Unintentional missteps might cost construction professionals dearly. Here’s how to stay within DORA’s reporting requirements.
The Colorado Department of Regulatory Agencies (DORA) plays an important role in upholding the ethical and professional standards of licensed construction professionals such as engineers, architects and land surveyors. Over the past several years, however, some members in these licensed professions have unintentionally run afoul of DORA’s rules for reporting malpractice settlements. The consequences can be severe when compared to the offense. Fundamentally, it is imperative for licensed construction professionals to be aware of DORA’s reporting requirements, and to factor those requirements into any settlement analysis.
DORA has broad discretion in regulating licensed professions with an eye toward protecting the public. Consequently, the DORA Board can impose sanctions for “failing to meet the generally accepted standards” of the regulated profession – a broad standard that can be interpreted differently in different circumstances. Colorado law requires that a licensed construction professional must report to DORA any settlement or judgment that stems from an allegation involving malpractice within 60 days of settlement or judgment. The DORA Board will then review the report, the circumstances and determine whether it wants to pursue further investigation by a request for additional information or a formal complaint. Depending on the outcome of the investigation, the DORA Board may choose to do nothing, investigate or initiate a complaint. On the low end, discipline could involve the professional’s agreement to complete additional education. Other options include a private letter of concern, fines, public admonition, license suspension or revocation, and even a referral for criminal prosecution.
As anyone involved in construction knows, projects often encounter costs associated with unanticipated problems, ranging from unsuspected geology to difficulty in permitting. These problems can lead to additional costs and disputes over who is responsible. Quite often, resolution becomes a business decision. It doesn’t make sense to litigate a dispute at a potential cost of hundreds of thousands of dollars when it can be settled for substantially less.
One problem that has emerged is knowing upon resolution of a dispute whether it constitutes a “malpractice” claim reportable to DORA. We have been surprised to see some business settlements – even if they don’t involve a lawsuit or a critical review by an outside expert – treated as a discipline-worthy event by the DORA board.
Another concern is the dilemma faced by the design professionals who may feel they have done nothing improper, but a settlement seems to be the better business decision rather than litigate to trial. The requirement to report the settlement to DORA creates a Hobson’s choice: Should an architect or engineer settle a de minimis claim as a business decision and risk discipline for malpractice? Or should they take the risk to invest the time and money in the hopes of winning in court an order to avoid the uncertainty of the Board’s review?
Here’s what we recommend you do if you face resolution of a claim or dispute that has any possibility of being considered subject to the reporting requirement by DORA.
- If you are uncertain about whether a settlement must be reported to DORA, consult legal counsel with experience in reporting and handling other matters at the agency. The cost of not following the agency’s reporting requirement could be significant to your career.
- If your insurance carrier is involved, be sure they are aware of the DORA reporting requirement in Colorado.
- If an insurance carrier is not involved and the dispute or claim does not appear to reflect malpractice, you still must consider whether a report to DORA is required. Consult legal counsel to help you decide.
- In considering a settlement as a business decision to avoid litigation costs, you must weigh the possibility of DORA identifying the underlying claim as malpractice. There won’t always be a bright line, and legal counsel can help you weigh the pros and cons.
Ireland Stapleton’s litigation and regulatory law practice groups, who represent licensed professionals in business litigation and regulatory matters, continue to monitor developments at DORA and watch rulings and other actions by the agency. We urge design professionals to be aware of this reporting requirement, to carefully assess the risks of settlements and to consult with experienced legal counsel.
The information provided herein is intended as general information and is not to be construed as legal advice. If legal advice is needed, please consult an attorney.
Julie M. Walker is an experienced trial attorney. She is well-known for representing licensed professionals in responding to regulatory inquiries and disciplinary matters. Julie litigates in federal and state courts, as well as in arbitrations and mediations across the country, in matters involving construction, professional liability, product liability, qui tam, financial services, complex torts, employment and commercial litigation. Julie also serves as an arbitrator with the American Arbitration Association Construction and Commercial panels of neutrals. Julie can be reached at email@example.com or at (303) 628-3643.