHS education loan. This bill would repeal that authority.

According to the author, “[w]e believe the authority granted to licensing boards is unnecessarily punitive…. [I]f people had the means to pay down their debt then they would. We would give the benefit of the doubt to professionals that loan default is not the result of careless borrowing, but instead legitimate financial issues. If then debtors are punished by having their licenses revoked or denied we believe this is excessive and actually would actually not motivate people to make payments since they do not have the money to do so.”

According to the DCA, based on discussions with its healing arts boards, it does not appear that the boards have used this authority. One board that had received HHS loan default notifications in the past has confirmed that it no longer does. Even if the boards still wish to use the authority, they may not be the right entity to properly determine what “satisfactory repayment arrangements” are or have the ability to determine equitable thresholds for a practitioner’s “economic status.”

Federal Health Education Loans. The authority to discipline healing arts licensees and deny applicants for defaulting on an HHS loan was established under AB 2019 (Speier), Chapter 683, Statutes of 2002. At the time, the author of AB 2019 stated that $173 million was owed nationwide by health care practitioners in defaulted educational loan debts, $40 million of which was estimated to be owed by California practitioners. According to the author of AB 2019, “these individuals are hard-core defaulters who may only respond to strong local pressure, including revocation or suspension of their license to practice."

However, it is not clear that the loans targeted under by that bill are the same loans currently in existence. For example, according to the U.S. Department of Education, the Health Education Assistance Loan (HEAL) Program was only available from fiscal year 1978 through fiscal year 1998 (on July 1, 2014, the HEAL Program was transferred from the U.S. Department of Health and Human Services to the U.S. Department of Education). It is no longer possible to obtain a new HEAL Program loan.

At the time AB 2019 was enacted, the HHS published a list of practitioners who defaulted under the HEAL program in the federal register. Currently, the U.S. Department of Education does not publish this information, but, pursuant to 42 U.S.C. 292h(c), it plans to in the future (82 FR 7807).

Currently, the loans offered by the HHS (through the Health Resources & Services Administration (HRSA)) appear to be aimed at improving health workforce shortages and providing educational opportunities for disadvantaged students from diverse backgrounds. For instance, under the Health Professions Student Loans (HPSL) program, HRSA provides “grants to participating schools to offer long-term, low interest loans to needy students, enrolled full-time or half-time in a dentistry, optometry, pharmacy, podiatric, or veterinary medicine.”

Prior Related Legislation. AB 2019 (Speier), Chapter 683, Statutes of 2002, authorized a licensing agency to cite, fine, or deny the license application or renewal for a healing arts licensee who is in default on the specified federal health education loans.

REGISTERED SUPPORT:

None on file.

REGISTERED OPPOSITION:

None on file.

Analysis Prepared by: Vincent Chee / B. & P. / 916-319-3301