BILL ANALYSIS
H.B. 2523
By: McDonald
04-25-95
Committee Report (Amended)
BACKGROUND
As Medicaid spending increases in Texas, the incidence of
fraudulent claims against the system have become greater. Local
offices of the Attorney General have received complaints asserting
abuse of eligibility standards and invalid facility certification.
Medicaid fraud diverts funding from those who are truly eligible
for Medicaid services, and because tax contributions fund Medicaid
programs, taxpayers assume the resulting additional burden.
Currently, there are no Texas statutes that specifically address
the growing problem of Medicaid Fraud.
PURPOSE
H.B. 2523 would impose civil liability and provide civil remedies
to deter Medicaid fraud.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.
SECTION BY SECTION ANALYSIS
SECTION 1. Adds Chapter 36, entitled "MEDICAID FRAUD PREVENTION,"
to Title 2, Human Resources Code, as follows:
Sec. 36.001. DEFINITIONS. Defines "claim," "documentary
material," "fiscal agent," "Medicaid program," "Medicaid
recipient," "provider," "service," "signed," and "unlawful
act."
Sec. 36.002. UNLAWFUL ACTS. States that a person commits an
unlawful act if the person:
(1) Makes or causes to be made a false statement or
misrepresentation of a material fact under specified
conditions.
(2) Conceals or fails to disclose a specified event.
(3) Applies for and receives a Medicaid benefit payment
on behalf of another person and uses it for something
other than the benefit of the person for whom it was
received.
(4) Makes or induces the making of a false statement or
misrepresentation of specified material facts.
(5) Charges, solicits, accepts, or receives, in addition
to a Medicaid payment, a gift, donation, money, or other
consideration as a condition to the provision of
service.
(6) Knowingly presents or causes to be presented a claim
for payment under the Medicaid program for a product
provided or service rendered by a person who is not
licensed or is not licensed in the manner required.
(7) Pays, offers, or receives a kickback or bribe for
securing Medicaid recipients, a rebate of a fee for
referring a Medicaid recipient, or a thing of value that
exceeds the rate established under the Medicaid program
as a condition for the provision of service.
(8) Makes a claim under the Medicaid program for a
questionable service or product, a service that is
substantially inadequate compared to the standards of
the industry, a service or product that is not medically
necessary, an adulterated or inappropriate product.
(9) Enters into an agreement or conspiracy to defraud
the state by obtaining or aiding another person in
obtaining an unauthorized payment or benefit from the
Medicaid program or a fiscal agent.
Sec. 36.003. INJUNCTIVE RELIEF. (a) Allows the attorney
general to institute an order to restrain a person believed to
be committing, have committed, or about to commit an unlawful
act.
(b) Requires an action under this section to be brought in a
district court of Travis County or in the county where the
unlawful act occurs.
Sec. 36.004. CIVIL REMEDIES. (a) States that except as
provided by Subsection (c) of this section, a person who
commits an unlawful act is liable to the state as specified in
this subsection.
(b) Requires the trier of fact to regard specified
considerations when determining the amount of a civil penalty
of not less than $10,000 or more than $50,000 for each
unlawful act committed by the person.
(c) Allows the trier of fact to assess a total of not more
than two times the value of a payment or in-kind benefit
provided under the Medicaid program directly or indirectly if
the trier of fact finds that the person furnished the attorney
general with all information known within 30 days of first
obtaining the information, and at the time this information
was furnished, the attorney general had not yet begun an
investigation.
(d) Requires an action under this section to be brought in
Travis County or in the county where the unlawful action
occurred.
(e) Allows the attorney general to take certain actions for
civil remedies in regard to injunctive relief.
Sec. 36.005. INVESTIGATION. (a) Allows the attorney general to
take action to investigate an unlawful act if the attorney
general has reason to believe that a person has relevant
information, a person has or is about to commit an unlawful
act, or it is in the public interest to conduct an
investigation.
(b) Allows a civil investigative demand to require disclosure
of any documented discoverable material.
(c) Sets forth the ways in which service of an investigative
demand may be made.
(d) Requires documentary material to be produced for
inspection and copying during normal business hours at the
office of the attorney general.
(e) Prohibits the office of the attorney general from
disclosing the contents of documentary material without the
consent of the person producing the material. Requires the
attorney general to prescribe reasonable terms and conditions
allowing the documentary material to be available for
inspection and copying to the person producing it or an
authorized representative of that person. Allows the attorney
general to use the material as deemed necessary in the
enforcement of this chapter.
(f) Allows a person to file a petition to extend the return
date for the demand or to modify it. Requires a petition to be
filed in a district court of Travis County, and be filed by
the return date specified in the demand or the 20th day after
the demand is served.
(g) Requires a person on whom a demand has been served to
comply with the terms of this except as provided by court
order.
(h) States that a person who has committed an unlawful act in
this state in regard to Medicaid, has submitted to the
jurisdiction of this state, and personal service on a demand
may be made on a person outside this state.
(i) Allows the attorney general to disclose any testimony,
documentary material, or other evidence gathered in an
investigation to specified persons.
(j) States that this section does not limit the authority of
the attorney general to conduct investigations or to access a
person's documentary materials or other information under
established state and federal laws.
(k) Allows the attorney general to file a petition for an
order to enforce the investigative demand if a person fails to
comply with an investigative demand or refuses to surrender
the documentary material.
(l) Allows the court to determine the matter presented and
enter an order to implement this section if a petition is
filed.
(m) States that failure to comply with a final order is
punishable by contempt.
(n) States that a final order issued by a district court is
subject to appeal to the supreme court.
Sec. 36.007. DOCUMENTARY MATERIAL IN POSSESSION OF STATE
AGENCY. (a) Requires state agencies, including those
specified, to provide the attorney general access to all
documentary materials of persons and Medicaid recipients to
which that agency has access. States that documentary material
is provided to permit the investigation of an unlawful act or
for use in an administrative or judicial proceeding.
(b) Prohibits the office of the attorney general from
disclosing the contents of documentary material except as
ordered by a court and except to specified persons.
Sec. 36.008. IMMUNITY. States that notwithstanding any other
law, a person is not civilly or criminally liable for
providing access to documentary material to specified persons.
Sec. 36.009. SUSPENSION OR REVOCATION OF AGREEMENT;
PROFESSIONAL DISCIPLINE. (a) Allows specified persons to
suspend or revoke a provider agreement between the department
or agency and a person found liable, or a permit, license or
certification granted by the department or agency to a person
found liable.
Sec. 36.010. APPLICATION OF OTHER LAW. Provides for
application of a civil remedy under this chapter, not
precluding the application of another common law, statutory or
regulatory remedy except that a person may not be liable for
a civil remedy and civil damages or penalty for the same act.
Sec. 36.011. RECOVERY OF COSTS, FEES, AND EXPENSES. Allows the
attorney general to recover costs, fees, and expenses that are
reasonably incurred in obtaining any injunctive relief or any
civil remedies, or on conducting investigations.
Sec. 36.012. USE OF MONEY RECOVERED. (a) Requires money
recovered by the attorney general to be deposited to the
credit of a special account in the general revenue fund.
(b) States that money recovered under this chapter may be
appropriated only to the attorney general for the enforcement
of this chapter to the extent necessary to fund the
responsibilities of the attorney general.
(c) States that Sections 403.094 and 403.095, Government Code,
do not apply to money recovered under this chapter.
SECTION 2. Effective date: September 1, 1995.
SECTION 3. Emergency clause.
EXPLANATION OF AMENDMENT
The amendment adds the phrase "knowingly or intentionally" to
Section 36.002 of this Act, regarding unlawful acts. The amendment
also creates a new Subsection (9) in this section, stating that a
person commits an unlawful act if the person makes a Medicaid claim
and knowingly or intentionally fails to indicate the type of
license and the identification number of the licensed health care
provider who actually provided the service. The original Subsection
(9) is renumbered to become Subsection (10).
Additionally, the amendment deletes Section 36.012 and substitutes
a new Section 36.012, requiring the legislature, in appropriating
the money recovered under this chapter, to consider the
requirements of the attorney general and other affected state
agencies in investigating Medicaid fraud and enforcing this
chapter.
SUMMARY OF COMMITTEE ACTION
H.B. 2523 was considered by the Public Health Committee in a public
hearing on April 25, 1995. The committee considered one amendment
to the bill. The amendment was adopted without objection.
The following persons testified in favor of the bill:
Lindsay Thorpe, representing self and Chartwell Group of Companies.
Sara Speights, representing Texas Health Care Association.
The following persons testified neutrally on the bill:
Hal Ray, representing Office of the Attorney General.
DeAnn Friedholm, representing Texas Health and Human Services
Commission -- State Medicaid Office.
The bill was reported favorably as amended, with the recommendation
that it do pass and be printed, by a record vote of 5 AYES, 0 NAYS,
0 PNV, and 4 ABSENT.