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State Board Report

February 2016

States continue to wrestle with the meaning of the U.S. Supreme Court’s decision in N.C. State Board of Dental Examiners v. Federal Trade Commission as legislation has been introduced in the 2016 regular sessions in Alabama, Virginia, West Virginia and Wyoming, with a possible "shell bill" filed in South Dakota. (For background, see the December 10, 2015 NASBA webinar on the "North Carolina Dental Case Decision: Implications for State Boards of Accountancy.")

Speaking during the Middle Atlantic Region’s conference call, NASBA Legislative and Governmental Affairs Director John Johnson reported he had worked with the Virginia Board of Accountancy on monitoring and responding to House Bill No. 1388, which requires the agency director of each agency in Virginia’s executive branch to be responsible "for determining if decisions on licensing practitioners, disciplining non-licensees, setting prices or rates, adopting regulations, developing codes of ethics or standards of conduct, or issuing guidance documents or advisory letters, or any other matters that the agency director believes may have a potential adverse impact on competition and, if so, whether such action is consistent with clearly articulated state policy." The bill gives the agency director the authority to approve case decisions, remand the case to the regulatory board if he or she determines it is not consistent with state policy or to remand the case to the regulatory board to obtain more information on "specific market issues." Mr. Johnson explained, "This is one of several ways jurisdictions are addressing active state supervision as set forth in the NC Dental Board case."

The bill that has emerged in West Virginia, based on the North Carolina Dental Board case, would change the composition of the Board of Accountancy. Presently the Virginia Board has seven members including five certified public accountants; however, House Bill 4312 would alter that so that three members would be CPAs and three members must be "retired, inactive or emeritus members…and may not be licensed to practice under the provisions of this article." The Bill goes on to state that any Board member who is unlicensed or who holds a retired, inactive, or emeritus license immediately and automatically forfeits his or her membership on the board if he or she obtains an active license that would permit him or her to practice under the provisions of this article. An additional "citizen member" of the Board cannot be a person who offers to the public any bookkeeping, tax preparation, financial advisory or insurance service.

"Unfortunately," Mr. Johnson observed, "based on what we glean from the FTC staff guidance paper as it relates to what constitutes a ‘controlling interest of licensees’ serving on state boards, replacing two ‘active’ CPAs with retired, inactive or emeritus members would not accomplish what was intended – and that is to protect the board from an anti-trust lawsuit."

While similar West Virginia legislation was filed for each of the other West Virginia professional licensing boards, Mr. Johnson pointed out that the West Virginia Accountancy Board became well educated on the issues surrounding the North Carolina Dental Board case in record time.

"West Virginia Board member David Hill did one heck of a job delivering the message before the House Government Organization Committee and, so far, accountancy is the only profession to defeat the bill in committee," he said. Noting that the West Virginia Board anticipates the bill will come up again before the legislature adjourns, Mr. Johnson remarked: "We won this battle, but not the war."

Mr. Johnson will be participating in all the NASBA Regional conference calls. He encourages all states to regularly review the legislation tracking and the North Carolina Dental Board case pages on this website.

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