PA 17-77—sSB 826

General Law Committee

AN ACT MAKING CHANGES TO DEPARTMENT OF CONSUMER PROTECTION STATUTES AND BANNING CERTAIN AUTOMATED TICKET PURCHASING SOFTWARE

SUMMARY: This act makes various unrelated changes to the Department of Consumer Protection (DCP) statutes. It:

1. exempts the Liquor Control Commission from a requirement that it submit decisions that are adverse to a party to the DCP commissioner for final approval, thus giving the commission the authority to make final decisions ( 1);

2. eliminates the requirement that DCP provide certain inapplicable functions to the Liquor Control Commission (e.g., budgetary, management, and investigatory) ( 2);

3. grants DCP and certain commissions additional enforcement powers ( 6, 9, & 13);

4. allows DCP to reinstate and renew certain lapsed licenses, permits, certifications, and registrations ( 12 & 16);

5. expands certain definitions to include additional registrants and licensees (e.g., sheet metal workers and real estate brokerage businesses) ( 4, 7, 8, & 10);

6. makes an individual who has physical custody of food when it becomes adulterated liable for cleanup costs ( 13);

7. sets a minimum $10,000 surety bond for homemaker-companion agencies ( 11);

8. allows liquor wholesalers to send certain notices by certified mail ( 3);

9. requires funeral home establishments to keep certain contract information electronically ( 15);

10. conforms certain DCP statutes to federal or industry standards or current practices ( 4, 5, 7, 8, & 10);

11. prohibits anyone from using automated ticket purchasing software to purchase tickets on the Internet ( 17); and

12. makes other minor, technical, and conforming changes ( 14).

EFFECTIVE DATE: July 1, 2017, except the sheet metal provision is effective October 1, 2017, the automated ticket purchasing provision is effective January 1, 2018, and the funeral service contract provision is effective July 1, 2018.

1 & 2 — LIQUOR CONTROL COMMISSION

Proposed Final Decisions

PA 16-185 authorized the DCP commissioner to reject or modify actions taken by certain boards or commissions, including the Liquor Control Commission, if they exercise their statutory authority in a way that is adverse to a party (see BACKGROUND). By law, the boards and commissions submit such actions as proposed final decisions to the DCP commissioner, who subsequently issues the final decisions. The act exempts the commission from this requirement, thus allowing it to make final decisions.

By law, the Liquor Control Commission consists of three members, including the DCP commissioner, and does not include any active market participants.

DCP Duties and Powers

The act eliminates the requirement that DCP provide certain inapplicable functions to the commission as it does for other boards and commissions (e.g., budgetary, management, and investigatory). The Liquor Control Act already requires DCP to enforce liquor laws and allows the department to do whatever is reasonably necessary to carry out this purpose. It also sets out procedures for, among other things, investigating complaints and conducting hearings and appeals according to the Uniform Administrative Procedure Act (UAPA).

3 — WHOLESALER TERRITORY ADJUSTMENTS BY CERTIFIED MAIL

The act allows certain liquor wholesaler notices to be sent by certified mail, rather than just by registered mail, return receipt requested. It applies to notices between DCP, manufacturer or out-of-state permittees, and wholesaler permittees to (1) terminate or diminish distributorship territories and (2) appoint additional wholesalers within a territory.

4 — REAL ESTATE BROKERAGE BUSINESSES

The act explicitly allows limited liability partnerships to operate as real estate brokerage businesses in Connecticut. Existing law already allows individual licensed real estate brokers or salespeople to operate as a corporation, limited liability company, or partnership.

By law, real estate businesses must provide the Real Estate Commission the name of at least one licensed real estate broker who is in charge of the real estate brokerage business. The act also allows businesses to designate someone who is qualified to be licensed.

5 — WATER BOTTLING STANDARDS

The act requires bottlers who process and package water for sale to do so according to updated federal guidelines (21 C.F.R. 117) in addition to other federal guidelines and state regulations specified under existing law. The new guidelines address, among other things, good manufacturing practices, hazard analysis, and risk-based preventive controls for human food.

6 — DCP GUARANTY FUNDS

The act allows the DCP commissioner, subject to the UAPA, to revoke, suspend, or deny any DCP license or registration, including that of the owner of a business entity holding a license or registration, when a licensee or registrant owes money to any guaranty fund or an account DCP maintains or uses.

These funds and accounts include the Home Improvement Guaranty Fund, New Home Construction Guaranty Fund, Connecticut Health Club Guaranty Fund, Real Estate Guaranty Fund, and privacy protection guaranty and enforcement account.

7 & 8 — DRUG WHOLESALERS AND DISTRIBUTORS

The act expands the registration requirements for drug wholesalers and distributors to conform to current prescription drug distribution practices and federal standards. It does this by broadening the definition of wholesaler or distributor to include medical device and oxygen providers, third-party logistics providers, and “virtual” manufacturers and wholesale distributors. By law, before issuing a certificate of registration for a wholesaler or distributor, the DCP commissioner must consider, among other things, the applicant's criminal history, past experience, and compliance with regulations. The registration and annual renewal fee is $190.

Under the act, a “medical device and oxygen provider” is anyone who distributes devices or oxygen under a medical order or prescription, except those with an active pharmacy license.

A “third-party logistics provider” is anyone who distributes drugs, devices, or cosmetics while taking possession, but not title, of them.

A “virtual manufacturer” is anyone who manufactures drugs, devices, or cosmetics for which he or she owns the (1) new drug application or abbreviated new drug application number (for prescription drugs) or (2) unique device identification number (for a prescription device, as available).  The virtual manufacturer must also (1) contract with a contract manufacturing organization for the physical manufacturing of the items and (2) not be involved in the physical manufacturing or take physical possession or store the items at any time.

A “virtual wholesale distributor” is anyone who facilitates or brokers the transfer of drugs, devices, or cosmetics without taking physical possession of them.

9 — PHARMACY COMMISSION

The act expands the Pharmacy Commission's disciplinary authority by allowing it to place conditions on any license or temporary permit to practice pharmacy, license to operate a pharmacy, or pharmacy intern or technician registration on the same grounds for which it may take disciplinary actions under existing law (e.g., for violating certain drug or pharmacy laws or failing to maintain clean, orderly, and sanitary pharmacy premises). Under existing law, unchanged by the act, the commission may also refuse to issue or renew, revoke, or suspend such credentials and assess a civil penalty of up to $1,000.

The act also expands the grounds for which the commission may discipline such licensees, permit holders, and registrants to include failing to demonstrate adherence to applicable provisions of national quality standards for pharmaceutical compounding, nonsterile and sterile preparations (i.e., U.S. Pharmacopeia, chapters 795 and 797).

10 — SHEET METAL WORK DEFINITION

The act expands the scope of the sheet metal worker license by updating the “sheet metal work” definition to reflect current industry practices. It does so by expanding the definition to include:

1. onsite layout work on ductwork systems;

2. additional materials for ductwork systems, not just the ferrous and nonferrous ones under prior law; and

3. work on any ductwork components, devices, air louvers, or accessories, in accordance with the State Building Code.

The act also specifies that sheet metal work includes the installation, erection, replacement, repair, or alteration of onsite testing and balancing of related life safety components, environmental air heating, ventilating, and air conditioning systems by manipulating, adjusting, or controlling such system for optimum balance performance of any ductwork system.

11 — HOMEMAKER-COMPANION AGENCY SURETY BOND

By law, homemaker-companion agencies must maintain a surety bond. The act sets the minimum coverage required for the bond at $10,000 and requires it to include coverage of theft by an employee from a person receiving agency services.

By law, a homemaker-companion agency is (1) any public or private organization that employs people who provide companion or homemaker services or (2) a registry, which is any person or entity in the business of supplying, referring, or placing an individual to provide homemaker services. Such services include help with personal hygiene, cooking, household cleaning, laundry, and other household chores, but not home health care.

12 — LAPSED CREDENTIALS

The act allows individuals to apply to have their licenses, permits, certifications, or registrations reinstated by DCP without an examination if (1) DCP receives the application and related fee within three years and (2) the law is silent on the reinstatement period. The automatic reinstatement period is the time within which DCP may reinstate a license without an examination.

Prior to reinstatement, the applicant must pay all back license and late fees, unless the applicant attests that he or she has not worked in the applicable occupation or profession in the state while the credential was lapsed, in which case the applicant must pay the current year's renewal fee. If the applicant's credentials have lapsed for more than three years, he or she must reapply for the credential.

13 — ADULTERATED FOOD CLEANUP

The act makes a person who maintained physical custody of food at the time it became adulterated responsible for all (1) costs and expenses incurred as a result of the DCP investigation and actions to contain, remove, monitor, mitigate, and dispose of such adulterated food, as well as any associated legal expenses, and (2) associated costs and expenses of cleanup and disposal if the adulteration was caused by the discharge, spillage, or uncontrolled loss of a food product. On the commissioner's request, the attorney general may bring a civil action to recover costs and expenses.

Under the act, the commissioner or her authorized agent may investigate and take samples of foods according to the procedures for adulterated food investigations. In addition to the seizure powers the commissioner already has, she or her authorized agent may seize, condemn, destroy, or render unsalable any adulterated food deemed poisonous, deleterious to public health, or otherwise unsafe.

If the person who maintained physical custody of the food when it became adulterated cannot be reasonably identified or contacted by DCP, the commissioner may contract with a third party to contain, remove, and dispose of the adulterated food to mitigate the impact on public health and safety.

15 — FUNERAL SERVICE ESTABLISHMENT CONTRACTS

Existing law requires funeral service establishments to maintain a list of each escrow account established by a funeral service contract. The act requires them to maintain the lists electronically and also include any insurance policies these funeral service contracts established.

Under the act, the electronic list must be maintained in an electronically readable format. In addition to the information already required by law, the act requires each list to include the (1) beneficiary's name, address, date of birth, and Social Security number and (2) contract's value at the time of inception and a listing of any additional payments made pursuant to the contract.

The act requires such establishments to disclose this information on the request of the social services commissioner. Existing law already requires such disclosure to the attorney general or public health or DCP commissioners.

16 — NEW HOME CONTRACTOR REGISTRATION RENEWAL

The act allows new home contractors to renew their registrations within six months after the registrations expire. The renewal fee must be charged on a prorated basis, depending on the renewal application date. By law, certificates expire biennially and are subject to a $240 renewal fee.

17 — PROHIBITED AUTOMATED TICKET PURCHASE SOFTWARE

The act prohibits anyone from using automated ticket purchasing software to buy tickets on the Internet. “Automated ticket purchasing software” means a device, computer program, or computer software that enables the automated purchase of tickets to entertainment events by bypassing or rendering inoperable security measures on an Internet website. A violation is deemed to violate the Connecticut Unfair Trade Practices Act (CUTPA, see BACKGROUND).

The 2016 federal Better Online Ticket Sales Act prohibits the use of software that circumvents a venue's attempt to limit the number of tickets a consumer may purchase.

BACKGROUND

Related Case

In North Carolina State Board of Dental Examiners v. Federal Trade Commission, 135 S. Ct. 1101 (2015), the U.S. Supreme Court held that a state regulatory board made up of active market participants can claim state action immunity from federal antitrust actions only if it is subject to active supervision by the state.  In rejecting the argument that entities designated by a state as an agency are exempt from the active supervision requirement, the Court noted that “the need for supervision turns not on the formal designation given by States to regulators but on the risk that active market participants will pursue private interests in restraining trade.”

The Court identified certain required factors for active supervision, but noted that the overall inquiry on the adequacy of supervision depends on context.  It also noted that an entity may be excused from the active supervision requirement in some situations, such as when the entity is electorally accountable.

CUTPA

This law prohibits businesses from engaging in unfair and deceptive acts or practices. CUTPA allows the consumer protection commissioner to issue regulations defining what constitutes an unfair trade practice, investigate complaints, issue cease and desist orders, order restitution in cases involving less than $10,000, enter into consent agreements, ask the attorney general to seek injunctive relief, and accept voluntary statements of compliance. It also allows individuals to sue. Courts may issue restraining orders; award actual and punitive damages, costs, and reasonable attorney's fees; and impose civil penalties of up to $5,000 for willful violations and $25,000 for violation of a restraining order.