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  -------------------------------------------------------------------