Legal Memorandum LI02


THE DEPARTMENT OF STATE
LICENSING COMPLAINT RESOLUTION PROCESS

The Department of State is provided statutory authority for the licensing and regulation of various occupations. These include real estate brokers and salesmen, private investigators and security guard companies, barbers and cosmetologists, notaries public, alarm installers, hearing aid dealers and real estate appraisers. Persons or businesses licensed by the Department of State are subject to various statutes and regulations designed to protect the public from untrustworthy or incompetent persons or businesses. The Department of State investigates complaints against licensees and unlicensed practitioners and may revoke a license after a hearing or by consent or may refer complaints to the Attorney General for civil or criminal prosecution.

THE COMPLAINT

Anyone who believes that he or she is a victim of an untrustworthy or incompetent licensee of the Department of State, or who is aware of unlicensed conduct by a person or business engaging in the occupations or businesses regulated by the Department of State, may file a complaint with the Department of State. Complaint forms may be obtained by contacting the Department of State.

Once a written complaint is received, it is reviewed to ensure that the complaint involves a matter under the jurisdiction of the Department of State and alleges unlawful or improper conduct.

Assuming the complaint is within the jurisdiction of the Department of State and alleges wrongful conduct, a copy of the complaint is mailed to the licensee and the licensee is asked for a response. Quite often, the licensee may not even be aware that a problem exists and once the problem is brought to his or her attention, it is resolved quickly and informally. Certain complaints, such as unlicensed activity, dictate that the target of the complaint not be provided a copy of the complaint initially, to allow for an effective investigation.


THE INVESTIGATION

If the licensee has not responded to the complaint or a resolution is not readily obtained, the complaint is assigned to a Department of State investigator to gather all relevant statements and documents from witnesses. After the investigation is completed, an assessment is made as to whether or not the matter may be resolved informally, dismissed for lack of merit or referred for further administrative action.

If the complaint is not resolved, it is referred for further action in one of several ways. If the alleged impropriety is relatively minor, it can be referred as a " ticket violation." Matters referred for ticket violation generally involve a violation of a Department of State statute or regulation which may be resolved by payment of a fine. If the complaint alleges, and the investigation demonstrates, unlicensed business practices, the case may be referred to the Attorney General for civil or criminal prosecution. If the complaint involves a licensee and involves serious violations of statutes or regulations and/or financial injury to a consumer, the complaint may bereferred to the Department of State Litigation Unit for resolution.


THE HEARING AND DECISION

Once referred to the Litigation Unit, the complaint could be settled between the Department and respondent through a written consent order. The consent order may provide for suspension or revocation of a license, a fine and/or restitution to the consumer. If the case cannot be resolved by consent order, or involves very serious unlawful activity, a Department of State complaint is prepared against the licensee and the matter is scheduled for a hearing.

The hearing is presided over by an administrative law judge who is authorized to render whatever decision is dictated by the law and facts. The hearing could result in dismissal of the complaint, suspension or revocation of a license, a fine and/or restitution to the injured party.

After a decision is rendered by the administrative law judge, either the Department of State or the licensee may appeal the decision of the administrative law judge directly to the Secretary of State. The appeal must be taken within 30 days of the time the decision is received by the party seeking to appeal.

On appeal, the Secretary of State will consider all evidence in the record and may either confirm the decision, make a written superseding decision or remand the matter to the administrative law judge for further proceedings.

Once the Secretary of State has issued a decision on the appeal, the licensee may seek judicial review of the decision by means of a petition to the New York State Supreme Court under Article 78 of the New York State Civil Practice Law and Rules. It is important for licensees to exercise their right to an administrative appeal to the Secretary of State, prior to attempting to litigate the decision of the administrative law judge in a civil court. Failure to appeal to the Secretary of State will result in a dismissal of the civil court proceeding upon the basis that the licensee or applicant has failed to exhaust available administrative remedies.

Throughout the complaint resolution process, both licensees and complainants should feel free to contact the Department of State to determine the status of the complaint or to attempt informal resolution.