By McDonald H.B. No. 2523
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the prevention of Medicaid fraud; imposing civil
1-3 penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Title 2, Human Resources Code, is amended by
1-6 adding Chapter 36 to read as follows:
1-7 CHAPTER 36. MEDICAID FRAUD PREVENTION
1-8 Sec. 36.001. DEFINITIONS. In this chapter:
1-9 (1) "Claim" means a written or electronically
1-10 submitted request or demand that:
1-11 (A) is signed by a provider or a fiscal agent
1-12 and that identifies a product or service provided or purported to
1-13 have been provided to a Medicaid recipient as reimbursable under
1-14 the Medicaid program, without regard to whether the money that is
1-15 requested or demanded is paid; or
1-16 (B) states the income earned or expense incurred
1-17 by a provider in providing a product or a service and that is used
1-18 to determine a rate of payment under the Medicaid program.
1-19 (2) "Documentary material" means a record, document,
1-20 or other tangible item of any form, including:
1-21 (A) a medical document or X ray prepared by a
1-22 person in relation to the provision or purported provision of a
1-23 product or service to a Medicaid recipient;
1-24 (B) a medical, professional, or business record
2-1 relating to:
2-2 (i) the provision of a product or service
2-3 to a Medicaid recipient; or
2-4 (ii) a rate or amount paid or claimed for
2-5 a product or service, including a record relating to a product or
2-6 service provided to a person other than a Medicaid recipient as
2-7 needed to verify the rate or amount;
2-8 (C) a record required to be kept by an agency
2-9 that regulates health care providers; or
2-10 (D) a record necessary to disclose the extent of
2-11 services a provider furnishes to Medicaid recipients.
2-12 (3) "Fiscal agent" means:
2-13 (A) a person who, through a contractual
2-14 relationship with the Texas Department of Human Services, the Texas
2-15 Department of Health, or another state agency, receives, processes,
2-16 and pays a claim under the Medicaid program; or
2-17 (B) the designated agent of a person described
2-18 by Paragraph (A).
2-19 (4) "Medicaid program" means the state Medicaid
2-20 program.
2-21 (5) "Medicaid recipient" means an individual on whose
2-22 behalf a person claims or receives a payment from the Medicaid
2-23 program or a fiscal agent, without regard to whether the individual
2-24 was eligible for benefits under the Medicaid program.
2-25 (6) "Provider" means a person who participates in or
2-26 who has applied to participate in the Medicaid program as a
2-27 supplier of a product or service and includes:
3-1 (A) a management company that manages, operates,
3-2 or controls another provider;
3-3 (B) a person, including a medical vendor, that
3-4 provides a product or service to a provider or to a fiscal agent;
3-5 and
3-6 (C) an employee of a provider.
3-7 (7) "Service" includes care or treatment of a Medicaid
3-8 recipient.
3-9 (8) "Signed" means to have affixed a signature
3-10 directly or indirectly by means of handwriting, typewriting,
3-11 signature stamp, computer impulse, or other means recognized by
3-12 law.
3-13 (9) "Unlawful act" means an act declared to be
3-14 unlawful under Section 36.002.
3-15 Sec. 36.002. UNLAWFUL ACTS. A person commits an unlawful
3-16 act if the person:
3-17 (1) knowingly or intentionally makes or causes to be
3-18 made a false statement or misrepresentation of a material fact:
3-19 (A) on an application for a contract, benefit,
3-20 or payment under the Medicaid program; or
3-21 (B) that is intended to be used to determine a
3-22 person's eligibility for a benefit or payment under the Medicaid
3-23 program;
3-24 (2) knowingly or intentionally conceals or fails to
3-25 disclose an event:
3-26 (A) that the person knows affects the initial or
3-27 continued right to a benefit or payment under the Medicaid program
4-1 of:
4-2 (i) the person; or
4-3 (ii) another person on whose behalf the
4-4 person has applied for a benefit or payment or is receiving a
4-5 benefit or payment; and
4-6 (B) to permit a person to receive a benefit or
4-7 payment that is not authorized or that is greater than the payment
4-8 or benefit that is authorized;
4-9 (3) knowingly or intentionally applies for and
4-10 receives a benefit or payment on behalf of another person under the
4-11 Medicaid program and converts any part of the benefit or payment to
4-12 a use other than for the benefit of the person on whose behalf it
4-13 was received;
4-14 (4) knowingly or intentionally makes, causes to be
4-15 made, induces, or seeks to induce the making of a false statement
4-16 or misrepresentation of material fact concerning:
4-17 (A) the conditions or operation of a facility in
4-18 order that the facility may qualify for certification or
4-19 recertification required by the Medicaid program, including
4-20 certification or recertification as:
4-21 (i) a hospital;
4-22 (ii) a nursing facility or skilled nursing
4-23 facility;
4-24 (iii) a hospice;
4-25 (iv) an intermediate care facility for the
4-26 mentally retarded;
4-27 (v) a personal care facility; or
5-1 (vi) a home health agency; or
5-2 (B) information required to be provided by a
5-3 federal or state law, rule, regulation, or provider agreement
5-4 pertaining to the Medicaid program;
5-5 (5) except as authorized under the Medicaid program,
5-6 knowingly or intentionally charges, solicits, accepts, or receives,
5-7 in addition to an amount paid under the Medicaid program, a gift,
5-8 money, a donation, or other consideration as a condition to the
5-9 provision of a service or continued service to a Medicaid recipient
5-10 if the cost of the service provided to the Medicaid recipient is
5-11 paid for, in whole or in part, under the Medicaid program;
5-12 (6) knowingly or intentionally presents or causes to
5-13 be presented a claim for payment under the Medicaid program for a
5-14 product provided or a service rendered by a person who:
5-15 (A) is not licensed to provide the product or
5-16 render the service, if a license is required; or
5-17 (B) is not licensed in the manner claimed;
5-18 (7) knowingly or intentionally pays, offers, solicits,
5-19 or receives:
5-20 (A) a kickback or a bribe in connection with the
5-21 securing of Medicaid recipients or the furnishing of a service or
5-22 product for which any part of the payment is or may be paid under
5-23 the Medicaid program;
5-24 (B) a rebate of a fee or charge made to a
5-25 provider for referring a Medicaid recipient to the provider; or
5-26 (C) a thing of value, as a condition to the
5-27 provision or continued provision of a service or product if the
6-1 person knows that the value of the thing exceeds the rate or other
6-2 applicable amount established under the Medicaid program for the
6-3 provision of the service or product;
6-4 (8) knowingly or intentionally makes a claim under the
6-5 Medicaid program for:
6-6 (A) a service or product that has not been
6-7 approved or acquiesced in by a treating physician;
6-8 (B) a service or product that is substantially
6-9 inadequate when compared to generally recognized standards within
6-10 the particular discipline or within the health care industry;
6-11 (C) a service or product that is not medically
6-12 necessary; or
6-13 (D) a product that has been adulterated,
6-14 debased, mislabeled, or that is otherwise inappropriate;
6-15 (9) makes a claim under the Medicaid program and
6-16 knowingly or intentionally fails to indicate the type of license
6-17 and the identification number of the licensed health care provider
6-18 who actually provided the service; or
6-19 (10) knowingly or intentionally enters into an
6-20 agreement, combination, or conspiracy to defraud the state by
6-21 obtaining or aiding another person in obtaining an unauthorized
6-22 payment or benefit from the Medicaid program or a fiscal agent.
6-23 Sec. 36.003. INJUNCTIVE RELIEF. (a) If the attorney
6-24 general has reason to believe that a person is committing, has
6-25 committed, or is about to commit an unlawful act, the attorney
6-26 general may institute an action for an appropriate order to
6-27 restrain the person from committing or continuing to commit the
7-1 act.
7-2 (b) An action under this section shall be brought in a
7-3 district court of Travis County or of a county in which any part of
7-4 the unlawful act occurred, is occurring, or is about to occur.
7-5 Sec. 36.004. CIVIL REMEDIES. (a) Except as provided by
7-6 Subsection (c), a person who commits an unlawful act is liable to
7-7 the state for:
7-8 (1) restitution of the value of any payment or
7-9 monetary or in-kind benefit provided under the Medicaid program,
7-10 directly or indirectly, as a result of the unlawful act;
7-11 (2) interest on the value of the payment or benefit
7-12 described by Subdivision (1) at the prejudgment interest rate in
7-13 effect on the day the payment or benefit was received or paid, for
7-14 the period from the date the benefit was received or paid to the
7-15 date that restitution is paid to the state;
7-16 (3) a civil penalty of not less than $10,000 or more
7-17 than $50,000 for each unlawful act committed by the person; and
7-18 (4) three times the value of the payment or benefit
7-19 described by Subdivision (1).
7-20 (b) In determining the amount of the civil penalty described
7-21 by Subsection (a)(3), the trier of fact shall consider:
7-22 (1) whether the person has previously violated the
7-23 provisions of this chapter;
7-24 (2) the seriousness of the unlawful act committed by
7-25 the person, including the nature, circumstances, extent, and
7-26 gravity of the unlawful act;
7-27 (3) whether the health and safety of the public or an
8-1 individual was threatened by the unlawful act;
8-2 (4) whether the person acted in bad faith when the
8-3 person engaged in the conduct that formed the basis of the unlawful
8-4 act; and
8-5 (5) the amount necessary to deter future unlawful
8-6 acts.
8-7 (c) The trier of fact may assess a total of not more than
8-8 two times the value of a payment or benefit described by Subsection
8-9 (a)(1) if the trier of fact finds that:
8-10 (1) the person furnished the attorney general with all
8-11 information known to the person about the unlawful act not later
8-12 than the 30th day after the date on which the person first obtained
8-13 the information; and
8-14 (2) at the time the person furnished all the
8-15 information to the attorney general, the attorney general had not
8-16 yet begun an investigation under this chapter.
8-17 (d) An action under this section shall be brought in Travis
8-18 County or in a county in which any part of the unlawful act
8-19 occurred.
8-20 (e) The attorney general may:
8-21 (1) bring an action for civil remedies under this
8-22 section together with a suit for injunctive relief under Section
8-23 36.003; or
8-24 (2) institute an action for civil remedies
8-25 independently of an action for injunctive relief.
8-26 Sec. 36.005. INVESTIGATION. (a) The attorney general may
8-27 take action under Subsection (b) if the attorney general has reason
9-1 to believe that:
9-2 (1) a person has information or custody or control of
9-3 documentary material relevant to the subject matter of an
9-4 investigation of an alleged unlawful act;
9-5 (2) a person is committing, has committed, or is about
9-6 to commit an unlawful act; or
9-7 (3) it is in the public interest to conduct an
9-8 investigation to ascertain whether a person is committing, has
9-9 committed, or is about to commit an unlawful act.
9-10 (b) In investigating an unlawful act, the attorney general
9-11 may:
9-12 (1) require the person to file on a prescribed form a
9-13 statement in writing, under oath or affirmation, as to all the
9-14 facts and circumstances concerning the alleged unlawful act and
9-15 other information considered necessary by the attorney general;
9-16 (2) examine under oath a person in connection with the
9-17 alleged unlawful act; and
9-18 (3) execute in writing and serve on the person a civil
9-19 investigative demand requiring the person to produce the
9-20 documentary material and permit inspection and copying of the
9-21 material under Section 36.006.
9-22 Sec. 36.006. CIVIL INVESTIGATIVE DEMAND. (a) An
9-23 investigative demand must:
9-24 (1) state the rule or statute under which the alleged
9-25 unlawful act is being investigated and the general subject matter
9-26 of the investigation;
9-27 (2) describe the class or classes of documentary
10-1 material to be produced with reasonable specificity to fairly
10-2 indicate the documentary material demanded;
10-3 (3) prescribe a return date within which the
10-4 documentary material is to be produced; and
10-5 (4) identify an authorized employee of the attorney
10-6 general to whom the documentary material is to be made available
10-7 for inspection and copying.
10-8 (b) A civil investigative demand may require disclosure of
10-9 any documentary material that is discoverable under the Texas Rules
10-10 of Civil Procedure.
10-11 (c) Service of an investigative demand may be made by:
10-12 (1) delivering an executed copy of the demand to the
10-13 person to be served or to a partner, an officer, or an agent
10-14 authorized by appointment or by law to receive service of process
10-15 on behalf of that person;
10-16 (2) delivering an executed copy of the demand to the
10-17 principal place of business in this state of the person to be
10-18 served; or
10-19 (3) mailing by registered or certified mail an
10-20 executed copy of the demand addressed to the person to be served at
10-21 the person's principal place of business in this state or, if the
10-22 person has no place of business in this state, to a person's
10-23 principal office or place of business.
10-24 (d) Documentary material demanded under this section shall
10-25 be produced for inspection and copying during normal business hours
10-26 at the office of the attorney general or as agreed by the person
10-27 served and the attorney general.
11-1 (e) Except as provided by Subsection (i) or as ordered by a
11-2 court for good cause shown, the office of the attorney general may
11-3 not produce for inspection or copying or otherwise disclose the
11-4 contents of documentary material obtained under this section to a
11-5 person other than an authorized employee of the attorney general
11-6 without the consent of the person who produced the documentary
11-7 material. The attorney general shall prescribe reasonable terms
11-8 and conditions allowing the documentary material to be available
11-9 for inspection and copying by the person who produced the material
11-10 or by an authorized representative of that person. The attorney
11-11 general may use the documentary material or copies of it as the
11-12 attorney general determines necessary in the enforcement of this
11-13 chapter, including presentation before a court.
11-14 (f) A person may file a petition, stating good cause, to
11-15 extend the return date for the demand or to modify or set aside the
11-16 demand. A petition under this section shall be filed in a district
11-17 court of Travis County and must be filed before the earlier of:
11-18 (1) the return date specified in the demand; or
11-19 (2) the 20th day after the date the demand is served.
11-20 (g) Except as provided by court order, a person on whom a
11-21 demand has been served under this section shall comply with the
11-22 terms of an investigative demand.
11-23 (h) A person who has committed an unlawful act in relation
11-24 to the Medicaid program in this state has submitted to the
11-25 jurisdiction of this state and personal service of an investigative
11-26 demand under this section may be made on the person outside of this
11-27 state.
12-1 (i) The attorney general may disclose any testimony,
12-2 documentary material, or other evidence gathered in an
12-3 investigation conducted under this chapter to:
12-4 (1) an agency of this state, the United States, or
12-5 another state;
12-6 (2) a criminal district attorney, district attorney,
12-7 or county attorney of this state;
12-8 (3) the United States attorney general; or
12-9 (4) a state or federal grand jury.
12-10 (j) This section does not limit the authority of the
12-11 attorney general to conduct investigations or to access a person's
12-12 documentary materials or other information under another state or
12-13 federal law, the Texas Rules of Civil Procedure, or the Federal
12-14 Rules of Civil Procedure.
12-15 (k) If a person fails to comply with an investigative
12-16 demand, or if copying and reproduction of the documentary material
12-17 demanded cannot be satisfactorily accomplished and the person
12-18 refuses to surrender the documentary material, the attorney general
12-19 may file in a district court of Travis County a petition for an
12-20 order to enforce the investigative demand.
12-21 (l) If a petition is filed under Subsection (k), the court
12-22 may determine the matter presented and may enter an order to
12-23 implement this section.
12-24 (m) Failure to comply with a final order entered under
12-25 Subsection (l) is punishable by contempt.
12-26 (n) A final order issued by a district court under
12-27 Subsection (l) is subject to appeal to the supreme court.
13-1 Sec. 36.007. DOCUMENTARY MATERIAL IN POSSESSION OF STATE
13-2 AGENCY. (a) A state agency, including the Health and Human
13-3 Services Commission, the Texas Department of Human Services, the
13-4 Texas Department of Health, the Texas Department of Mental Health
13-5 and Mental Retardation, or the Department of Protective and
13-6 Regulatory Services, shall provide the attorney general access to
13-7 all documentary materials of persons and Medicaid recipients under
13-8 the Medicaid program to which that agency has access. Documentary
13-9 material provided under this subsection is provided to permit
13-10 investigation of an alleged unlawful act or for use or potential
13-11 use in an administrative or judicial proceeding.
13-12 (b) Except as ordered by a court for good cause shown, the
13-13 office of the attorney general may not produce for inspection or
13-14 copying or otherwise disclose the contents of documentary material
13-15 obtained under this section to a person other than:
13-16 (1) an authorized employee of the attorney general;
13-17 (2) an agency of this state, the United States, or
13-18 another state;
13-19 (3) a criminal district attorney, district attorney,
13-20 or county attorney of this state;
13-21 (4) the United States attorney general; or
13-22 (5) a state or federal grand jury.
13-23 Sec. 36.008. IMMUNITY. Notwithstanding any other law, a
13-24 person is not civilly or criminally liable for providing access to
13-25 documentary material under this chapter to:
13-26 (1) an authorized employee of the attorney general;
13-27 (2) an agency of this state, the United States, or
14-1 another state;
14-2 (3) a criminal district attorney, district attorney,
14-3 or county attorney of this state;
14-4 (4) the United States attorney general; or
14-5 (5) a state or federal grand jury.
14-6 Sec. 36.009. SUSPENSION OR REVOCATION OF AGREEMENT;
14-7 PROFESSIONAL DISCIPLINE. (a) The commissioner of human services,
14-8 the commissioner of public health, the commissioner of mental
14-9 health and mental retardation, the executive director of the
14-10 Department of Protective and Regulatory Services, or the executive
14-11 director of another state health care regulatory agency may suspend
14-12 or revoke:
14-13 (1) a provider agreement between the department or
14-14 agency and a person found liable under Section 36.004; or
14-15 (2) a permit, license, or certification granted by the
14-16 department or agency to a person found liable under Section 36.004.
14-17 (b) A person licensed by a state regulatory agency who
14-18 commits an unlawful act is subject to professional discipline under
14-19 the applicable licensing law or rules adopted under that law.
14-20 Sec. 36.010. APPLICATION OF OTHER LAW. The application of a
14-21 civil remedy under this chapter does not preclude the application
14-22 of another common law, statutory, or regulatory remedy, except that
14-23 a person may not be liable for a civil remedy under this chapter
14-24 and civil damages or a penalty under Section 32.039 if the civil
14-25 remedy and civil damages or penalty are assessed for the same act.
14-26 Sec. 36.011. RECOVERY OF COSTS, FEES, AND EXPENSES. The
14-27 attorney general may recover fees, expenses, and costs reasonably
15-1 incurred in obtaining injunctive relief or civil remedies or in
15-2 conducting investigations under this chapter, including court
15-3 costs, reasonable attorney's fees, witness fees, and deposition
15-4 fees.
15-5 Sec. 36.012. USE OF MONEY RECOVERED. The legislature, in
15-6 appropriating money recovered under this chapter, shall consider
15-7 the requirements of the attorney general and other affected state
15-8 agencies in investigating Medicaid fraud and enforcing this
15-9 chapter.
15-10 SECTION 2. This Act takes effect September 1, 1995.
15-11 SECTION 3. The importance of this legislation and the
15-12 crowded condition of the calendars in both houses create an
15-13 emergency and an imperative public necessity that the
15-14 constitutional rule requiring bills to be read on three several
15-15 days in each house be suspended, and this rule is hereby suspended.