1-1 By: Counts, Duncan (Senate Sponsor - Montford) H.B. No. 1487
1-2 (In the Senate - Received from the House May 11, 1995;
1-3 May 12, 1995, read first time and referred to Committee on Economic
1-4 Development; May 22, 1995, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 7, Nays 0;
1-6 May 22, 1995, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 1487 By: Lucio
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the investigation, prosecution, and punishment of the
1-11 offense of insurance fraud.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Title 7, Penal Code, is amended by adding Chapter
1-14 35 to read as follows:
1-15 CHAPTER 35. INSURANCE FRAUD
1-16 Sec. 35.01. DEFINITIONS. In this chapter:
1-17 (1) "Health care goods" means a tangible product,
1-18 device, medicine, or other object provided in conjunction with a
1-19 health care service.
1-20 (2) "Health care provider" means a person who renders
1-21 health care services or an agent or employee of an organization
1-22 that renders or provides a facility and means to render health care
1-23 services. The term includes a physician, surgeon, person who may
1-24 be selected by an insured or a beneficiary under Article 21.52,
1-25 Insurance Code, and person defined as a provider of health care
1-26 under Section 2.05(d)(1), Medical Practice Act (Article 4495b,
1-27 Vernon's Texas Civil Statutes).
1-28 (3) "Health care service" means a service that is
1-29 intended to improve or maintain the physical or mental condition of
1-30 an individual and that is rendered, directed, or supervised by a
1-31 health care provider.
1-32 (4) "Insurer" means a person who engages in the
1-33 business of insurance in this state, including:
1-34 (A) an insurer that is not authorized to do
1-35 business in this state;
1-36 (B) a health maintenance organization;
1-37 (C) a group hospital service corporation
1-38 regulated under Chapter 20, Insurance Code; and
1-39 (D) any person who self-insures and provides
1-40 health care benefits to the person's employees.
1-41 (5) "Statement" means an oral or written communication
1-42 or a record or documented representation of fact evidencing a loss,
1-43 injury, or expense. The term includes computer-generated
1-44 information.
1-45 Sec. 35.02. INSURANCE FRAUD. (a) A person commits an
1-46 offense if, with intent to defraud or deceive an insurer, the
1-47 person causes to be prepared or presents to an insurer in support
1-48 of a claim for payment under a health or property and casualty
1-49 insurance policy a statement that the person knows contains false
1-50 or misleading information concerning a matter that is material to
1-51 the claim, and the matter affects a person's right to a payment or
1-52 the amount of payment to which a person is entitled.
1-53 (b) A person commits an offense if, with intent to defraud
1-54 or deceive an insurer, the person solicits, offers, pays, or
1-55 receives a benefit in connection with the furnishing of health care
1-56 goods or services for which a claim for payment is submitted under
1-57 a health or property and casualty insurance policy.
1-58 (c) For purposes of Subsection (a), information concerning a
1-59 matter that is material to a claim for payment under an insurance
1-60 policy includes information concerning:
1-61 (1) whether health care goods or services were
1-62 provided;
1-63 (2) whether health care goods or services were
1-64 medically necessary under professionally accepted standards;
1-65 (3) the nature of the health care goods or services
1-66 provided;
1-67 (4) the date on which health care goods or services
1-68 were provided;
2-1 (5) the medical record of goods or services provided;
2-2 (6) the condition treated or diagnosis made;
2-3 (7) the identity and applicable license of the
2-4 provider or the recipient of health care goods or services;
2-5 (8) whether property was damaged or lost in the manner
2-6 and under the circumstances described in a statement related to a
2-7 claim for insurance payment; or
2-8 (9) whether any other claim for insurance payment has
2-9 been communicated to any other insurer concerning property damage
2-10 or loss to the same property.
2-11 (d) An offense under this section is:
2-12 (1) a state jail felony if the value of the claim is
2-13 $1,500 or more but less than $20,000;
2-14 (2) a felony of the third degree if the value of the
2-15 claim is $20,000 or more but less than $100,000;
2-16 (3) a felony of the second degree if the value of the
2-17 claim is $100,000 or more but less than $200,000; or
2-18 (4) a felony of the first degree if the value of the
2-19 claim is $200,000 or more.
2-20 Sec. 35.03. AGGREGATION AND MULTIPLE OFFENSES. (a) When
2-21 separate claims in violation of this chapter are communicated to an
2-22 insurer or group of insurers pursuant to one scheme or continuing
2-23 course of conduct, the conduct may be considered as one offense and
2-24 the value of the claims aggregated in determining the
2-25 classification of the offense. If claims are aggregated under this
2-26 subsection, Subsection (b) shall not apply.
2-27 (b) When three or more separate claims in violation of this
2-28 chapter are communicated to an insurer or group of insurers
2-29 pursuant to one scheme or continuing course of conduct, the conduct
2-30 may be considered as one offense, and the classification of the
2-31 offense shall be one category higher than the most serious single
2-32 offense proven from the separate claims, except that if the most
2-33 serious offense is a felony of the first degree, the offense is a
2-34 felony of the first degree. This subsection shall not be applied
2-35 if claims are aggregated under Subsection (a).
2-36 Sec. 35.04. JURISDICTION OF ATTORNEY GENERAL. (a) The
2-37 attorney general may offer to an attorney representing the state in
2-38 the prosecution of an offense under Section 35.02 the
2-39 investigative, technical, and litigation assistance of the attorney
2-40 general's office.
2-41 (b) The attorney general may prosecute or assist in the
2-42 prosecution of an offense under Section 35.02 on the request of the
2-43 attorney representing the state described by Subsection (a).
2-44 SECTION 2. Article 2.12, Code of Criminal Procedure, is
2-45 amended to read as follows:
2-46 Art. 2.12. Who are peace officers. The following are peace
2-47 officers:
2-48 (1) sheriffs and their deputies;
2-49 (2) constables and deputy constables;
2-50 (3) marshals or police officers of an incorporated
2-51 city, town, or village;
2-52 (4) rangers and officers commissioned by the Public
2-53 Safety Commission and the Director of the Department of Public
2-54 Safety;
2-55 (5) investigators of the district attorneys', criminal
2-56 district attorneys', and county attorneys' offices;
2-57 (6) law enforcement agents of the Texas Alcoholic
2-58 Beverage Commission;
2-59 (7) each member of an arson investigating unit
2-60 commissioned by a city, a county, or the state;
2-61 (8) officers commissioned under Section 21.483,
2-62 Education Code, or Subchapter E, Chapter 51, Education Code;
2-63 (9) officers commissioned by the General Services
2-64 Commission;
2-65 (10) law enforcement officers commissioned by the
2-66 Parks and Wildlife Commission;
2-67 (11) airport police officers commissioned by a city
2-68 with a population of more than one million, according to the most
2-69 recent federal census, that operates an airport that serves
2-70 commercial air carriers;
3-1 (12) airport security personnel commissioned as peace
3-2 officers by the governing body of any political subdivision of this
3-3 state, other than a city described by Subdivision (11), that
3-4 operates an airport that serves commercial air carriers;
3-5 (13) municipal park and recreational patrolmen and
3-6 security officers;
3-7 (14) security officers commissioned as peace officers
3-8 by the State Treasurer;
3-9 (15) officers commissioned by a water control and
3-10 improvement district under Section 51.132, Water Code;
3-11 (16) officers commissioned by a board of trustees
3-12 under Chapter 341, Acts of the 57th Legislature, Regular Session,
3-13 1961 (Article 1187f, Vernon's Texas Civil Statutes);
3-14 (17) investigators commissioned by the Texas State
3-15 Board of Medical Examiners;
3-16 (18) officers commissioned by the board of managers of
3-17 the Dallas County Hospital District, the Tarrant County Hospital
3-18 District, or the Bexar County Hospital District under Section
3-19 281.057, Health and Safety Code;
3-20 (19) county park rangers commissioned under Subchapter
3-21 E, Chapter 351, Local Government Code;
3-22 (20) investigators employed by the Texas Racing
3-23 Commission;
3-24 (21) officers commissioned by the State Board of
3-25 Pharmacy;
3-26 (22) officers commissioned by the governing body of a
3-27 metropolitan rapid transit authority under Section 13, Chapter 141,
3-28 Acts of the 63rd Legislature, Regular Session, 1973 (Article 1118x,
3-29 Vernon's Texas Civil Statutes), or by a regional transportation
3-30 authority under Section 10, Chapter 683, Acts of the 66th
3-31 Legislature, Regular Session, 1979 (Article 1118y, Vernon's Texas
3-32 Civil Statutes);
3-33 (23) officers commissioned under the Texas High-Speed
3-34 Rail Act (Article 6674v.2, Revised Statutes) <by the Texas
3-35 High-Speed Rail Authority>;
3-36 (24) investigators commissioned by the attorney
3-37 general under Section 402.009, Government Code;
3-38 (25) security officers and investigators commissioned
3-39 as peace officers under Chapter 466, Government Code; <and>
3-40 (26) an officer employed by the Texas Department of
3-41 Health under Section 431.2471, Health and Safety Code;<.>
3-42 (27) <(26)> officers appointed by an appellate court
3-43 under Subchapter F, Chapter 53, Government Code;<.>
3-44 (28) <(26)> officers commissioned by the state fire
3-45 marshal under Chapter 417, Government Code; and
3-46 (29) an investigator commissioned by the commissioner
3-47 of insurance under Article 1.10D, Insurance Code.
3-48 SECTION 3. Article 59.01(2), Code of Criminal Procedure, as
3-49 amended by Section 5, Chapter 761, and Section 1, Chapter 828, Acts
3-50 of the 73rd Legislature, Regular Session, 1993, is amended to read
3-51 as follows:
3-52 (2) "Contraband" means property of any nature,
3-53 including real, personal, tangible, or intangible, that is:
3-54 (A) used in the commission of:
3-55 (i) any first or second degree felony
3-56 under the Penal Code;
3-57 (ii) any felony under Chapters 29, 30, 31,
3-58 <or> 32, or 35, Penal Code; or
3-59 (iii) any felony under The Securities Act
3-60 (Article 581-1 et seq., Vernon's Texas Civil Statutes);
3-61 (B) used or intended to be used in the
3-62 commission of:
3-63 (i) any felony under Chapter 481, Health
3-64 and Safety Code (Texas Controlled Substances Act);
3-65 (ii) any felony under Chapter 483, Health
3-66 and Safety Code;
3-67 (iii) a felony under Article 350, Revised
3-68 Statutes; <or>
3-69 (iv) any felony under Chapter 34, Penal
3-70 Code; <or>
4-1 (v) <(iv)> a Class A misdemeanor under
4-2 Subchapter B, Chapter 365, Health and Safety Code, if the defendant
4-3 has been previously convicted twice of an offense under that
4-4 subchapter; or
4-5 (vi) <(v)> any felony under The Sale of
4-6 Checks Act (Article 489d, Vernon's Texas Civil Statutes);
4-7 (C) the proceeds gained from the commission of a
4-8 felony listed in Paragraph (A) or (B) of this subdivision or a
4-9 crime of violence; or
4-10 (D) acquired with proceeds gained from the
4-11 commission of a felony listed in Paragraph (A) or (B) of this
4-12 subdivision or a crime of violence.
4-13 SECTION 4. Section 2, Article 1.10D, Insurance Code, is
4-14 amended by amending Subsections (b) and (e) and adding Subsections
4-15 (f) and (g) to read as follows:
4-16 (b) If the commissioner has reason to believe that a person
4-17 has engaged in or is engaging in an act or practice that may
4-18 constitute either a fraudulent insurance act, as defined by Section
4-19 1(a)(2) of this article, or insurance fraud under Section 35.02(a),
4-20 Penal Code, or has committed, or is about to commit, a fraudulent
4-21 insurance act or insurance fraud, the commissioner may make any
4-22 investigation necessary inside or outside this state to determine
4-23 whether or not the act has occurred, or to aid in the enforcement
4-24 of the laws relating to fraudulent insurance acts or insurance
4-25 fraud. <In regard to allegations of fraud on the part of a
4-26 policyholder or claimant, the commissioner's authority to initiate
4-27 investigations under this subsection is limited to those instances
4-28 in which there is evidence showing a pattern of fraudulent
4-29 activity.>
4-30 (e) This section does not prohibit or limit the authority of
4-31 an insurer to conduct its own independent investigation into a
4-32 suspected case of insurance claim fraud. Before an insurer may
4-33 request the commissioner to conduct an investigation of suspected
4-34 claim fraud, the insurer must have completed its investigation and
4-35 drafted a report of its findings. The insurer shall submit the
4-36 report and the related investigation file to the commissioner as
4-37 part of the insurer's request for investigation by the
4-38 commissioner. <In regard to an insurer's request for investigation
4-39 under this subsection, the commissioner's authority to undertake an
4-40 investigation against a policyholder or claimant is limited to
4-41 those instances in which the insurer's investigation reports show a
4-42 pattern of fraudulent activity.>
4-43 (f) The commissioner may employ investigators as the
4-44 commissioner considers necessary to enforce this article and may
4-45 commission those investigators as peace officers. An investigator
4-46 employed by the department as a peace officer must meet the
4-47 requirements for peace officers imposed under Chapter 415,
4-48 Government Code. If the commissioner elects to commission peace
4-49 officers, the commissioner shall appoint a chief investigator who
4-50 is commissioned as a peace officer and who is qualified by training
4-51 and experience in law enforcement to supervise, direct, and
4-52 administer the activities of the commissioned investigators.
4-53 (g) An investigator employed by the department may request
4-54 the assistance of local law enforcement officers in conducting an
4-55 investigation authorized by this article.
4-56 SECTION 5. Subsection (d), Section 1B, Texas Motor Vehicle
4-57 Safety-Responsibility Act (Article 6701h, Vernon's Texas Civil
4-58 Statutes), is amended to read as follows:
4-59 (d) A standard proof of liability insurance form described
4-60 in Subsection (a)(2) <(A)(2)> of this section, or a document that
4-61 is an unauthorized version of the form, is a governmental record
4-62 for purposes of Chapter 37, Penal Code. A standard proof of
4-63 liability insurance form is unauthorized for purposes of this
4-64 subsection if it is not issued by an insurer authorized to transact
4-65 motor vehicle liability insurance in this state.
4-66 SECTION 6. (a) The change in law made by Chapter 35, Penal
4-67 Code, as added by this Act, applies only to an offense committed on
4-68 or after the effective date of this Act. For purposes of this
4-69 section, an offense is committed before the effective date of this
4-70 Act if any element of the offense occurs before that date.
5-1 (b) An offense committed before the effective date of this
5-2 Act is governed by the law in effect when the offense was
5-3 committed, and the former law is continued in effect for that
5-4 purpose.
5-5 SECTION 7. This Act takes effect September 1, 1995.
5-6 SECTION 8. The importance of this legislation and the
5-7 crowded condition of the calendars in both houses create an
5-8 emergency and an imperative public necessity that the
5-9 constitutional rule requiring bills to be read on three several
5-10 days in each house be suspended, and this rule is hereby suspended.
5-11 * * * * *