In many instances, a business or professional must obtain a license from a regulatory agency that supervises a particular industry or field before they can start conducting business. According to the Administrative Procedures Act (APA), a license is an agency permit, certificate, charter, membership, approval, or other form of permission. In most circumstances, the party seeking a license or permit has the burden of demonstrating to the agency that he or she is eligible based on the agency’s predetermined criteria. Administrative agencies retain the power to revoke, suspend, or modify a license issued pursuant to their authority.
Many types of businesses and professions must obtain a license or permit, or sometimes both. For example, restaurants must obtain appropriate licenses and certifications from the department of public health, or a similar health-related department, before they can begin serving food to customers. Most states have some form of Alcoholic Beverage Control that provides liquor licenses to restaurants, bars, and nightclubs. Serving alcoholic beverages without an appropriate license from the supervising agency can result in substantial fines and penalties.
One of the most common industries subject to administrative agency licensing requirements is the medical field. Doctors, physicians, dentists, and healthcare providers must all obtain some form of license. Currently, there is no federal medical board authority, and each state maintains its own medical board that provides licenses to doctors and healthcare providers and supervises their activities.
For professionals who must obtain a license from an administrative agency in order to conduct business or perform services, having the license denied, suspended, or revoked can be devastating. In general, agencies can establish a wide range of criteria that applicants must meet or maintain during the status of the licensure. The agency need only show that the requirement it imposes on applicants is rationally related to determining whether the applicant is fit for the particular profession in question. Agencies are typically required to provide timely notice of the denial of a license, or the suspension or revocation of a license. In some instances, the agency must also provide a brief statement explaining the grounds for the denial.
In many instances, the licensing agency requires applicants to take some form of standardized test, acquire an academic degree, complete training courses, or complete a certain number of field training hours before qualifying for a license. Many agencies impose a combination of these requirements. Disputes may arise regarding whether or not an applicant has met the necessary requirements.
Most agencies that require licenses provide the public with a method for reporting whether one of its licensees has violated a law, practice, or procedure relevant to the industry. For example, many truck drivers must obtain a specific license before they can legally drive large trucks. To ensure that drivers are operating their trucks safely and complying with applicable laws, most trucking companies print a phone number and the words “How’s my driving?” on the side of the truck. Motorists who observe the driver performing unsafe or illegal acts while on the road can report the driver, which may lead to an investigation into the driver’s performance and suspension or revocation of the license. State medical boards typically provide methods for the public to report a healthcare provider’s unsafe or careless practices. One of the most common examples of a professional licensing dispute is when a state medical board requires a medical professional to submit to a peer review panel.
An administrative agency that has denied, suspended, or revoked a license may be subject to legal action from the applicant or license holder. Before pursuing legal action, however, the applicant or license holder usually must exhaust any appeal procedures provided by the agency, such as an administrative hearing or administrative appeal. An applicant or license holder may assert a number of claims in the lawsuit against the agency, including the violation of certain rights and procedures. The court will then determine whether the agency’s denial, suspension, or revocation of the license complied with the appropriate procedures and was within the realm of the agency’s authority. A licensing agency’s authority to grant, deny, suspend, or revoke a license is derived from the statute or order that created the agency. Any conduct by the agency that falls outside the scope of the statute may constitute an arbitrary and capricious act, or an abuse of the agency’s discretion.