AICPA and NASBA back bill limiting legal damages against state accounting boards

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The American Institute of CPAs and the National Association of State Boards of Accountancy are throwing their support behind legislation that would limit damage awards against state regulatory boards such as state accounting boards.

The bill, known as the Occupational Licensing Board Antitrust Damages Relief and Reform Act, was introduced by Rep. Mike Conaway, R-Texas, who is also a CPA. It would protect not only state regulatory boards such as accountancy boards from legal damages, but also board members and their staff.

The bill also calls for a Government Accountability Office study that will examine licensing reform, how states can perform cost-benefit analyses through sunrise and sunset reviews; how states can provide greater portability, including for military veterans and spouses; and how licensing affects low-income workers and those with criminal records.

The legislation aims to address the antitrust law implications for state professional and occupational licensing boards affected by the Supreme Court's 2015 decision in North Carolina State Board of Dental Examiners v. Federal Trade Commission. The court ruled that the North Carolina Dental Board was not entitled to “state action” immunity from antitrust laws because its actions were not actively supervised by the state.

The bill would safeguard state boards, board members and their staff members from damage awards stemming from private antitrust litigation. It would also allow both government enforcers and private plaintiffs to continue to sue for injunctive relief (and potentially recover attorneys' fees if successful). To get liability relief, the bill says specific criteria need to be met:

  • For new occupational licenses, the state must have a sunrise review mechanism in place;
  • For existing boards, a periodic sunset review is required unless the occupation is licensed in at least 40 states; and,
  • Boards must also meet two compositional criteria -- specifically, all board members must be selected by an officer of the state and the boards must have public representation.

Conaway served for seven years as a member of the Texas State Board of Public Accountancy, with five of those years as presiding officer. In addition, he served as chair of NASBA from 2002-2003. As a licensed Texas CPA for over 40 years, he has a good idea of the significance of having licensed professionals serve on state boards.

“State licensing boards provide an invaluable service to the state,” Conaway said in a statement. “Individuals who serve on these boards should enjoy the same legal protections for working on behalf of the state as all other state officials do. Having served on the Texas State Board of Accountancy myself, I understand that serving on a licensing board is performing an important public service. This legislation ensures that members of state licensing boards will continue to serve the state without fear of personal liability.”

Both the AICPA and the NASBA are lending their support.

“Public protection can only be attained in its truest form with the passing of this most important legislation,” said NASBA President and CEO Ken Bishop in a statement. “Over the last several years, the actions of state boards of accountancy, appointed board members and staff have been placed under a cloud of uncertainty, including the prospect of antitrust treble damages as they carry out their duties under state law. This narrowly targeted bill will ensure state boards can continue their statutory mandate to regulate the practice of public accountancy without threat. I commend Congressman Conaway for leading this effort. As a former Texas State Board member and chair, he understands the vital role state board members play to protect the public."

“The accounting profession believes that a federal solution is necessary to ensure that current and prospective state board members are not dissuaded from serving because of uncertainty over any potential liability arising from their public service,” said AICPA President and CEO Barry Melancon in a statement. “We commend Congressman Conaway for recognizing and addressing this very real threat to voluntary service on state boards of accountancy and other licensing boards.”

The AICPA originally voiced its concern about the ruling’s impact in a letter last September submitted for a congressional hearing. In the letter, Melancon pointed out that state professional boards could lose qualified and experienced members because of the risk of personal liability in lawsuits related to actions taken in the members’ official capacities.

The AICPA hopes to remove the potential for personal financial liability of appointed state board members under antitrust laws, including people who serve on state boards of accountancy. “There is widespread agreement regarding the importance of well-functioning licensing boards, in such learned professions as medical, legal, accounting, engineering, architecture and more, to promote and protect public health, safety and welfare,” said Melancon. “Therefore, the AICPA believes that a federal solution is important to ensure that current and prospective state board members are not deterred from serving because they are uncertain as to any potential financial liability that could arise from their public service. Such legislation should provide a balanced approach to protecting the public while also allowing for competition in the marketplace for consumers.”

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Finance, investment and tax-related legislation Certifications and licensing Barry Melancon Ken Bishop AICPA NASBA