BILL ANALYSIS C.S.H.B. 1487 By: Counts (Montford) Economic Development 05-18-95 Senate Committee Report (Substituted) BACKGROUND The 73rd Legislature, Regular Session, enacted Section 32.55, Penal Code (Insurance Claim Fraud). The intention of Section 32.55 was to counter the growing number and magnitude of accident insurance fraud rings, which often included the involvement of unscrupulous doctors, attorneys, physical therapists, runners, and law clerks among the perpetrators. Section 32.55, however, was not included in the revised Penal Code. PURPOSE As proposed, C.S.H.B. 1487 sets forth provisions relating to the investigation, prosecution, and punishment of the offense of insurance fraud. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Title 7, Penal Code, by adding Chapter 35, as follows: CHAPTER 35. INSURANCE FRAUD Sec. 35.01. DEFINITIONS. Defines "health care goods," "health care provider," "health care service," "insurer," and "statement." Sec. 35.02. INSURANCE FRAUD. (a) Provides that a person commits an offense if, with intent to defraud or deceive an insurer, the person causes to be prepared or presents to an insurer in support of a claim for payment under a health or property and casualty insurance policy a statement that the person knows contains false or misleading information concerning a matter that is material to the claim, and the matter affects a person's right to a payment or the amount of payment to which a person is entitled. (b) Provides that a person commits an offense if, with intent to defraud or deceive an insurer, the person solicits, offers, pays, or receives a benefit in connection with the furnishing of health care goods or services for which a claim payment is submitted under a health or property and casualty insurance policy. (c) Provides that information concerning a matter that is material to a claim for payment under an insurance policy includes certain information. (d) Sets forth a staggered schedule of offenses contingent on the dollar amount of the fraudulent claim. Sec. 35.03. AGGREGATION AND MULTIPLE OFFENSES. (a) Authorizes the conduct to be considered as one offense and the value of the claim aggregated in determining the classification of the offense when separate claims in violation of this chapter are communicated to an insurer or group of insurers pursuant to one scheme or continuing course of conduct. Prohibits Subsection (b) from applying if claims are aggregated under this subsection. (b) Authorizes the conduct to be considered as one offense when three or more separate claims in violation of this chapter are communicated to an insurer or group of insurers pursuant to one scheme or continuing course of conduct. Requires the classification of the offense to be one category higher than the most serious single offense proven from the separate claims, except that if the most serious offense is a first degree felony, the offense is a first degree felony. Prohibits this subsection from being applied if claims are aggregated under Subsection (a). Sec. 35.04. JURISDICTION OF ATTORNEY GENERAL. (a) Authorizes the attorney general to offer to an attorney representing the state in the prosecution of an offense under Section 35.02 the investigative, technical, and litigation assistance of the attorney general's office. (b) Authorizes the attorney general to prosecute or assist in the prosecution of an offense under Section 35.02 on request of the attorney representing the state. SECTION 2. Amends Article 2.12, Code of Criminal Procedure, to provide that officers commissioned under the Texas High-Speed Rail Act (Article 6674v.2, V.T.C.S.), and an investigator commissioned by the commissioner of insurance (commissioner) under Article 1.10D, Insurance Code, are peace officers. SECTION 3. Amends Article 59.01(2), Code of Criminal Procedure, to redefine "contraband." SECTION 4. Amends Section 2, Article 1.10D, Insurance Code, by amending Subsections (b) and (e), and adding Subsections (f) and (g), as follows: (b) Authorizes the commissioner to make any necessary investigation if the commissioner has reason to believe that any person has engaged in or is engaging in an act or practice that may constitute either a fraudulent insurance act, as defined by Section 1(a)(2) of this article, or insurance fraud under Section 35.02(a), Penal Code, or has committed or is about to commit a fraudulent insurance act or insurance fraud. Deletes a provision regarding allegations of fraud on the part of a policyholder or claimant. (e) Makes a conforming change. (f) Authorizes the commissioner to employ investigators as the commissioner considers necessary to enforce this article, and to commission those investigators as peace officers. Requires an investigator employed by the Texas Department of Insurance (department) as a peace officer to meet the requirements for peace officers imposed under Chapter 415, Government Code. Requires the commissioner, if the commissioner elects to commission peace officers, to appoint a chief investigator who is commissioned as a peace officer and who is qualified by training and experience in law enforcement to supervise, direct, and administer the activities of the commissioned investigators. (g) Authorizes an investigator employed by the department to request the assistance of local law enforcement officers in conducting an investigation authorized by this article. SECTION 5. Amends Section 1B(d), Article 6701h, V.T.C.S. (Texas Motor Vehicle Safety-Responsibility Act), to make a nonsubstantive change. SECTION 6. Makes application of this Act prospective. SECTION 7. Effective date: September 1, 1995. SECTION 8. Emergency clause.