Tuesday, August 19, 2014

Arizona Registrar of Contractors Transition in Complaint Handling Process

By John G. Sestak, Jr.

The Arizona Registrar of Contractors (ROC) has historically followed a unique enforcement process, which has been described as “complainant driven.” Under that process, the complaining party made the sole decision “in whether to file a complaint, whether to have the ROC issue a citation, whether a hearing would occur, and whether repairs or settlement agreements complied with the terms of the contract.” As the ROC described, in a Director’s Message dated September 5, 2013, “in this ‘complainant driven’ process, the complainant made the critical decisions as the parties attempted to resolve their dispute.”

Since the fall of 2013, the ROC has transitioned from a “complainant driven” process to a regulatory process. Now, the ROC will effectively have complete control over the entire process once a complaint is filed. A citation will not be issued simply because the complainant requests it. Rather, the ROC will decide whether the evidence produced by the complainant and gathered by the ROC investigator supports the issuance of a citation. The Director’s Message states that, based upon a comparison with other states, this change will result in fewer citations being issued against contractors.

If the ROC decides to issue a citation, an arbitration process can be implemented. The arbitration process will typically be used for small-dollar disputes involving poor construction on residential properties where a contractor is not the subject of numerous prior complaints. For these cases, the contractor will be able to avoid the citation and formal disciplinary process by resolving the complaint through arbitration.

If a complaint is not resolved, the ROC may decide to prosecute the claim, regardless of whether the complaining party has made a settlement with the contractor or otherwise decides to abandon the complaint. Even if the complainant settles with the contractor, the ROC may elect to prosecute the claim and proceed to a hearing. The ROC may also subpoena the complainant’s testimony, even though the complainant has settled with the contractor. This is why the complainant ceases to become a “party” to the action or process once the complaint is filed.

The ROC will impose progressive discipline on contractors’ licenses based upon the severity and recurrence of violations. The ROC states that, in the future, discipline will consist of letters of concern, suspension limited to a finite number of days, suspension until compliance with an order of the ROC, and possible revocation of a license. The ROC suggests that this change will result in fairer and speedier resolution of investigations and that a contractor will not permanently lose its license for a first-time minor violation.

While the ROC states that these changes will enhance consumer protection, reduce “gaming of the system by bad contractors…,” be fairer to good contractors, and streamline the process, it remains to be seen what will evolve. The Director, in a Director’s Message of May 30, 2014, reported that the new process has resulted in a decrease of the issuance of citations against contractors from 36% of all complaints to approximately 13% of all complaints.

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