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