1-1 By: Harris of Tarrant, Moncrief, Zaffirini S.B. No. 206
1-2 (In the Senate - Filed January 29, 1993; February 1, 1993,
1-3 read first time and referred to Committee on Economic Development;
1-4 March 16, 1993, rereferred to Committee on Health and Human
1-5 Services; March 19, 1993, reported adversely, with favorable
1-6 Committee Substitute by the following vote: Yeas 8, Nays 0;
1-7 March 19, 1993, sent to printer.)
1-8 COMMITTEE VOTE
1-9 Yea Nay PNV Absent
1-10 Zaffirini x
1-11 Ellis x
1-12 Madla x
1-13 Moncrief x
1-14 Nelson x
1-15 Patterson x
1-16 Shelley x
1-17 Truan x
1-18 Wentworth x
1-19 COMMITTEE SUBSTITUTE FOR S.B. No. 206 By: Moncrief
1-20 A BILL TO BE ENTITLED
1-21 AN ACT
1-22 relating to claims, review of claims, and fraudulent claims for
1-23 benefits for certain health care and mental health care services
1-24 covered by insurance; imposing civil and criminal penalties.
1-25 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-26 SECTION 1. Subchapter C, Chapter 21, Insurance Code, is
1-27 amended by adding Article 21.24-2 to read as follows:
1-28 Art. 21.24-2. SETTLEMENT OF CLAIMS FOR HEALTH CARE SERVICES
1-29 Sec. 1. DEFINITIONS. In this article:
1-30 (1) "Health care provider" means a person providing
1-31 health care services who is eligible for reimbursement for those
1-32 services from an insurer.
1-33 (2) "Insured" means the policyholder in the case of an
1-34 individual policy of insurance and the certificate holder in the
1-35 case of a group policy of insurance.
1-36 (3) "Insurer" means a person who is authorized to
1-37 write an individual or group policy of insurance that is delivered,
1-38 issued for delivery, or renewed in this state and that provides
1-39 coverage for medical or surgical expenses incurred as a result of
1-40 accident or sickness, including a company subject to Chapter 20 of
1-41 this code and a health maintenance organization subject to the
1-42 Texas Health Maintenance Organization Act (Chapter 20A, Vernon's
1-43 Texas Insurance Code).
1-44 Sec. 2. NOTICE OF AMOUNT PAID. An insurer shall notify the
1-45 insured in writing of the amount billed by a health care provider
1-46 and actually paid by the insurer for health care services provided
1-47 under the insured's coverage.
1-48 Sec. 3. ADJUSTMENT OF DEDUCTIBLE OR COPAYMENT. If an
1-49 insured pays a deductible or copayment for health care services and
1-50 the amount actually paid by the insurer for those services is
1-51 adjusted, the health care provider shall refund to the insured any
1-52 amount of the deductible or copayment paid by the insured in excess
1-53 of the amount required to be paid under the policy for those
1-54 services.
1-55 SECTION 2. Subchapter C, Chapter 21, Insurance Code, is
1-56 amended by adding Article 21.24-3 to read as follows:
1-57 Art. 21.24-3. WAIVER OR REDUCTION OF COPAYMENT OR DEDUCTIBLE
1-58 PROHIBITED
1-59 Sec. 1. DEFINITIONS. In this article:
1-60 (1) "Health care provider" means a person providing
1-61 health care services who is eligible for reimbursement for those
1-62 services from an insurer or who provides services to enrollees of
1-63 health care plans.
1-64 (2) "Enrollee" means an individual who is enrolled in
1-65 a health care plan.
1-66 (3) "Health care plan" has the meaning assigned by
1-67 Section 2, Texas Health Maintenance Organization Act (Article
1-68 20A.02, Vernon's Texas Insurance Code).
2-1 (4) "Health insurance policy" means an individual or
2-2 group policy of insurance that provides coverage for medical or
2-3 surgical expenses incurred as a result of accident or sickness,
2-4 including a policy issued by a group hospital service corporation.
2-5 (5) "Insured" means a policyholder in the case of an
2-6 individual health insurance policy and the certificate holder in
2-7 the case of a group health insurance policy.
2-8 Sec. 2. WAIVER OR REDUCTION OF COPAYMENT OR DEDUCTIBLE.
2-9 (a) A health care provider may not waive or reduce a copayment,
2-10 deductible, or similar fee required under a health insurance policy
2-11 or health care plan.
2-12 (b) A health care provider may not represent to an insured
2-13 or enrollee that a waiver or reduction in violation of Subsection
2-14 (a) of this section is permissible.
2-15 (c) A health care provider has waived a copayment,
2-16 deductible, or similar fee in violation of Subsection (a) of this
2-17 section if the provider knowingly fails to follow standard business
2-18 practices to collect the copayment, deductible, or similar fee.
2-19 Sec. 3. PENALTIES. (a) A person who violates this article
2-20 commits an offense. An offense under this subsection is a Class B
2-21 misdemeanor.
2-22 (b) A person who violates this article commits an unfair
2-23 method of competition and unfair and deceptive act or practice for
2-24 purposes of Article 21.21, Insurance Code.
2-25 (c) A person who violates this article commits a false,
2-26 misleading, or deceptive act or practice for purposes of Subchapter
2-27 E, Chapter 17, Business & Commerce Code.
2-28 SECTION 3. Subtitle B, Title 2, Health and Safety Code, is
2-29 amended by adding Chapter 45 to read as follows:
2-30 CHAPTER 45. AUDIT OF HOSPITALS
2-31 Sec. 45.001. AUDIT OF HOSPITAL. (a) If a utilization
2-32 review agent certified under Article 21.58A, Insurance Code,
2-33 conducts an audit of hospital billings in conjunction with a
2-34 utilization review, the agent shall report any adverse results of
2-35 the audit to the state agency that licenses the hospital.
2-36 (b) The department shall adopt criteria for reports made
2-37 under this section, including criteria to determine whether a
2-38 report of adverse results of an audit must be made, in consultation
2-39 with the Texas Department of Mental Health and Mental Retardation
2-40 and the Texas Commission on Alcohol and Drug Abuse.
2-41 SECTION 4. Section 9, Article 21.58A, Insurance Code, is
2-42 amended to read as follows:
2-43 Sec. 9. VIOLATIONS. <(a) If the commissioner believes that
2-44 a utilization review agent has violated or is violating this
2-45 article, the commissioner shall notify the utilization review agent
2-46 of the alleged violation and may compel the production of any and
2-47 all documents or other information as provided by this code.>
2-48 <(b) The commissioner may initiate the proceedings under
2-49 this section after the 30th day after the date the commissioner
2-50 notifies the agent as required by Subsection (a) of this section.>
2-51 <(c) Proceedings under this article are a contested case for
2-52 the purposes of the administrative procedure act.>
2-53 <(d)> If a <after notice and hearing the commissioner
2-54 determines that the> utilization review agent has violated or is
2-55 violating any provision of this article, the commissioner may<:>
2-56 <(1)> impose sanctions under Section 7, Article 1.10
2-57 of this code<;> or
2-58 <(2) issue a cease and desist order> under Article
2-59 1.10A of this code.
2-60 SECTION 5. Section 11, Article 21.58A, Insurance Code, is
2-61 amended by adding Subsection (c) to read as follows:
2-62 (c) The board shall adopt guidelines and procedures for
2-63 utilization reviews conducted after a health care service has been
2-64 provided to an enrollee.
2-65 SECTION 6. Article 21.58A, Insurance Code, is amended by
2-66 adding Section 13A to read as follows:
2-67 Sec. 13A. REPORTING OF INFORMATION RELATING TO PATIENT CARE;
2-68 IMMUNITY. (a) For the purpose of this section, "quality assurance
2-69 entity" means any person, committee, division, department, or other
2-70 entity responsible for quality assurance or peer review of services
3-1 provided by a health care provider.
3-2 (b) A utilization review agent may report to a quality
3-3 assurance entity information gathered by the utilization review
3-4 agent that relates to a specific patient and that is relevant to
3-5 the quality of care received by the patient. The utilization
3-6 review agent may require that the quality assurance entity ensure
3-7 compliance with confidentiality requirements imposed by law,
3-8 including the requirements of Sections 161.032 and 611.002, Health
3-9 and Safety Code, and Section 5.06, Medical Practice Act (Article
3-10 4495b, Vernon's Texas Civil Statutes).
3-11 (c) Information provided by a utilization review agent to a
3-12 peer review committee under Section 5.06, Medical Practice Act
3-13 (Article 4495b, Vernon's Texas Civil Statutes), is subject to the
3-14 confidentiality requirements of that section.
3-15 (d) Except as provided by Section 5.06, Medical Practice Act
3-16 (Article 4495b, Vernon's Texas Civil Statutes), a utilization
3-17 review agent is not subject to liability for providing information
3-18 to a quality assurance entity.
3-19 SECTION 7. Section 2, Article 1.10A, Insurance Code, is
3-20 amended to read as follows:
3-21 Sec. 2. Authority To Issue Order. The commissioner may
3-22 issue an emergency cease and desist order, ex parte, if:
3-23 (1) the commissioner believes:
3-24 (A) an authorized person engaging in the
3-25 business of insurance is committing an unfair method of competition
3-26 or an unfair or deceptive act or practice in violation of Article
3-27 21.21 or Article 21.21-2 of this code or in violation of a rule or
3-28 regulation promulgated under Article 21.21 or Article 21.21-2 of
3-29 this code;
3-30 (B) an unauthorized person is engaging in the
3-31 business of insurance in violation of Article 1.14-1 of this code
3-32 or in violation of a rule or regulation promulgated under Article
3-33 1.14-1 of this code;
3-34 (C) an unauthorized person engaged in the
3-35 business of insurance acting in violation of Article 1.14-1 of this
3-36 code is committing an unfair method of competition or an unfair or
3-37 deceptive act or practice in violation of Article 21.21 or Article
3-38 21.21-2 of this code or in violation of any rule or regulation
3-39 promulgated under Article 21.21 or Article 21.21-2 of this code;
3-40 <or>
3-41 (D) an authorized person engaging in the
3-42 business of insurance is determined by the commissioner to be in a
3-43 hazardous condition or a hazardous financial condition under
3-44 Article 1.32 or Article 20A.19 of this code; or
3-45 (E) a person is violating Article 21.58A of this
3-46 code or a rule adopted under Article 21.58A of this code; and
3-47 (2) it appears to the commissioner that the alleged
3-48 conduct is fraudulent or hazardous or creates an immediate danger
3-49 to the public safety or is causing or can be reasonably expected to
3-50 cause significant, imminent, and irreparable public injury.
3-51 SECTION 8. Title 2, Health and Safety Code, is amended by
3-52 adding Subtitle I to read as follows:
3-53 SUBTITLE I. SPECIAL PROVISIONS
3-54 CHAPTER 180. DEPARTMENT REVIEW OF
3-55 MENTAL HEALTH BENEFITS CLAIMS
3-56 Sec. 180.001. DEFINITIONS. In this chapter:
3-57 (1) "Insured" means a person who makes a mental health
3-58 benefits claim.
3-59 (2) "Insurer" means an insurer that writes an
3-60 individual or group policy of insurance that is delivered, issued
3-61 for delivery, or renewed in this state, including a company subject
3-62 to Chapter 20, Insurance Code, and a health maintenance
3-63 organization subject to the Texas Health Maintenance Organization
3-64 Act (Chapter 20A, Vernon's Texas Insurance Code).
3-65 (3) "Mental health benefits claim" means a claim made
3-66 under an insurance policy for benefits for the treatment of a
3-67 mental or emotional disorder, including a serious mental illness as
3-68 defined by Article 3.51-14, Insurance Code.
3-69 (4) "Mental health benefits invoice" means an invoice
3-70 for goods or services provided to an insured for the treatment of a
4-1 mental or emotional disorder, including a serious mental illness as
4-2 defined by Article 3.51-14, Insurance Code. The term includes an
4-3 invoice that is provided to an assignee of the insured.
4-4 Sec. 180.002. CLAIM REVIEW. (a) On request and in
4-5 accordance with this section, the department may review a mental
4-6 health benefits invoice.
4-7 (b) Not later than the 30th day after the date an insured
4-8 notifies an insurer of a mental health benefits claim, the insurer
4-9 may request that the department conduct a review of the invoice
4-10 under this section. The department shall adopt rules establishing
4-11 criteria for when review may be requested by an insurer under this
4-12 subsection and what documentation the insurer must provide in
4-13 connection with the request to demonstrate that those criteria have
4-14 been satisfied.
4-15 (c) Not later than the 30th day after the date the insurer
4-16 notifies an insured that the insurer has denied all or part of a
4-17 mental health benefits claim, the insured may request that the
4-18 department conduct a review of the invoice under this section.
4-19 This subsection does not apply to an invoice for which the insurer
4-20 has requested a review under Subsection (b) of this section.
4-21 (d) Not later than the 30th day after the date the
4-22 department receives a request from an insured under Subsection (c)
4-23 of this section, the department shall mail a notice to the affected
4-24 insurer, advising the insurer of the request.
4-25 (e) The department shall report a person to the office of
4-26 attorney general and to the Texas Department of Mental Health and
4-27 Mental Retardation or other appropriate state agency if the
4-28 department finds, as a result of a review conducted under this
4-29 section, that the person participated in the issuance of a mental
4-30 health benefits invoice that the person knows:
4-31 (1) does not accurately reflect the services or
4-32 products provided;
4-33 (2) includes a service or product that should not have
4-34 been provided; or
4-35 (3) includes an unreasonable charge for a service or
4-36 product.
4-37 (f) The board shall adopt rules governing hearings and
4-38 reviews conducted under this article.
4-39 (g) This section does not limit the right of an insured to
4-40 bring an action in a court to enforce the insured's rights against
4-41 an insurer. An insured is not required to request review under
4-42 this article before bringing an action in court. Regardless of
4-43 whether a review has been conducted under Subsection (c) of this
4-44 section, the insured is entitled to trial de novo with respect to
4-45 any matter that was the subject of the review.
4-46 SECTION 9. Subchapter E, Chapter 21, Insurance Code, is
4-47 amended by adding Article 21.58D to read as follows:
4-48 Art. 21.58D. Insurer Investigation of Health Benefits Claims
4-49 Sec. 1. Definitions. In this article:
4-50 (1) "Health benefits claim" means a claim made under
4-51 an insurance policy for benefits for the treatment of an illness or
4-52 injury, including a serious mental illness as defined by Article
4-53 3.51-14 of this code or any other mental or emotional disorder.
4-54 (2) "Health benefits invoice" means an invoice for
4-55 goods or services provided to an insured for the treatment of an
4-56 illness or injury, including a mental or emotional disorder. The
4-57 term includes an invoice that is provided to an assignee of the
4-58 insured.
4-59 (3) "Insured" means a person making a health benefits
4-60 claim under an insurance policy.
4-61 (4) "Insurer" means an insurer that writes an
4-62 individual or group policy of insurance that is delivered, issued
4-63 for delivery, or renewed in this state, including a company subject
4-64 to Chapter 20, Insurance Code, and a health maintenance
4-65 organization subject to the Texas Health Maintenance Organization
4-66 Act (Chapter 20A, Vernon's Texas Insurance Code).
4-67 Sec. 2. Investigation. (a) An insurer shall investigate a
4-68 claim submitted to the insurer if the insured requests an
4-69 investigation under this section.
4-70 (b) An insured may request that the insurer investigate
5-1 whether the health benefits invoice on which the claim is based:
5-2 (1) accurately reflects the services or products
5-3 provided;
5-4 (2) includes a service or product that should not have
5-5 been provided; or
5-6 (3) includes an unreasonable charge for a service or
5-7 product.
5-8 (c) The insured must make the request for investigation not
5-9 later than the 30th day after the date on which:
5-10 (1) the insured mailed or delivered the claim to the
5-11 insurer; or
5-12 (2) the insured received notice of a claim filed by a
5-13 health care provider under an assignment of benefits.
5-14 (d) The insurer shall report the results of the
5-15 investigation to the insured, the department, the provider, and the
5-16 Texas Department of Health, Texas Department of Mental Health and
5-17 Mental Retardation, or other appropriate state agency.
5-18 Sec. 3. NOTIFICATION OF RIGHT TO INVESTIGATION. (a) Each
5-19 individual policy of insurance, certificate evidencing coverage
5-20 under a group policy of insurance, and evidence of coverage issued
5-21 by a health maintenance organization that is delivered, issued for
5-22 delivery, or renewed by an insurer in this state must include a
5-23 statement of an insured's right to an investigation under this
5-24 article.
5-25 (b) A notice of the amount billed provided to an insured
5-26 under Section 2, Article 21.24-2, of this code must include a
5-27 statement of the insured's right to an investigation under this
5-28 article.
5-29 (c) The board shall adopt rules governing the form and
5-30 content of the statement included in the policy, certificate,
5-31 evidence of coverage, or notice under this article.
5-32 SECTION 10. Subchapter E, Chapter 21, Insurance Code, is
5-33 amended by adding Articles 21.79, 21.79A, 21.79A-1, and 21.79A-2 to
5-34 read as follows:
5-35 Art. 21.79. CIVIL ACTIONS FOR INSURANCE CLAIM FRAUD
5-36 Sec. 1. DEFINITION. For purposes of this article, "health
5-37 care practitioner" means a person who renders or causes to be
5-38 rendered health care or mental health care services and who is
5-39 entitled to payment under a health insurance policy and includes
5-40 any person who may be selected by an insured or beneficiary under
5-41 Article 21.52 of this code. The term also includes a person who is
5-42 an officer, employee, or agent of an organization that renders
5-43 health care or mental health care services.
5-44 Sec. 2. CAUSES OF ACTION. (a) A person who is injured by
5-45 an act of fraud in connection with an insurance claim may bring an
5-46 action in a court of competent jurisdiction for damages and may
5-47 petition the court to restrain further attempts to make an improper
5-48 claim for payment.
5-49 (b) A person who has received medical treatment wrongfully
5-50 or unnecessarily at the direction of a health care practitioner may
5-51 bring an action in a court of competent jurisdiction for damages or
5-52 to enjoin further wrongful acts.
5-53 Sec. 3. DAMAGES. (a) In an action filed under this
5-54 article, the court may grant a successful claimant:
5-55 (1) compensatory damages plus all reasonable
5-56 investigation and litigation expenses, including attorney fees;
5-57 (2) an order restraining the respondent from engaging
5-58 in further attempts to make an improper claim for payment;
5-59 (3) damages in accordance with Subsection (b) of this
5-60 section; and
5-61 (4) any other relief the court finds proper.
5-62 (b) If the court finds that the respondent has engaged in a
5-63 pattern of committing fraud in connection with insurance claims,
5-64 the court may award the claimant two times the amount of
5-65 compensatory damages awarded under Subsection (a)(1) of this
5-66 section. An award of damages under this subsection is in addition
5-67 to an award of damages under Subsection (a)(1) of this section.
5-68 Sec. 4. LIMITATIONS. (a) Notwithstanding Section 16.003,
5-69 Civil Practice and Remedies Code, a person must bring suit under
5-70 this article on or before the later of:
6-1 (1) four years after the date the fraud occurred; or
6-2 (2) four years after the date the person, in the
6-3 exercise of reasonable diligence, should have discovered the
6-4 occurrence of the fraud.
6-5 (b) The limitations period in this section does not include
6-6 any period during which the person bringing the action reasonably
6-7 believes that the department or another authorized governmental
6-8 agency is conducting a criminal investigation or prosecution of the
6-9 defendant for fraud.
6-10 Sec. 5. NOTICE TO APPROPRIATE AGENCY. (a) Not later than
6-11 the 31st day after a verdict is entered holding a health care
6-12 practitioner liable for damages under this article, the clerk of
6-13 the court in which the verdict is rendered shall prepare and send
6-14 to the licensing authority with jurisdiction over the practitioner
6-15 a certified abstract of the court's record regarding the case.
6-16 (b) On receipt of the abstract of the record, the licensing
6-17 authority shall consider disciplinary action against the health
6-18 care practitioner in accordance with the procedures used by that
6-19 licensing authority.
6-20 Art. 21.79A. HEALTH CARE INSURANCE CLAIM FRAUD; NOTIFICATION
6-21 OF LICENSING AUTHORITY. (a) For purposes of this article, "health
6-22 care practitioner" means a person who renders or causes to be
6-23 rendered health care or mental health care services and who is
6-24 entitled to payment under a health insurance policy. The term
6-25 includes:
6-26 (1) any person who may be selected by an insured or
6-27 beneficiary under Article 21.52 of this code; and
6-28 (2) an officer, employee, or agent of an organization
6-29 that renders health care or mental health care services.
6-30 (b) If the department knows that a health care practitioner
6-31 has been convicted of fraud in connection with an insurance claim,
6-32 the department shall notify the licensing authority with
6-33 jurisdiction over the practitioner of the conviction.
6-34 (c) On receipt of notification under Subsection (b) of this
6-35 article, the licensing authority shall consider disciplinary action
6-36 against the health care practitioner in accordance with the
6-37 procedures used by that licensing authority.
6-38 (d) The department shall cooperate with the licensing
6-39 authority and shall provide any necessary and relevant testimony,
6-40 documents, or other evidence in the possession of the department.
6-41 Art. 21.79A-1. HEALTH CARE INSURANCE CLAIM FRAUD; REPORT OF
6-42 OUT-OF-STATE CONVICTION. (a) For purposes of this article,
6-43 "health care practitioner" means a person who renders or causes to
6-44 be rendered health care or mental health care services and who is
6-45 entitled to payment under a health insurance policy. The term
6-46 includes:
6-47 (1) any person who may be selected by an insured or
6-48 beneficiary under Article 21.52 of this code; and
6-49 (2) an officer, employee, or agent of an organization
6-50 that renders health care or mental health care services.
6-51 (b) If a health care practitioner rendering health care or
6-52 mental health care services in this state is convicted of fraud on
6-53 an insurer in another state, the practitioner shall report the
6-54 conviction in writing to the commissioner.
6-55 (c) A health care practitioner who does not report a
6-56 conviction in accordance with Subsection (b) of this article may be
6-57 disciplined in accordance with the procedures of the licensing
6-58 authority with jurisdiction over the practitioner.
6-59 Art. 21.79A-2. HEALTH CARE INSURANCE CLAIM FRAUD; HEALTH
6-60 CARE PRACTITIONER COOPERATION IN INVESTIGATION. (a) In this
6-61 article:
6-62 (1) "Health benefits claim" means a claim made under
6-63 an insurance policy for benefits for the treatment of an illness or
6-64 injury, including a mental or emotional disorder.
6-65 (2) "Health benefits claim investigation" means an
6-66 investigation of a health benefits claim conducted by:
6-67 (A) a law enforcement agency of this state;
6-68 (B) an insurer;
6-69 (C) the insurance fraud unit created under
6-70 Article 1.10D of this code;
7-1 (D) the office of the attorney general; or
7-2 (E) a state or federal governmental agency or a
7-3 nongovernmental agency established to detect and prevent fraudulent
7-4 insurance acts or to regulate the business of insurance.
7-5 (3) "Health care practitioner" means a person who
7-6 renders or causes to be rendered health care or mental health care
7-7 services and who is entitled to payment under a health insurance
7-8 policy. The term includes:
7-9 (A) any person who may be selected by an insured
7-10 or beneficiary under Article 21.52 of this code; and
7-11 (B) an officer, employee, or agent of an
7-12 organization that renders health care or mental health care
7-13 services.
7-14 (4) "Investigating agency" means the person conducting
7-15 the health benefits claim investigation.
7-16 (b) Not later than the 31st day after the date on which a
7-17 health care practitioner receives a request for information from an
7-18 investigating agency that relates to a health benefits claim
7-19 investigation, the health care practitioner shall provide the
7-20 information to the agency.
7-21 (c) If the health care practitioner does not provide the
7-22 requested information within the time specified by Subsection (b)
7-23 of this article, a court of this state, on the petition of the
7-24 investigating agency, shall order the health care practitioner to
7-25 provide the information unless the health care practitioner
7-26 demonstrates that the information is not available or that the
7-27 information may not be released under state or federal law.
7-28 (d) A court issuing an order under Subsection (c) of this
7-29 article also shall order the health care practitioner to pay
7-30 reasonable attorney fees and costs incurred by the investigating
7-31 agency in obtaining the order. The order may include appropriate
7-32 limits on the distribution of confidential communications.
7-33 (e) If the health benefits claim is the subject of a
7-34 criminal or civil court proceeding at the time a court order is
7-35 sought under Subsection (c) of this article, the petition for an
7-36 order under Subsection (c) of this article must be made in the
7-37 court in which the claim is pending.
7-38 SECTION 11. Subsection (e), Section 2, Article 1.10D,
7-39 Insurance Code, is amended to read as follows:
7-40 (e) This section does not prohibit or limit the authority
7-41 of an insurer to conduct its own independent investigation into a
7-42 suspected case of insurance claim fraud. Before an insurer may
7-43 request the commissioner to conduct an investigation of suspected
7-44 claim fraud, the insurer must have completed its investigation and
7-45 drafted a report of its findings. The insurer shall submit the
7-46 report and the related investigation file to the commissioner as
7-47 part of the insurer's request for investigation by the
7-48 commissioner. The commissioner may undertake an investigation
7-49 against a policyholder or claimant only if:
7-50 (1) <In regard to an insurer's request for
7-51 investigation under this subsection, the commissioner's authority
7-52 to undertake an investigation against a policyholder or claimant is
7-53 limited to those instances in which> the insurer's investigation
7-54 reports show a pattern of fraudulent activity; or
7-55 (2) the total amount of allegedly fraudulent claims is
7-56 at least $25,000.
7-57 SECTION 12. Section 5, Article 1.10D, Insurance Code, is
7-58 amended by adding Subsection (d) to read as follows:
7-59 (d) The insurance fraud unit may provide information or
7-60 material that is relevant to an inquiry into claim fraud to an
7-61 insurance industry-sponsored fraud investigation unit if the
7-62 commissioner determines that providing the information or material
7-63 would prevent further fraud or otherwise serve the public interest
7-64 and that the interests of the department and of the insurance
7-65 industry-sponsored fraud investigation unit are substantially
7-66 similar with respect to the subject of the investigation. An
7-67 insurance industry-sponsored fraud investigation unit that has
7-68 received information or material under this subsection may not
7-69 release the information or material to a person other than an
7-70 authorized governmental entity. Providing information or material
8-1 under this subsection is not a waiver of confidentiality by the
8-2 department under any part of this code. The department is not
8-3 subject to liability for providing information or material to an
8-4 insurance industry-sponsored fraud investigation unit.
8-5 SECTION 13. Subsection (a), Section 6, Article 1.10D,
8-6 Insurance Code, is amended to read as follows:
8-7 (a) A person acting without malice, fraudulent intent, or
8-8 bad faith is not subject to liability based on filing reports or
8-9 furnishing, orally or in writing, other information concerning
8-10 suspected, anticipated, or completed fraudulent insurance acts if
8-11 the reports or information are provided to:
8-12 (1) a law enforcement officer or an agent or employee
8-13 of a law enforcement officer;
8-14 (2) the National Association of Insurance
8-15 Commissioners, a state or federal governmental agency or
8-16 nongovernmental agency or association established to detect and
8-17 prevent fraudulent insurance acts or to regulate the business of
8-18 insurance, or an employee of that association or <governmental>
8-19 agency; <or>
8-20 (3) an insurer or an agent or an employee of an
8-21 insurer; or
8-22 (4) an authorized governmental agency or the
8-23 department.
8-24 SECTION 14. Section 6, Article 1.10D, Insurance Code, is
8-25 amended by adding Subsection (e) to read as follows:
8-26 (e) In an action brought against a person for filing a
8-27 report or furnishing other information concerning a fraudulent
8-28 insurance act, the party bringing the action must specifically
8-29 plead any allegation that Subsection (a) of this section is
8-30 inapplicable because the person that filed the report or furnished
8-31 the information acted with malice, fraudulent intent, or bad faith.
8-32 SECTION 15. (a) Article 21.24-2, Insurance Code, as added
8-33 by this Act, applies only to amounts paid by an insurer for health
8-34 care services rendered on or after the effective date of this Act.
8-35 Amounts paid by the insurer for health care services rendered
8-36 before the effective date of this Act are governed by the law in
8-37 effect at the time the amounts were paid, and that law is continued
8-38 in effect for that purpose.
8-39 (b) Section 21.24-3, Insurance Code, as added by this Act,
8-40 applies only to conduct that occurs on or after the effective date
8-41 of this Act. Conduct that occurs before the effective date of this
8-42 Act is governed by the law as it existed immediately before the
8-43 effective date of this Act, and that law is continued in effect for
8-44 that purpose.
8-45 (c) Section 9, Article 21.58A, Insurance Code, as amended by
8-46 this Act, applies only to a violation of Article 21.58A that occurs
8-47 on or after the effective date of this Act. A violation of Article
8-48 21.58A, Insurance Code, that occurs before the effective date of
8-49 this Act is governed by the law in effect at the time the violation
8-50 occurs, and that law is continued in effect for that purpose.
8-51 (d) The State Board of Insurance may not adopt rules under
8-52 Subsection (c), Section 11, Article 21.58A, Insurance Code, as
8-53 added by this Act, until the board has reported to the 73rd
8-54 Legislature the findings and recommendations of the study conducted
8-55 by the board in accordance with Subsection (b), Section 11.03,
8-56 Chapter 242, Acts of the 72nd Legislature, Regular Session, 1991.
8-57 (e) Chapter 180, Health and Safety Code, as added by this
8-58 Act, applies only to a mental health benefits claim received by an
8-59 insurer on or after the effective date of this Act. A mental
8-60 health benefits claim received before the effective date of this
8-61 Act is governed by the law in effect at the time the claim was
8-62 received, and that law is continued in effect for that purpose.
8-63 (f) Article 21.58D, Insurance Code, as added by this Act,
8-64 applies only to a health benefits claim received by an insurer on
8-65 or after the effective date of this Act. A health benefits claim
8-66 received before the effective date of this Act is governed by the
8-67 law in effect at the time the claim was received, and that law is
8-68 continued in effect for that purpose.
8-69 (g) Article 21.79, Insurance Code, as added by this Act,
8-70 applies only to a cause of action that accrues on or after the
9-1 effective date of this Act. An action that accrued before the
9-2 effective date of this Act is governed by the law in effect at the
9-3 time the action accrued, and the former law is continued in effect
9-4 for that purpose.
9-5 (h) Article 21.79A-1, Insurance Code, as added by this Act,
9-6 applies to a conviction for fraud on an insurer in another state
9-7 that occurred before, on, or after the effective date of this Act.
9-8 (i) Subsection (e), Section 6, Article 1.10D, Insurance
9-9 Code, as added by this Act, applies only to a pleading filed on or
9-10 after the effective date of this Act. A pleading filed before the
9-11 effective date of this Act is governed by the law in effect at the
9-12 time the pleading was filed, and that law is continued in effect
9-13 for that purpose.
9-14 SECTION 16. This Act takes effect September 1, 1993.
9-15 SECTION 17. The importance of this legislation and the
9-16 crowded condition of the calendars in both houses create an
9-17 emergency and an imperative public necessity that the
9-18 constitutional rule requiring bills to be read on three several
9-19 days in each house be suspended, and this rule is hereby suspended.
9-20 * * * * *
9-21 Austin,
9-22 Texas
9-23 March 19, 1993
9-24 Hon. Bob Bullock
9-25 President of the Senate
9-26 Sir:
9-27 We, your Committee on Health and Human Services to which was
9-28 referred S.B. No. 206, have had the same under consideration, and I
9-29 am instructed to report it back to the Senate with the
9-30 recommendation that it do not pass, but that the Committee
9-31 Substitute adopted in lieu thereof do pass and be printed.
9-32 Zaffirini,
9-33 Chair
9-34 * * * * *
9-35 WITNESSES
9-36 FOR AGAINST ON
9-37 ___________________________________________________________________
9-38 Name: Dan Morales x
9-39 Representing: State of Texas
9-40 City: Austin
9-41 -------------------------------------------------------------------
9-42 Name: Dr. Charles Arnold x
9-43 Representing: Self
9-44 City: San Antonio
9-45 -------------------------------------------------------------------
9-46 Name: David F. Briones, M.D. x
9-47 Representing: TSPP & TMA
9-48 City: El Paso
9-49 -------------------------------------------------------------------
9-50 Name: Ben Marroquin x
9-51 Representing: MHMR
9-52 City: Austin
9-53 -------------------------------------------------------------------
9-54 Name: Joe Woods x
9-55 Representing: State Bd of Insurance
9-56 City: Austin
9-57 -------------------------------------------------------------------
9-58 Name: Rhonda Myron x
9-59 Representing: Tx Dept of Insurance
9-60 City: Austin
9-61 -------------------------------------------------------------------
9-62 Name: Caroline Scott x
9-63 Representing: Tx Dept of Insurance
9-64 City: Austin
9-65 -------------------------------------------------------------------