Inspector Renewal Costs $931?

The inspector “violated 815 KAR 6:010 Sec. 5(2) by failing to pay his renewal fee,” the Final Order says.
     The result?
     Cough up the license renewal fee ($400) plus $531.25, supposedly for “costs and fees” of the Kentucky Board of Home Inspectors (KBHI).
     That’s a total renewal hit of $931.25 in cash.  Not to mention everyone’s time, lost business, etc.
     That socko order came on the KBHI’s second ever Settlement Agreement.  It was approved in a Final Order of the Board at Tuesday’s (11/12/13) meeting, ending Case No. 13-KBHI-00181, KBHI v 
ted Shields.  It was settled on the brink of a Aug. 27 hearing.
    The published Order makes it sound like it is just a “nonpayment” case.  There was more to it than that, but anyone trying to learn from the written Order itself would never know it.  Which is the wrong way to get to the right result.  Anyone reading it years from now should know exactly what the facts were.  But at least the decision is in print. That, alone, is progress.
    The case actually was described as a bounced check sent for license renewal, during discussion of the case at the Board’s September meeting.  But there was still more left out of the Order. 

     Still, the takeaway is brutally blunt.  Bouncing a check for the home inspector license renewal fee is more dangerous than any other check you could write.

Go to Kroger and bounce a check.  You end up paying the check and a bounce fee like $50.  Not because Kroger, or any other merchant, is golden hearted about hassling bounced checks.  Just because that is all the law allows.

That’s the fly in the ointment here.  The KBHI had every right to make an example of the bounced check here.  Especially with all the other facts.  But where does the law authorize the KBHI to charge “fees and costs”?

After all, the KBHI is completely funded by home inspector license fees.  Licensees pay all its costs to start with.  That means home inspectors already pay 100% of KBHI “costs” and luxuries – including its 3-day resort “retreats” in the woods the last two years.

Actually, home inspectors pay way more than 100% of the Board’s costs.  Since 2008, over $300,000 in license fees was “swept” – taken – to balance the state budget.  That’s all money that was lying around unspent – after paying 100% of the KBHI costs.  So it is fair to say the Board not only had zero unpaid costs, it had more money that it could spend.
Did the law somehow let the Board charge “costs and fees” anyhow?  Not.
Bluntly, the KBHI affirmatively is not allowed, by one word in its statutes, to charge fines, fees, costs, or any other money punishment.
The Board’s power to discipline are specific, and limited – by the same law that created the KBHI.  It can revoke or suspend a license, or require extra CE, put a license on probation, or issue a reprimand.  That’s it.  Fees, fines, and the like plainly are not on the list.
The history of the licensing law removes any doubt.
Twice the Board asked the legislature to give it power to “fine” (the first time) or levy “monetary sanctions” (the second time).  Twice the General Assembly rejected the very idea.  (It kicked around asking a third time, but decided the message was loud and clear.)  In fact, practically none of the boards at the Office of Occupations & Professions with the KBHI have any power to fine or pick licensee pockets with money penalties.  Fining and collecting money is a power that the legislature knows has a history of inviting abuse.  It goes to people’s heads.  Next thing you know, a board is intimidating licensees to give in, whether they were right or wrong, regardless of what is fair.
So where did this come from?  Not the General Assembly, and not in the law, obviously.  Those would be legitimate sources.  Not any court decision, either.
Instead, it was a “what the heck” idea from the Board’s most laughable lawyer, Mark Brengelman, recently retired in mid-life from his post at the Attorney General’s Office (OAG).  Since the Board lost support of the Housing, Building & Construction department’s full-time  lawyers who know this field, the KBHI has been renting lawyers hourly from the OAG.
Brengelman history was a minor legend in the OAG.  He snookered the Board of Pharmacy into chasing some poor licensee all the way to the Ky Supreme Court to hassle his pharmacy license.  The pharmacist won.  It was not even close.  The Supreme Court decision said Brengelman’s idea of state law was “patently absurd.”  By the time the Board of Pharmacy finished paying the huge bills to win a decision that it was dead wrong, Brengelman was no longer the Board of Pharmacy lawyer.  He turned up at the KBHI.
At the KBHI, Brengelman wrote a regulation let Board members pay themselves all they wanted.  “Poorly drafted” was just one of the comments from the General Assembly that reviewed it — and shot it down — unanimously (a rare result with parties so divided).  Brengelman waltzed then KBHI chairman Mark Schmidt into a buzz saw at the legislative hearing.  Bad enough that he sat Schmidt up as an unprepared sitting duck, while Brengelman sat there thinking he could snooker the legislative committee too.  You can watch the embarrassing show on video at _____.  But, more to the point, the legislature was as blunt as the Supreme Court.  It did not just say the regulation was “poorly drafted.”  That was being polite.  It dumped all over the proposed regulation, and the very idea behind it.  Then it told Schmidt it would sweep all the KBHI cash sitting around – that Brengelman claimed would let the Board pay itself more.
It was no coincidence that the third time the Board kicked around fines, it was Brengelman who told the Board it should ask for fines “up to $10,000.”  Why he stopped short of the death penalty we’ll never know.  But a $10,000 fine would be a death penalty for practically any home inspection business in Kentucky.
In the KBHI’s first “settlement,” Brengelman told the Board it was a “fine.”  Figuring out (with help) that there was no authority to fine, Brengelman then wrote up the “fine” as so-called “fee and costs.”  Then he misled the inspector, and even tried to intimidate him to sign the deal.  Among other things, Brengelman sent threat letters on the Attorney General’s letterhead – to let the inspector feel the whole Attorney General’s Office, which tries criminal cases on endless budgets, was landing on him.  (After Brengelman’s exit, the OAG announced a policy forbidding that kind of intimidation or coercion with its letterhead for state board lawyers.  They use board letterhead now.)
That was not enough.  The inspector knew he was right about the law.  So Brengelman upped the ante.  He then threatened to add $1,500 in imaginary “fees and costs” on top.  That was an entirely made-up number.  It was a pure scare tactic.  Conscientious boards would be somewhere between embarrassed and mortified to see its lawyer need to stoop that kind of “might makes right.”
The put-upon inspector had a great case.  He would have won – except that it would cost more to go there than to bite his lip and pay an illegal fine.  Recovering his legal bills in court was unlikely, leaving aside the time, aggravation, risk it would take.  So the inspector folded.
From that abuse came Tuesday’s Settlement Agreement.  The theory is that it is a private contract.  People are free to do whatever they decide to do.  The excuse for putting in “fees and costs” now seems to be than a home inspector can agree to anything to settle a case – whether or not the KBHI has any authority to do whatever is involved, like a fine, or “fees and costs.”
If that were true, it would be OK to agree to 20 lashes, or a pound of flesh.  It is not OK.  The Board simply cannot demand any penalty it has no authority – from the General Assembly – to impose.  When the General Assembly delegates power to an administrative board to “carry out” a licensing law, that board has only the power delegated.  Nothing more, nothing less.

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