Putting the Pieces in Place for Licensing Proceedings

There has been an increase in the number of licensing proceedings being pursued against engineers. If you receive any correspondence from your local or state licensing board, you should immediately provide notice of the licensing proceeding to Underwriters via Pearl Insurance for coverage under your Professional Liability Insurance Policy. Your ASCE Policy may include Licensing Board Proceeding coverage. Unfortunately, many engineers fail to realize that they have purchased this coverage or, alternatively, that this coverage is triggered when the engineer first receives correspondence from the licensing board initiating any investigation.

Defense counsel is most effective when he or she is engaged at the beginning of the process.

Engineers often fail to recognize that the licensing board is in fact initiating a licensing proceeding by sending the engineer correspondence requesting an explanation of the engineer’s actions in relation to a project. Many engineers are lulled into believing that if they informally explain their actions, the licensing board will understand and end its investigation, only to later realize that this is not the case. Instead, licensing proceedings often result in the licensing board seeking the imposition of sanctions on the engineer, which may include fines, educational requirements, probationary periods with required supervision, public censure, and even suspension or revocation of the engineer’s license.

It is important that you provide notice of the licensing proceeding immediately upon receipt of the first correspondence from the licensing board for two reasons:

1. If there is coverage for the licensing proceeding under your policy, you can obtain the benefit of defense counsel from the beginning of the process. Licensing proceedings are often reported after the engineer has responded to the licensing board’s initial correspondence. As a result, the engineer is often already facing sanctions from the licensing board. Once the engineer has already responded, either formally or informally, defense counsel may be barred or otherwise limited from making any further response on behalf of the engineer. Defense counsel is most effective when he or she is engaged at the beginning of the process.
2. Your notice of the licensing proceeding will also serve
   as notice of a potential claim circumstance under your policy. Therefore, if an actual claim results (e.g., there is a demand or litigation) in connection with the same facts and circumstances as in the licensing proceeding, the claim will relate back to your notice of the licensing proceeding and coverage will be analyzed under the same ASCE policy, reducing the chances of an uncovered claim in the future. Accordingly, it is in your best interest to provide notice of any correspondence that you receive from a licensing board immediately upon receipt.