HB 9-PRIVATE INVESTIGATORS/AGENCIES  4:12:02 PM CHAIR OLSON announced that the final order of business would be HOUSE BILL NO. 9, "An Act providing for the licensing and regulation of private investigators and private investigator agencies; and providing for an effective date." 4:12:40 PM REPRESENTATIVE HUGHES, speaking as prime sponsor of HB 9, presented HB 9. She acknowledged she introduced a similar bill to license private investigators last year when it was brought to her attention that a felon could get a business license and operate as a private investigator. She related a situation in which a family lost a daughter and was approached by such an unscrupulous individual. She emphasized that a presumption of authority exists when someone identifies himself/herself as a private investigator. In those instances citizens might offer the private investigator personal information that they might not otherwise give out. She offered her belief that this is something that should be addressed. She described her approach to curb this activity was not to create a costly board, but to pattern private investigator licensing after other professions licensed by the division. Finally, since the fiscal note for licensing private investigators quadrupled from one the division proposed last year, she has questions for the department about the fiscal note, she stated. 4:14:49 PM GINGER BLAISDELL, Staff, Representative Shelley Hughes, Alaska State Legislature, on behalf of the prime sponsor, presented a section-by-section analysis of HB 9. She stated that Section 1 would include private investigators as one of the specified professions licensed under the Department of Commerce, Community & Economic Development (DCCED) and Section 2 would require private investigators to be licensed in the state. This provision clearly states that person may not practice private investigating unless licensed under this chapter or exempt from being licensed, noting a number of exemptions exist. A person may not use the title of or practice as a private investigator unless the person is registered with the department or it could result in a misdemeanor. 4:15:55 PM MS. BLAISDELL referred to page 2, line 4, of proposed AS 08.85.110 that outlines the scope of practice for private investigators, including investigating criminal offenses, obtaining information from individuals, or gathering evidence to be used in court. Private investigators working in the state have advised the sponsor that if someone has not received adequate training, the collection of evidence may not admissible in court. 4:16:59 PM MS. BLAISDELL referred to page 2, line 19, of proposed AS 08.85.120 that outlines the general requirements for a private investigator. She related that in order to obtain a license as a private investigator, an applicant must be a citizen, cannot have been convicted of a felony in the prior 10 years or been convicted of a crime of dishonesty or sexual misconduct, or have received a dishonorable discharge from the military, or have been determined to be mentally incompetent by a court of law. Further an applicant cannot currently be on probation or parole, she said. 4:17:51 PM MS. BLAISDELL referred to page 3, line 15, of proposed AS 08.85.130, which would create two classes of license, with a class A license being a more advanced professional level of private investigator and a class B license an entry level position, such as an apprentice who may need additional experience or training to become a class A private investigator. She directed attention to page 4, lines 21-31, through page 6, line 12 of HB 9 to language that identifies the information for the license application, including providing the typical standard information, plus providing criminal history and conviction record, employment records, and a statement that the applicant is free from mental illness. Applicants must submit fingerprints and fees for the criminal history record check, letters of recommendations from three citizens without any prior felony convictions, and the application must be notarized, she said. 4:19:41 PM MS. BLAISDELL referred to page 6, line 13, of proposed AS 08.85.170 that would allow the department to conduct background investigations of applicants. She directed attention to page 6, lines 19-28, which would create provisions for reciprocity to allow private investigators licensed in another state, with comparable qualifications, to become licensed in Alaska. 4:20:28 PM CHAIR OLSON asked how many states currently license private investigators. MS. BLAISDELL answered that she was unsure. She recalled that approximately 109 Alaskans have identified themselves as private investigators and approximately 40 out-of-state investigators. In further response, she answered that she was not sure how many other states currently license private investigators. MS. BLAISDELL clarified that proposed AS 08.85.200 would allow Alaska to recognize private investigators licensed in other states, but she wasn't certain how many states would recognize Alaska's private investigators for reciprocity. In further response, she related that a wide range of licensure programs exist in other states. She recalled that four states do not license private investigators, but some states provide municipal oversight, although others have statewide laws. 4:21:41 PM MS. BLAISDELL referred to page 6, lines 29-31 through page 7, line 12, of proposed AS 08.85.210, noting the department would issue an identification card that will list the private investigator's license number, which must be carried while the investigator is performing private investigator duties. MS. BLAISDELL directed attention to page 7, lines 12-31 through page 8, line 15 of proposed AS 08.85.220, to the requirement for a private investigator agency certificate, noting the department will issue a private investigator agency certificate if the primary employee meets the requirements of possessing a class A license and the agency is insured and bonded. She referred to page 8, 1ines 16-31 through page 9, line 2, of proposed AS 08.85.230 related to license renewal and nontransferability of licenses. She related that a private investigator license is not transferable, but can be renewed as long as the qualification criteria is still valid; however, approximately every five years a licensee must submit to an additional background check. 4:22:43 PM MS. BLAISDELL directed attention to page 9, lines 3-11, of proposed AS 08.85.240, which pertains to firearms training. She explained this provision was added to ensure that people entering into high risk situations would have successfully completed firearms training. MS. BLAISDELL directed attention to page 9, lines 12-17, which provides confidentiality of licensees' personal identifying information. Under proposed AS 08.85.260, prohibited practices, licensees cannot collect information for illegal purposes. This provision also prevents people from impersonating a private investigator by carrying a badge or uniform, or display flashing vehicle lights. 4:24:20 PM MS. BLAISDELL, referring to page 10, line 24 of proposed AS 08.85.270, explained that this basically states that an action may not be brought against a person who files a complaint in good faith against a licensee. She surmised that private investigators may encounter some people who might wish to complain about the legitimate activities of a licensed private investigator. Thus a private investigator can't be sued for damages because he/she located the person he was hired to find. She next referred to page 10, lines 27-28, noting that the regulations will be conducted by administrative procedures by the department. MS. BLAISDELL directed attention to the exemptions beginning on page 10, lines 29-31 through page 12, line 13, that lists the types of people who are exempt from private investigator licensure, including people who perform professional investigative services in their normal course of business, such as attorneys, law enforcement officers, insurance agents, bank employees, forensic scientists, fire investigators, and paralegals, while acting within the scope of their employment. She characterized these exemptions include a number of professions that do not require additional licensure as a private investigator. 4:26:12 PM MS. BLAISDELL stated the bill contains a few definitions, and transitional provisions that allow someone who has met the requirements of this chapter who is operating as a private investigator to continue to do so until the business license renewal. She related that the effective date of the bill is July 2015, although the department would like to postpone the effective date to allow time to adopt regulations. 4:26:50 PM REPRESENTATIVE HUGHES emphasized that private investigators cannot wear any type of badge that attempts to portray them as law enforcement officers or some type of state or federal officials. 4:27:37 PM CHAIR OLSON asked for clarification on the fiscal note. MS. BLAISDELL deferred to the department to discuss the fiscal note; however, she pointed out the fiscal note in members' packets refers to House Bill 253, which was a bill introduced last legislature to license private investigators, which did not pass. She included a fiscal note for the aforementioned bill since it provides a basis for discussion for the fiscal note for HB 9. 4:28:25 PM REPRESENTATIVE LEDOUX referred to page 3, lines 13-14, to subsection (c), which seems overly vague for a conflict of interest. She suggested it may give the department unfettered authority to establish a conflict of interest as opposed to specifying circumstances. MS. BLAISDELL stated that this bill was patterned after Colorado law. She said that the applicant may not be currently employed in a position the department determines to represent a conflict of interest for the prospective licensee. The provision specifically restricts licensees from being currently employed as a peace officer or federal, state or local government in the capacity of law enforcement. She suggested that a person might be employed in a profession that could create a conflict of interest, such as someone who is a human resource officer who has access to more information. She suggested there will always be odd circumstances and questions as to whether the department should have the discretion. 4:31:02 PM REPRESENTATIVE LEDOUX interjected that she feels uncomfortable with [the department determining any conflict of interest]. REPRESENTATIVE HUGHES welcomed suggestions in improving that provision. 4:31:27 PM REPRESENTATIVE JOSEPHSON referred to page 2 of HB 9 to the scope of practice for investigators. He wondered whether proposed AS 08.85.110 would cover all the activities of a private investigator and if the activities listed were based on a model bill. MS. BLAISDELL explained that the private investigator licensing bill used Colorado's law, which was tweaked by Legislative Legal to comport with other statutory provisions. REPRESENTATIVE HUGHES reminded members that the previous bill had input and review from private investigators so she thought the private investigators would have pointed out any investigative activities that were missing. 4:33:32 PM REPRESENTATIVE JOSEPHSON referred to page 7, to subparagraph (A) to errors and omissions insurance. He asked what is known about private investigator negligence. He stated that private investigators could be liable for errors and he wondered if private investigators can obtain insurance. He said he has never heard of any insurance being offered, but wondered whether private investigators could be sued for such things as reporting that adultery occurred when it actually didn't occur. MS. BLAISDELL answered that the bill requires surety bonds and errors and omissions insurance, which was set at $100,000 at the recommendation of a private investigator. She reported that the surety bond is standard practice, that the City of Fairbanks requires licensing for private investigators, as well as requiring a surety bond of $10,000, or $20,000 if the private investigators are licensed in two or more states. She was unsure about the errors and omissions insurance, but offered to research this for the committee. 4:35:41 PM REPRESENTATIVE JOSEPHSON referred to the concealed handgun provisions and asked whether any second amendment constitutional issues exist. MS. BLAISDELL replied that she asked for clarification from Legislative Legal Services in terms of the permit to carry a concealed handgun. She reported the legislative legal drafters advised that Alaska law does not prohibit anyone 21 years of age or older who may legally possess a firearm from carrying a concealed weapon. Thus, anyone can carry a concealed firearm without a special permit or training. Further, Alaska provides that a person may obtain permit to carry a concealed handgun, with the primary reason to obtain an Alaska concealed handgun permit is to be able to carry a concealed handgun in other states. She stated that in order to obtain a concealed handgun permit, a person is required to successfully complete an approved handgun course under AS 18.65.715, typically conducted by the Alaska State Troopers or by several private entities. Last year during discussions on the previous bill, it was deemed important that if private investigators were to carry any weapons while encountering higher-risk situations, that some type of training should be required. 4:38:15 PM REPRESENTATIVE JOSEPHSON asked whether the penalties for failure to comply with the investigator certificates [under proposed AS 08.85.220 (e)] was consistent with violations of other professions, for example, if someone calls themselves a nurse, but he/she is not one, whether the person is subject to a class A misdemeanor. He pointed out some of the violations are technical such as in [subsection (c), paragraph (5)] that requires notifying the department within 30 days of any change in the agency's officers, directors, or partners. REPRESENTATIVE LEDOUX referred to the extensive list of 18 exemptions and wondered why so many exemptions were allowed if horrendous things can happen with unlicensed private investigators. She asked why the bill was only concerned about people conducting investigations with their own individual business, but not for those working for an attorney or an insurance agent. REPRESENTATIVE HUGHES stated that in many of the exemptions, the professionals conduct investigations as part of their duties and they have some oversight, whereas private investigators are sole practitioners. She suggested that some of the other professions require their own licensing. 4:41:25 PM REPRESENTATIVE LEDOUX referred to page 10, line 31 through page 11, line 2, which read, "(1), a person who is employed exclusively or regularly by one employer that is not a private investigator agency and who performs investigations solely in connection with the affairs of that employer." She offered her belief that could be someone working for an insurance company. She offered her belief that if licensing is going to be required for investigators, that it should cover everyone. MS. BLAISDELL responded that the business license classification for investigations was very broad, and the types of investigators who seek licensure tend to be the ones who are in business for themselves with broad access to database information. Typically, insurance adjusters work for insurance agencies, and if someone has a concern, he/she could contact the employer. 4:44:33 PM REPRESENTATIVE LEDOUX argued that these investigators could be hired by an insurance company or an attorney seeking information. She expressed concern that the investigators might misidentify themselves just to obtain the information, but the employers might not be concerned since their goal is to hire investigators to find out. REPRESENTATIVE HUGHES suggested that it isn't necessary to license everyone who puts on Band-Aids as licensed practical nurses, that there must be a limit. She explained that people working under these exemptions have employers. Although she understood the concern, she suggested there must be a limit as to who needs licensure. She maintained that the exemptions are for people who work for employers so they have oversight and likely work under a set of requirements in their professions that may address the concerns. 4:45:48 PM REPRESENTATIVE LEDOUX agreed the employers might have requirements, but she is not sure that they do, which is her concern. REPRESENTATIVE HUGHES suggested that the division might be able to provide a response on the exemptions for professions covered by licensure. CHAIR OLSON asked to discuss the fiscal note. 4:46:26 PM SARA CHAMBERS, Acting Director, Division of Corporations, Business, and Professional Licensing, Department of Commerce, Community, & Economic Development (DCCED), said the fiscal note reflects the level of staffing and costs to start a new program, for licensure costs and enforcement. The licensing examiner would need to compile information and determine eligibility and the division's investigators would need to review the information to determine if it is true and accurate and the applicant was not withholding information that will keep them from meeting the threshold for licensure. Certainly, the division would not expect 100 percent of the licensing examiner or investigator's time to be charged back to the private investigator licensing program. Last year the division received three new licensing programs as well as a significant expansion of a program, but failed to ask for additional support within the division. This resulted in the division not being able to absorb the costs, therefore; the division will request the minimum staff it needs for any new programs. She related her understanding that a portion of the licensing staff might be charged to other licensing programs. 4:50:00 PM REPRESENTATIVE JOSEPHSON said it sounds like the division will be shifting some of the burden of the private investigator licensing program to some of the other new programs. However, it doesn't seem fair for the private investigators to absorb the 2014 new licensing program costs. He wondered if the division must explain to the other programs why their fees will be increased or whether he is missing the point. MS. CHAMBERS explained that the division puts forth a certain level of service regardless of the number of staff, which depends on the length of the lag time to process new licenses, for example, if applicants must wait three weeks, six weeks, or a year for licensure. Thus the volume doesn't reflect the activity, but the level of service can be provided. She did not necessarily think there will be additional costs for a specific program, but the division desires to provide a high level of service to the state. For example, the Alaska State Medical Board just completed its renewal period at a time when the division experienced an influx of applications. Having additional staff available allows the division to temporarily assign licensing examiners to programs that need seasonal help, in this instance, to assist the medical board license doctors to ensure that hospitals were fully staffed and able to function. In fact, Alaskans have a high expectation for service and the division can experience a need for help in any of its licensing programs, she said. 4:52:41 PM REPRESENTATIVE HUGHES expressed concern that the fiscal note was nearly quadruple of the fiscal note on a similar bill last legislative session. She recalled during the presentation for the Division of Corporations, Business & Professional Licensing, that Ms. Chambers reported the range for license fees was a minimum of $50 for some professions to $1,700 for midwives. However, she reported that page 3 of the fiscal note for HB 9, lists an estimated license fee of $2,900 for private investigators. She questioned the figures since the fiscal note to license private investigators last year was $60,000 total instead of $230,000. She wondered why private investigators were being asked to help cover the expenses for the error of licensing costs for three new professions last year. She explained that it was not her intent to create a bureaucracy. She further questioned the need for 1.5 licensing examiners to license a potentially 140 private investigators in the state. She stated that this program was patterned after some processes in place for other professions, including fingerprinting. She expressed concerned about the proposed costs to license private investigators as well as their proposed biennial fees. MS. CHAMBERS replied that she did not anticipate the 1.5 staff positions proposed for the program to charge all of their time to the private investigator program. It's possible the proposed private investigator licensing program might need a fulltime investigator for a month, or 80 percent of an investigator's time for three months, or perhaps 60 percent for six months. After the initial licensure period, the investigator's ongoing commitment could be reduced to 30 percent, she said, noting that the fiscal note anticipated the absolute worst case scenario, and took into account the number of exemptions that must be considered as well as potential complaints. However, at this point the division doesn't know how many private investigators will apply for licensure. She described the fee setting process as being very dynamic, one that depends a number of factors outside the division's control. It is more likely that private investigators will pay fees closer to those of midwives, but the projected $2,900 in biennial fees were based on the information the division has today. Any portion of staff time not used for the private investigator program will be charged to another program. For example, if the licensing examiner assigned to the private investigator program was temporarily assigned to help medical board process applications or license renewals, the examiner's time will be charged to that program, she said. 4:57:10 PM REPRESENTATIVE HUGHES questioned the ratio of 1.5 staff for this program. She asked for further clarification on the number of staff assigned to other non-board professions of similar size - with 150 licensees - since 1.5 staff seems very high. MS. CHAMBERS answered that it depends on the program. She explained that some programs with under 100 licensees are assigned one fulltime staff; however, other programs may have several thousand licensees but their profession requires minimal requirements for licensure, with little need for investigations. Thus, those professions may be assigned one-half or one fulltime licensing examiner. Certainly, at times the division may assign multiple investigators to work on one investigation. However, for this program, the division envisions that investigating licensees and reviewing the allowable exemptions will initially require quite a bit of "hands on" effort. It seemed highly unlikely the private investigator licensees would be charged $2,900 in biennial fees or that it would take 1.5 staff to maintain the program. The division will employ the practice of positive timekeeping. She emphasized that the division cannot absorb these program costs so it anticipated the costs for the proposed program. 4:59:59 PM REPRESENTATIVE HUGHES maintained her concern over the "quadrupled" fees reflected in the fiscal note. She said she did not wish to have the fiscal note reiterated, but she expressed concern that the bill will not pass with the current fiscal note attached. In fact, she said she will pull the bill rather than add to the bureaucracy in the division.