BILL ANALYSIS C.S.S.B. 793 By: Harris (Goodman) 05-08-95 Committee Report (Substituted) BACKGROUND This bill implements several welfare reform proposals relating to child support and medical support obligations. Several provisions of the bill relate primarily to activities of the office of the attorney general as the state agency designated to administer the child support enforcement program under Part D of Title IV of the federal Social Security Act ("Title IV-D"). Title IV-D funding for required activities of the agency as prescribed by federal law includes federal financial participation. This bill seeks to maximize such funding and improve the system for delivery of services throughout the state. Article 4 of the bill implements required state laws relating to medical support mandated by the federal Omnibus Budget Reconciliation Act of 1993 (OBRA), which became effective in September 1993, and requires states, as a condition of continued receipt of federal Medicaid funds, to have in effect certain state laws regarding medical child support. California and New York have already implemented this legislation. PURPOSE The first three articles of the bill provide for several different enhancements of child support services in Texas. Among its principal provisions, the bill authorizes the attorney general to work with appropriate federal, state, county and local officials in developing and implementing, as funds other than state general revenue permit, a statewide unified child support registry system which would use automated processes for recording and tracking child support orders, monitoring compliance with those orders, and initiating enforcement actions when delinquency occurs. Through contracts with the attorney general as the Title IV-D agency counties would be able to participate in federal funding for their child support services, to the extent federal regulations will allow, whether the services are provided directly by county agencies or through contract with private providers. The bill also amends current statutory provisions for the employee new hire reporting [ENHR] program to permit cooperative enhancement and expansion of the database by the attorney general, the Department of Human Services, the Workers' Compensation Commission and the Texas Employment Commission. The amendment would also expand the use of the program to the prevention of welfare, workers' compensation and unemployment insurance fraud. The bill provides for needed revisions of the administrative processes for child support enforcement used by the attorney general and domestic relations offices. The bill also requires the adoption of a memorandum of understanding between the Texas Department of Human Services and the attorney general regarding the accuracy and completeness of information for use in enforcing child support orders in welfare (AFDC) cases, and provides for interagency cooperation and studies for the improvement of child support services in Texas. The fourth article of the bill is designed to: (1) avoid the loss of all federal contributions to the Texas Medicaid program by bringing Texas laws into compliance with federal requirements; (2) protect the welfare of children by assuring that their health insurance coverage is not lost or compromised due to the acts of parents who divorce or do not marry; (3) shift the costs of these childrens' health care from state taxpayers to the private sector, thereby saving state funds. Provisions in this article also specifically address concerns about possible conflicting interpretations of the federally mandated language. RULEMAKING AUTHORITY The bill does not provide the attorney general with any additional rule-making authority to implement the provisions of the first three articles of the bill, but it clarifies existing rule making authority by requiring the attorney general to adopt rules to implement the provision for the establishment of the statewide unified registry system. Section 4.01, under Article 3.96-10 of Subchapter J, Chapter 3, the Insurance Code, as added by this Act, provides authority for the Commissioner of Insurance to make rules to further define unfair or deceptive practices under that subchapter. SECTION BY SECTION ANALYSIS SECTION 1.01 Amends Chapter 231, Family, to add a new Section 231.0011 which authorizes the attorney general as the Title IV-D agency, in coordination with the Texas Judicial Council, the Office of Court Administration, the federal Office of Child Support Enforcement, and state, county and local officials, to develop and implement on a phased-in basis a statewide system for child support and medical support enforcement, using federal, state, local, and private resources, to the extent these resources are available, which: (1) unifies state and county support registries; (2) records and tracks all child support orders entered in the state; (3) employs automated enforcement processes, including delinquency monitoring; (4) incorporates existing enforcement resources to maximize benefits from state and federal funding; and (5) ensures accountability of all participants in the enforcement process, including state, county and local officials, private contractors and the judiciary. Authorizes the attorney general to convene a workgroup responsible for developing a process and time-table for the implementation of a unified registry system and for reporting the results of its work to the governor, lieutenant governor, speaker of the house of representatives and the attorney general not later than January 15, 1996. Requires the attorney general: (1) to develop technical standards and to identify federal requirements for participation in the system and to apply for necessary federal waivers not later than January 15, 1996; and (2) not later than June 1, 1996, to produce a hardware and software procurement and implementation plan for the phased-in implementation of the system. Requires participating counties: (1) to enter into a contract with the attorney general under which all new support orders shall be treated as Title IV-D cases; (2) to comply with all pertinent federal requirements; (3) to maintain the current level of county funding for child support services included in the system; (4) to monitor support orders for compliance and to initiate appropriate enforcement action directly or by contract with private entities or attorneys when a delinquency occurs. Requires the attorney general to determine what, if any, of program funds generated through other Title IV-D activities may be passed through to participating counties and to develop in cooperation with the counties and federal officials a cost allocation methodology to assist counties in identifying county contributions to the system which may be eligible for federal financial participation. Authorizes the attorney general: (1) to phase in the proposed system, beginning in January, 1996, contingent upon the availability of sufficient federal reimbursement and locally generated funds; and (2) to adopt rules to implement the system. SECTION 1.02. Amends Sections 231.109(a) and (d), Chapter 231, Family Code, to allow the Title IV-D agency to contract with "private entities" in addition to private attorneys and political subdivisions of the state to provide services in Title IV-D cases and to clarify that an attorney employed "to provide Title IV-D" services represents the interest of the state. SECTION 1.03. Amends Chapter 231, Family Code, to add new Section 231.113 which requires the Title IV-D agency, to the extent possible, to enforce a child support obligation in an AFDC case within one year of receiving necessary information from the Texas Department of Human Services. SECTION 1.04. Amends Section 231.202, Family Code, to delete subpart (5) which allowed the Title IV-D agency to pay certain mileage costs incurred by a sheriff or a constable, but placed the provision in a section of the statute which required that the county provide the state share of costs (currently about 1/3). This provision has been moved in an amendment to Section 231.209, Family Code, under Section 1.05 of the bill, to reflect the original intent of the 73rd Legislative that the Title IV-D agency to bear fully the reimbursement of the costs. SECTION 1.05. Amends Section 231.209, Family Code, to add a provision currently contained in subpart (5) of Section 231.202, Family Code (deleted from that code section under Section 1.04 of this bill), to allow the Title IV-D agency to pay the full amount of reimbursement to a sheriff or constable of mileage "or other reasonable travel" costs to execute an out-of-county capias or warrant, as was the intent of the 1993 amendments which authorized this reimbursement. SECTION 1.06. Amends Section 231.304, Family Code, to expand the Employer New Hire Reporting (ENHR) program enacted by the 73rd Legislature by involving the Texas Department of Human Services, the Workers' Compensation Commission and the Texas Employment Commission in the development of the program and by extending the use of the program and its database to purposes, including the prevention of fraud, relating to the administration of unemployment benefits, workers' compensation, child support, or public assistance programs. Requires the Title IV-D agency to work with the Texas Employment Commission, the Texas Workers' Compensation Commission, the comptroller, the Texas Department of Commerce, the secretary of state, and employer groups to encourage employer participation in the program. SECTION 1.07. Amends Chapter 231, Family Code, to add new Section 231.305 requiring the Title IV-D agency and the Texas Department of Human Services to adopt by rule a memorandum of understanding for the development of procedures governing child support enforcement in public assistance cases. SECTION 2.01. Amends Section 101.005, Family Code, to remove as inappropriate the requirement that a "child support review officer" have received family law mediation training and to substitute that such officer be "trained," since the function of the review officer is not mediation. SECTION 2.02. Amends Section 102.007, Family Code, to authorize a political subdivision under contract with the attorney general to provide Title IV-D child support services to bring any appropriate legal action under Title 5 of the Family Code. SECTION 2.03. Amends Subchapter B, Chapter 231, Family Code, to add new Section 231.306 encouraging the Title IV-D agency to use its new automated child support enforcement system, once the system is fully operational, to maximize the collection of medical support and establish cash medical support orders for Medicaid-eligible children for whom private health insurance is not available. SECTION 2.04. Amends Subchapter E, Chapter 231, Family Code, and makes the following changes in sections, subsections, and parts of sections relating to the administrative child support review process: Sec. 231.401. PURPOSE. Clarifies the purpose of the process, which is to resolve routine cases through agreement of the parties or by uncontested orders. Sec. 231.402. AGREEMENTS ENCOURAGED. Deletes reference to "mediation," since most cases will be resolved without mediation. Sec.231.405. INITIATING CHILD SUPPORT REVIEW. Deletes subsection 231.405(a) as unnecessary. and amends subsection 231.405(b) to clarify that notice of a review shall be sent to each party entitled to notice. Sec. 231.406. CONTENTS OF NOTICE OF CHILD SUPPORT REVIEW. Amends the required contents of a notice of child support review to clarify existing provisions: that a recipient of the notice may be represented by legal counsel in a review process or court hearing and that non-participation of the recipient will not prevent the completion of the review process. Sec. 231.407. NOTICE BY MAIL. Deletes, as unnecessary and confusing, current subsection (b) requiring three days to be added to time in which a person is to respond to a notice served by mail and redesignates current subsection (c) as subsection (b). Sec. 231.408. ADMINISTRATIVE SUBPOENA IN CHILD SUPPORT REVIEW. Redesignates current text as a subsection 231.408(a) and creates new subsection 231.408(b) to authorize a court to compel compliance with an administrative subpoena and award attorney fees and costs to a child support agency enforcing a subpoena. Sec. 231.409. SCHEDULING AND CONDUCTING NEGOTIATION CONFERENCE. Changes section heading; deletes current requirement that in order to request a negotiation conference a party must complete an affidavit of financial resources. Authorizes a conference to be held by telephone or video conference. Permits a conference to be adjourned in order to permit mediation of issues that cannot be resolved during a negotiation conference. Sec. 231.410. TIME FOR NEGOTIATION CONFERENCE; NOTICE REQUIRED. Deletes, as unnecessary, subsection 231.410(a) specifying that a conference must be conducted not later than the 45th day after the date all notices of the review have been sent to the parties and redesignates subsection 231.410(b) as the section text requiring that all parties entitled to notice of the conference be notified not later than the 10th day before the date of the conference. Sec. 231.411. RESCHEDULING NEGOTIATION CONFERENCE; NOTICE REQUIRED. Amends to permit rescheduling or adjournment of a negotiation conference at the discretion of the reviewing officer. Sec. 231.412. INFORMATION REQUIRED TO BE PROVIDED AT NEGOTIATION CONFERENCE. Clarifies and reconciles the information to be given participants in a negotiation conference. Sec. 231.414. RECORD NOT REQUIRED. Clarifies that documentary evidence relied upon by a review officer, together with the administrative order, shall constitute a sufficient record of the proceedings. Sec. 231.415. ISSUANCE OF CHILD SUPPORT REVIEW ORDER OR FINDING THAT NO ORDER SHOULD BE ISSUED; EFFECT. Clarifies the procedures to be followed if a negotiation conference does not result in an agreement. Sec. 231.416. VACATING CHILD SUPPORT REVIEW ORDER. Amends subsection 231.416(b) relating to the vacating of a child support review order by a child support review officer, to specify that a new negotiation conference "may," instead of "shall," be scheduled and that the review officer may determine, and give notice of that determination, that a child support review order should not be issued. Sec. 231.417. CONTENTS OF CHILD SUPPORT REVIEW ORDER. Adds new subsection (d) requiring a child support review order which establishes or modifies the amount of previously ordered support must contain specific findings and new subsection (e) allowing the court to resolve issues relating to the conservatorship or possession of a child if a review order so specifies. Sec. 231.418. ADDITIONAL CONTENTS OF AGREED CHILD SUPPORT REVIEW. Clarifies the procedure to be followed when one or more parties agree to a child review order and the contents of the order. Corrects information in mandated warnings. Sec. 231.420. CONTENTS OF PETITION FOR CONFIRMATION; DOCUMENTARY EVIDENCE TO BE FILED WITH PETITION. Makes stylistic changes and clarifies that exhibits accompanying a petition filed with the clerk do not have to be served on the parties, although the petition must identify the exhibits. Sec. 231.421. DUTIES OF CLERK OF COURT. Makes stylistic changes and provides that the child support agency, not the clerk, shall mail a copy of the agreed child support review order to the parties; that the copy of the petition sent the parties contain the date of filing; that the support agency must file a certificate of service showing the date of mailing to each party; and that the fees to be collected by the clerk are those identified in Subchapter C, Chapter 231, Family Code. Sec. 231.422. FORM TO REQUEST A COURT HEARING. Deletes subpart 231.422(b)(1) which requires that a copy of the form to request a hearing be attached to each party's copy of the petition for confirmation of a child support review order and renumbers the subsequent subparts. Sec. 231.423. TIME TO REQUEST A COURT HEARING[; HEARING SUA SPONTE]. Deletes "HEARING SUA SPONTE" from the section heading and subsection (b), making current subsection (a), as amended by the bill, the text of the section; amends the text of current subsection (a) to clarify that a request for a hearing on a support review order should be filed no later than the 20th day after the order is served or mailed. Sec. 231.424. CONFIRMATION WITHOUT HEARING. Clarifies that confirmation of a child support review order shall be made not later than the 30th day after the date a petition which includes waivers by all parties has been filed or, where such waivers are not included in the petition, the date the last party to be served with citation has been served. Sec. 231.425. EFFECT OF REQUEST FOR HEARING; PLEADING. Clarifies that a request by a party for a hearing must be timely filed and that the review order and petition for confirmation constitute a sufficient pleading by the child support agency; specifies that a request for hearing may limit the scope of the de novo hearing by identifying the issues in dispute. Sec. 231.426. TIME FOR COURT HEARING. Requires a hearing on the confirmation of a child support review order not later than the 30th day after the day the last party to be served has filed a timely request for a hearing. Sec. 231.427. ORDER AFTER HEARING; EFFECT OF CONFIRMATION ORDER. Changes "final judgment" to "final order" of the court. Sec. 231.428. SPECIAL CHILD SUPPORT REVIEW PROCEDURES RELATING TO ESTABLISHMENT OF PATERNITY. Substitutes "parentage" for "paternity" in the heading and text of the section and authorizes the child support agency to file a child support review order with a request for parentage testing if either party fails or refuses to participate in administrative parentage testing; requires the court to follow the appropriate procedures and allows the imposition of sanctions in order to obtain compliance with the testing order; prohibits the confirmation of a review order until an opportunity for parentage testing has been provided. Sec. 231.431, "STUDY OF CHILD SUPPORT REVIEW PROCESS," is added, requiring the attorney general to undertake a study of the cost-effectiveness of the child support review process compared with other enforcement mechanisms and to report the results of the study to the governor and the legislature not later than September 1, 1996. SECTION 2.05. Amends Section 71.035(a), Government Code, to require the Texas Judicial Council to implement a tracking system, using information reported each month by district and county clerks to the Office of Court Administration, in order to ensure accountability for counties and courts participating in the statewide integrated system for child support and medical support enforcement proposed by this bill. SECTION 3.01. Requires the attorney general to establish a work group which would monitor progress toward the implementation of the proposed statewide integrated system for child support and medical support enforcement and would report its findings and recommendations to the attorney general and notify the governor, the comptroller, and the legislature of the filing of the report not later than September 1, 1996, and annually thereafter. SECTION 3.02. Requires the attorney general and the Texas Department of Health to negotiate an agreement for the payment of cash incentives to the attorney general for enrolling Medicaid-eligible children in private health insurance plans, including a portion of the state share of costs recovered or saved as a result of the attorney general's efforts, and to report to the legislature the results of negotiations not later than October 1, 1996. SECTION 3.03. Requires the attorney general, the state medicaid administrator, and the Insurance Commission to initiate a study for the establishment of a health insurance purchasing alliance to provide coverage for children for whom a child support obligation is established or enforced in a Title IV-D case and to provide a report of the results of the study by not later than October 1, 1996, to the governor, the lieutenant governor, speaker of the house of representatives; attorney general, and commissioner of health and human services. SECTION 3.04. Encourages the attorney general to study the cost-effective use of private contractors in child support services and to consider the use of private contractors when a cost analysis indicates that a private contractor could deliver services as effectively as the Title IV-D agency; requires the attorney general to report the results of efforts under this section and to notify the governor, the comptroller, and the legislature of the filing of the report not later than December 1, 1996. SECTION 4.01. Adds a new Subchapter J to Chapter 3, Insurance Code, to comply with federal mandates relating to medical support for children. Article 3.96-1 defines "insurer" broadly to include health maintenance organizations (HMOs) and other benefit plans, as required by provisions of the federal Omnibus Budget Reconciliation Act of 1993 (OBRA '93), codified at 42 U.S.C. 1396-1(b). Other definitions in this section are for the purpose of this subchapter. Article 3.96-2 prohibits insurers from denying children enrollment in a health insurance plan for any of five specified reasons including preexisting conditions. This is consistent with federal law, which prohibits Employee Retirement Income Security Act (ERISA) plans from excluding coverage for adopted children with preexisting conditions. See 29 U.S.C. 1169(c)(2). Subsections 2,3, and 4 are taken almost verbatim from 42 U.S.C. 1396g-1(a)(4). Subsection 5 restates the prohibition of discrimination against the Title XIX agency, which is required by 42 U.S.C. 1396g-1(a)(4) and by Article 3.96-5 of this Act. Article 3.96-3 prohibits enrollment period restrictions and requires an insurer to enroll a child on application of the custodial parent, or a child support agency, if the primary insured parent fails or refuses to enroll the child. This provision is required by 42 U.S.C. 1396g-1(a)(2)(A) & (B). Article 3.96-4 prohibits disenrollment of a child unless the court order is terminated or the child is enrolled in comparable health coverage as required by 42 U.S.C. 1396-1(a)(2)(C) and clarifies that the eligibility of a child for enrollment in a health plan does not terminate because the parent's eligibility has terminated. (The federal language relating to cancellation or nonrenewal by an insurer caused some concern because it does not explicitly deal with the situation in which dependent coverage for the employee's dependent has ceased because of termination of employment. The intent of the federal statute was to require coverage for eligible children. To clarify, subsection (b), Art. 3.96-4 states that an "eligible" child "does not include a child as to whom eligibility has terminated because the parent eligible for dependent health coverage is no longer eligible for such coverage." Article 3.96-5 allows a child support agency or custodial parent to transition to continuation or conversion health coverage, if such provision(s) is present in the original coverage, when the employee loses eligibility for dependent health coverage (e.g., employee no longer employed by employer). This article follows a national trend for permitting the medicaid agencies to consider continuation of coverage for children as an alternative to switching to the medicaid program. Many custodial parents would similarly appreciate the opportunity to continue coverage. Article 3.96-6 prohibits discrimination against the Title XIX agency as required by 42 U.S.C. 1396g-1(a)(4). This article also adds a requirement that insurers provide information to the Title XIX agency to facilitate reimbursement. Article 3.96-7 specifies the rights of custodial parents related to filing claims and receiving information and payments (or assigning payments to a provider) on claims, pursuant to 42 U.S.C. 1396g-1(a)(5). Article 3.96-8 clarifies the prohibition against service area restrictions by forbidding contract provisions which deny, limit or reduce payments for claims of a child who lives outside the coverage area, pursuant to 42 U.S.C. 1396g-1(a)(1)(C). Article 3.96-9 provides penalties and remedies for the failure of an insurer to comply with this subchapter equivalent to the remedies provided to injured parties under Chapter 21 of the Insurance Code. Article 3.96-10 provides rule making authority for the Commissioner of Insurance develop rules to implement this subchapter including a further definition of unfair or deceptive practices under this subchapter. SECTION 4.02. Amends Section 101.012 of the Family Code to expand the definition "employer" to include, "for purposes of enrolling dependents in a group health insurance plan, a union, trade association, or other similar organization." SECTION 4.03. Amends Section 154.184, Family Code, by eliminating the provision which permits employers to allow employees to "veto" a child's enrollment. SECTION 4.04. Amends Section 154.186, Family Code, to provide for employer notice. The section also eliminates the requirement that the clerk "certify" a copy of the order, since this step serves no useful purpose, adds costs, and slows the process. SECTION 4.05. Amends Section 154.187, Family Code, by implementing the mandate for employer enrollment in certain circumstances and the prohibition against enrollment season restrictions, as required by 42 U.S.C. 1396g-1(a)(3); also eliminates the reference to "enrollment periods" because enrollment season restrictions are prohibited by 42 U.S.C. 1396g-1(a)(3); adds Subsection 154.187(g), to clarify that an employer under a medical support order is subject to the provisions generally applicable to a wage withholding order or writ, which is already implied in current law and assumed by most practitioners. SECTION 4.06. Replaces Section 154.192, which provided a geographical services area exemption for HMOs, with new language enacting the OBRA-mandated prohibition against disenrollment; clarifies that the employer is not required to maintain coverage if the employee or member ceases to be eligible for dependent coverage. SECTION 4.07. Amends Family Code §158.206(a) to clarify that an employer has no liability to the obligor for complying with a medical support order. SECTION. 5.01. Effective date: September 1, 1995, except that: (1) Section 4.01 applies only to an insurance policy or evidence of coverage delivered, issued for delivery, or renewed on or after January 1, 1996; (2) the office of the attorney general may phase in the proposed statewide integrated system for child and medical support enforcement, as provided in Section 1.01 of the Act, to the extent funds and federal reimbursement are available; (3) the Office of Court Administration may phase in the implementation of the monthly report, as provided in Section 2.05 of the Act, on the performance of counties and courts in the operation of the proposed statewide system, to correspond with the phased implementation of that system; and (4) the implementation of any part of this Act requiring federal waivers shall be delayed until such waivers are obtained. Provides that all funds received from the federal government as reimbursement relating to the statewide integrated system established by Section 1.01 of the Act be in excess of any amount appropriated by the 74th Legislature to the attorney general for the fiscal biennium ending August 31, 1997. SECTION. 5.02. Requires the attorney general to provide the legislature not later than December 1, 1996, an estimate of the cost savings to the state and the effectiveness of the expansion of child support enforcement services and privatization efforts. SECTION 5.03. Requires the attorney general as the Title IV-D agency, in conjunction with the Texas Department of Human Services, to develop and implement a plan for assigning a representative of the attorney general to work with department eligibility workers, only if increased support collections in public assistance cases justifies the implementation of the plan; requires the attorney general to complete the plan by not later than October 1, 1995, and to notify the governor, the lieutenant governor, and speaker of the house of representatives of the filing of the completed plan; requires the attorney general and the Texas Department of Human Services to prepared the initial memorandum of understanding required by Section 1.06 of the Act, by not later than December 1, 1995. SECTION 5.04. Provides that changes in the child support review process under Chapter 231, Family Code, effected by this Act apply only to a review for which notice is given on or after the effective date of the Act. SECTION 5.05. Provides that Section 3.01 of the Act expires on September 2, 1997, and Sections 3.02(b) and 3.03 expire on January 1, 1997. SECTION 5.06. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The House Committee Substitute conforms the Senate Bill to the House companion bill, C.S.H.B.2664, by deleting a new subsection (l) to Family Code Section 231.011 which was added by the Senate Jurisprudence Committee, and by restoring a reference in Section 1.06 to Section 14.061 of the Family Code, which the Senate version had changed to reference Subchapter D, Chapter 154 of the recodified Family Code. SUMMARY OF COMMITTEE ACTION S.B. 793 was considered in a formal meeting on May 8, 1995. The committee considered a complete substitute which was adopted without objection. The committee reported the bill favorably as substituted with the recommendation that it do pass and be printed by a record vote of 8 ayes, 0 nays, 0 pnv, 1 absent.