Opinion #6760

The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)

STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6760

April 16, 1993

ADMINISTRATIVE LAW:

Administrative agency holding a hearing and issuing sanctions after a license has lapsed

Under the Forbes Mechanical Contractors Act, the administrative agency has jurisdiction to hold an enforcement hearing to review conduct of a contractor which occurred while the contractor was licensed, and to issue authorized sanctions, including restitution, even though the contractor is no longer licensed.

Honorable Frank M. Fitzgerald

State Representative

The Capitol

Lansing, MI

You have asked a question which may be stated as follows:

Under the Forbes Mechanical Contractors Act, does the administrative agency have jurisdiction to hold an enforcement hearing to review conduct of a contractor which occurred while the contractor was licensed, and to issue authorized sanctions, including restitution, even though the contractor is no longer licensed?

The Forbes Mechanical Contractors Act (the Act), 1984 PA 192, MCL 338.971 et seq; MSA 18.86(1) et seq, as set forth in its title, was adopted to regulate:

[T]he use, installation, alteration, and servicing of specified heating, cooling, ventilating, and refrigerating equipment and systems; to create a board of mechanical rules; to provide for the licensing of installing contractors and of servicing contractors of heating, cooling, ventilating, and refrigerating equipment and systems; to prescribe fees; to provide for the promulgation of rules; and to prescribe penalties.

In addition to setting forth the standards and requirements for licensure for the various trades listed, the Act sets forth the authority of the Department of Labor and the Board of Mechanical Rules. A detailed protocol has been established for receiving and investigating complaints. Specifically, section 11 of the Act provides, in pertinent part:

(1) The department may investigate the activities of a licensee related to the licensee's activities as a contractor. The department may hold hearings, administer oaths, and order relevant testimony to be taken and shall report its findings to the board. The board shall proceed under section 16 if the board finds that any of the following grounds exist:

(a) The practice of fraud or deceit in obtaining a license under this act.

(b) The practice of fraud or deceit in the performance of work for which a license is required under this act.

(d) The practice of false advertising.

(e) An act which demonstrates incompetence.

(f) A violation of this act or rule promulgated under this act.

(4) A revocation, suspension, or other sanction set forth in subsection (3) or section 16 shall be imposed only after a hearing has been conducted pursuant to the administrative procedures act of 1969, Act No. 306 of the Public Acts of 1969, being sections 24.201 to 24.328 of the Michigan Compiled Laws.

(5) The installation, alteration, or servicing of heating, cooling, ventilating, or refrigerating equipment or systems shall not be performed under a license that has been suspended, revoked, or has expired. A license, other than a license issued under this act, shall not be recognized for securing permits to install, alter, or service heating, cooling, ventilating, or refrigerating equipment or systems. [ Emphasis added.]

Sanctions permitted under the Act are found at sections 16 and 17. These provisions state:

Sec. 16. After finding the existence of 1 or more of the grounds for board action described in section 11(1) and after an opportunity for a hearing, the board, except as provided in section 11(2), shall impose 1 or more of the following sanctions for each violation:

(a) Suspension of the license issued under this act.

(b) Denial of the license required under this act.

(d) A requirement that restitution be made.

Sec. 17. If restitution is required to be made under section 16, the license of the person required to make the restitution may be suspended until restitution is made. [ Emphasis added.]

Administrative agencies have only those powers statutorily conferred upon them either expressly or by necessary implication. Coffman v State Bd of Examiners in Optometry, 331 Mich 582, 590; 50 NW2d 322 (1951). Here, in section 11(1) of the Act, the Legislature has expressly authorized the agency to investigate "the activities of a licensee related to the licensee's activities as a contractor." There is no language in the Act which precludes the administrative agency from investigating and holding a hearing concerning the contractor's conduct as a licensee once the license has expired.

The intent of the Legislature in the Forbes Mechanical Contractors Act, supra, was to regulate the practice of certain occupations. In doing so, the Legislature sought a measure of protection for the consumers of these services. Inherent in providing that protection is the requirement that licensees submit themselves to the scrutiny of the various licensing boards concerning their conduct as licensees. Prudent public policy suggests that the welfare of the citizens of the state is compromised when potential violators of a licensing statute are allowed to circumvent the authority of the agency merely by allowing their licenses to lapse, thereby escaping possible sanction.

This conclusion is buttressed by the Court's decision in In the Matter of Probert, 411 Mich 210; 308 NW2d 773 (1981). In that case, the Judicial Tenure Commission found that Charles Probert, a former municipal court judge, had committed judicial misconduct and recommended that he be permanently enjoined from holding judicial office. The proceedings against Judge Probert, although commenced while he was still on the bench, concluded after his term of office had expired. The judge challenged the authority of the Commission, claiming that since he was no longer a judge, the Commission lacked jurisdiction over him.

In rejecting various aspects of the judge's challenge, the Supreme Court stated, at pages 226-229:

Because the possibilities of censure and conditional suspension remain after a judge charged with misconduct steps down or fails to be reelected, a judicial discipline case does not become moot the instant the judge leaves office. Effective relief can still be granted; a controversy still exists. [ Citations omitted.] Establishment of a rule, therefore, calling for immediate termination of commission proceedings upon a judge's leaving office is unwarranted.

Such a rule would also be unwise. A judge charged with misconduct should not have the power, simply by leaving office, to short-circuit investigation of the allegations against him, leaving the proceedings incomplete and subject to the abrasion of time. [ Footnote omitted.]

Furthermore, to hold that this Court has no power to discipline a former judge would work undue mischief, which would be most apparent, for example, in a case in which a judge leaves office after his case is submitted to us and only the question of discipline remains. Such a holding would mean that at a time when the commission has completed its work and we have before us all the information and materials necessary to render judgment, our power to vindicate the integrity of the judiciary could nonetheless be negated by wholly irrelevant occurrences such as the expiration of the judge's term of office, his resignation, or the length of time we take to decide the case.

Ultimately, the Court imposed the sanctions of censure and five-year conditional suspension without pay.

More recently, in Rutherford v Dept' of Social Services, 193 MichApp 326, 328-329; 483 NW2d 410 (1991), lv den 441 Mich 886 (1992), the Court of Appeals addressed the question whether the Department of Social Services had jurisdiction over a Medicaid provider who had resigned from the Medicaid program where the controversy concerned claims which the provider had filed prior to his resignation. The Court held:

The threshold question is whether DSS had jurisdiction over petitioner, being that he resigned from the medicaid program before DSS notified him that it sought recovery of overpayments. Section 111a of the Social Welfare Act authorizes the director of DSS to "[r]ecover payments to a provider in excess of the reimbursement to which the provider is entitled." MCL 400.111a(7)(d); MSA 16.490(21a)(7)(d). Section 105 defines a "provider" as an individual, sole proprietorship, corporation or any other legal entity "who has entered into an agreement of enrollment" in the medicaid program. MCL 400.105(4); MSA 16.490(15)(4).

In addition, the practitioners manual provides that a claimant continues to be subject to the conditions of the program for six years from the last date of service for which a claim is made. By virtue of the fact that petitioner enrolled in the medicaid program and agreed to the policies delineated in the practitioners manual upon enrolling, DSS obtained jurisdiction over him. Though he resigned in 1985, he remained subject to the provisions of the program in 1987 for claims made before his resignation. [ Emphasis added.]

Significantly, the Court reached this result even though the administrative hearing had not begun prior to the resignation of the provider.

Section 11(4) of the Act requires that a hearing be conducted pursuant to the Administrative Procedures Act of 1969, 1969 PA 306, MCL 24.201 et seq; MSA 3.560(101) et seq, before administrative sanctions may be imposed. Section 92 of the Administrative Procedures Act of 1969 provides that, after summary suspension of a license, the administrative agency continues to have jurisdiction to hold a hearing concerning the conduct of the former licensee. M & S Inc v Attorney General, 165 MichApp 301, 309; 418 NW2d 441 (1987).

Cases from other jurisdictions also support the principle that an administrative agency may hold hearings and impose sanctions against licensees whose licenses have expired. State v Otterholt, 234 Iowa 1286; 15 NW2d 529, 532 (1944); Gilpin v Bd of Nursing, Dep't of Commerce, State of Montana, 837 P2d 1342, 1344 (1992).

It is my opinion, therefore, that under the Forbes Mechanical Contractors Act, an administrative agency has jurisdiction to hold an enforcement hearing to review conduct of a contractor which occurred while the contractor was licensed, and to issue authorized sanctions, including restitution, even though the contractor is no longer licensed.

Frank J. Kelley

Attorney General