By McDonald H.B. No. 2523
74R5595 DLF-F
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;
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) makes or causes to be made a false statement or
3-18 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) conceals or fails to disclose an event:
3-25 (A) that the person knows affects the initial or
3-26 continued right to a benefit or payment under the Medicaid program
3-27 of:
4-1 (i) the person; or
4-2 (ii) another person on whose behalf the
4-3 person has applied for a benefit or payment or is receiving a
4-4 benefit or payment; and
4-5 (B) to permit a person to receive a benefit or
4-6 payment that is not authorized or that is greater than the payment
4-7 or benefit that is authorized;
4-8 (3) applies for and receives a benefit or payment on
4-9 behalf of another person under the Medicaid program and converts
4-10 any part of the benefit or payment to a use other than for the
4-11 benefit of the person on whose behalf it was received;
4-12 (4) makes, causes to be made, induces, or seeks to
4-13 induce the making of a false statement or misrepresentation of
4-14 material fact concerning:
4-15 (A) the conditions or operation of a facility in
4-16 order that the facility may qualify for certification or
4-17 recertification required by the Medicaid program, including
4-18 certification or recertification as:
4-19 (i) a hospital;
4-20 (ii) a nursing facility or skilled nursing
4-21 facility;
4-22 (iii) a hospice;
4-23 (iv) an intermediate care facility for the
4-24 mentally retarded;
4-25 (v) a personal care facility; or
4-26 (vi) a home health agency; or
4-27 (B) information required to be provided by a
5-1 federal or state law, rule, regulation, or provider agreement
5-2 pertaining to the Medicaid program;
5-3 (5) except as authorized under the Medicaid program,
5-4 charges, solicits, accepts, or receives, in addition to an amount
5-5 paid under the Medicaid program, a gift, money, a donation, or
5-6 other consideration as a condition to the provision of a service or
5-7 continued service to a Medicaid recipient if the cost of the
5-8 service provided to the Medicaid recipient is paid for, in whole or
5-9 in part, under the Medicaid program;
5-10 (6) knowingly presents or causes to be presented a
5-11 claim for payment under the Medicaid program for a product provided
5-12 or a service rendered by a person who:
5-13 (A) is not licensed to provide the product or
5-14 render the service, if a license is required; or
5-15 (B) is not licensed in the manner claimed;
5-16 (7) pays, offers, solicits, or receives:
5-17 (A) a kickback or a bribe in connection with the
5-18 securing of Medicaid recipients or the furnishing of a service or
5-19 product for which any part of the payment is or may be paid under
5-20 the Medicaid program;
5-21 (B) a rebate of a fee or charge made to a
5-22 provider for referring a Medicaid recipient to the provider; or
5-23 (C) a thing of value, as a condition to the
5-24 provision or continued provision of a service or product if the
5-25 person knows that the value of the thing exceeds the rate or other
5-26 applicable amount established under the Medicaid program for the
5-27 provision of the service or product;
6-1 (8) makes a claim under the Medicaid program for:
6-2 (A) a service or product that has not been
6-3 approved or acquiesced in by a treating physician;
6-4 (B) a service or product that is substantially
6-5 inadequate when compared to generally recognized standards within
6-6 the particular discipline or within the health care industry;
6-7 (C) a service or product that is not medically
6-8 necessary; or
6-9 (D) a product that has been adulterated,
6-10 debased, mislabeled, or that is otherwise inappropriate; or
6-11 (9) enters into an agreement, combination, or
6-12 conspiracy to defraud the state by obtaining or aiding another
6-13 person in obtaining an unauthorized payment or benefit from the
6-14 Medicaid program or a fiscal agent.
6-15 Sec. 36.003. INJUNCTIVE RELIEF. (a) If the attorney
6-16 general has reason to believe that a person is committing, has
6-17 committed, or is about to commit an unlawful act, the attorney
6-18 general may institute an action for an appropriate order to
6-19 restrain the person from committing or continuing to commit the
6-20 act.
6-21 (b) An action under this section shall be brought in a
6-22 district court of Travis County or of a county in which any part of
6-23 the unlawful act occurred, is occurring, or is about to occur.
6-24 Sec. 36.004. CIVIL REMEDIES. (a) Except as provided by
6-25 Subsection (c), a person who commits an unlawful act is liable to
6-26 the state for:
6-27 (1) restitution of the value of any payment or
7-1 monetary or in-kind benefit provided under the Medicaid program,
7-2 directly or indirectly, as a result of the unlawful act;
7-3 (2) interest on the value of the payment or benefit
7-4 described by Subdivision (1) at the prejudgment interest rate in
7-5 effect on the day the payment or benefit was received or paid, for
7-6 the period from the date the benefit was received or paid to the
7-7 date that restitution is paid to the state;
7-8 (3) a civil penalty of not less than $10,000 or more
7-9 than $50,000 for each unlawful act committed by the person; and
7-10 (4) three times the value of the payment or benefit
7-11 described by Subdivision (1).
7-12 (b) In determining the amount of the civil penalty described
7-13 by Subsection (a)(3), the trier of fact shall consider:
7-14 (1) whether the person has previously violated the
7-15 provisions of this chapter;
7-16 (2) the seriousness of the unlawful act committed by
7-17 the person, including the nature, circumstances, extent, and
7-18 gravity of the unlawful act;
7-19 (3) whether the health and safety of the public or an
7-20 individual was threatened by the unlawful act;
7-21 (4) whether the person acted in bad faith when the
7-22 person engaged in the conduct that formed the basis of the unlawful
7-23 act; and
7-24 (5) the amount necessary to deter future unlawful
7-25 acts.
7-26 (c) The trier of fact may assess a total of not more than
7-27 two times the value of a payment or benefit described by Subsection
8-1 (a)(1) if the trier of fact finds that:
8-2 (1) the person furnished the attorney general with all
8-3 information known to the person about the unlawful act not later
8-4 than the 30th day after the date on which the person first obtained
8-5 the information; and
8-6 (2) at the time the person furnished all the
8-7 information to the attorney general, the attorney general had not
8-8 yet begun an investigation under this chapter.
8-9 (d) An action under this section shall be brought in Travis
8-10 County or in a county in which any part of the unlawful act
8-11 occurred.
8-12 (e) The attorney general may:
8-13 (1) bring an action for civil remedies under this
8-14 section together with a suit for injunctive relief under Section
8-15 36.003; or
8-16 (2) institute an action for civil remedies
8-17 independently of an action for injunctive relief.
8-18 Sec. 36.005. INVESTIGATION. (a) The attorney general may
8-19 take action under Subsection (b) if the attorney general has reason
8-20 to believe that:
8-21 (1) a person has information or custody or control of
8-22 documentary material relevant to the subject matter of an
8-23 investigation of an alleged unlawful act;
8-24 (2) a person is committing, has committed, or is about
8-25 to commit an unlawful act; or
8-26 (3) it is in the public interest to conduct an
8-27 investigation to ascertain whether a person is committing, has
9-1 committed, or is about to commit an unlawful act.
9-2 (b) In investigating an unlawful act, the attorney general
9-3 may:
9-4 (1) require the person to file on a prescribed form a
9-5 statement in writing, under oath or affirmation, as to all the
9-6 facts and circumstances concerning the alleged unlawful act and
9-7 other information considered necessary by the attorney general;
9-8 (2) examine under oath a person in connection with the
9-9 alleged unlawful act; and
9-10 (3) execute in writing and serve on the person a civil
9-11 investigative demand requiring the person to produce the
9-12 documentary material and permit inspection and copying of the
9-13 material under Section 36.006.
9-14 Sec. 36.006. CIVIL INVESTIGATIVE DEMAND. (a) An
9-15 investigative demand must:
9-16 (1) state the rule or statute under which the alleged
9-17 unlawful act is being investigated and the general subject matter
9-18 of the investigation;
9-19 (2) describe the class or classes of documentary
9-20 material to be produced with reasonable specificity to fairly
9-21 indicate the documentary material demanded;
9-22 (3) prescribe a return date within which the
9-23 documentary material is to be produced; and
9-24 (4) identify an authorized employee of the attorney
9-25 general to whom the documentary material is to be made available
9-26 for inspection and copying.
9-27 (b) A civil investigative demand may require disclosure of
10-1 any documentary material that is discoverable under the Texas Rules
10-2 of Civil Procedure.
10-3 (c) Service of an investigative demand may be made by:
10-4 (1) delivering an executed copy of the demand to the
10-5 person to be served or to a partner, an officer, or an agent
10-6 authorized by appointment or by law to receive service of process
10-7 on behalf of that person;
10-8 (2) delivering an executed copy of the demand to the
10-9 principal place of business in this state of the person to be
10-10 served; or
10-11 (3) mailing by registered or certified mail an
10-12 executed copy of the demand addressed to the person to be served at
10-13 the person's principal place of business in this state or, if the
10-14 person has no place of business in this state, to a person's
10-15 principal office or place of business.
10-16 (d) Documentary material demanded under this section shall
10-17 be produced for inspection and copying during normal business hours
10-18 at the office of the attorney general or as agreed by the person
10-19 served and the attorney general.
10-20 (e) Except as provided by Subsection (i) or as ordered by a
10-21 court for good cause shown, the office of the attorney general may
10-22 not produce for inspection or copying or otherwise disclose the
10-23 contents of documentary material obtained under this section to a
10-24 person other than an authorized employee of the attorney general
10-25 without the consent of the person who produced the documentary
10-26 material. The attorney general shall prescribe reasonable terms
10-27 and conditions allowing the documentary material to be available
11-1 for inspection and copying by the person who produced the material
11-2 or by an authorized representative of that person. The attorney
11-3 general may use the documentary material or copies of it as the
11-4 attorney general determines necessary in the enforcement of this
11-5 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) The attorney general may disclose any testimony,
11-21 documentary material, or other evidence gathered in an
11-22 investigation conducted under this chapter to:
11-23 (1) an agency of this state, the United States, or
11-24 another state;
11-25 (2) a criminal district attorney, district attorney,
11-26 or county attorney of this state;
11-27 (3) the United States attorney general; or
12-1 (4) a state or federal grand jury.
12-2 (j) This section does not limit the authority of the
12-3 attorney general to conduct investigations or to access a person's
12-4 documentary materials or other information under another state or
12-5 federal law, the Texas Rules of Civil Procedure, or the Federal
12-6 Rules of Civil Procedure.
12-7 (k) If a person fails to comply with an investigative
12-8 demand, or if copying and reproduction of the documentary material
12-9 demanded cannot be satisfactorily accomplished and the person
12-10 refuses to surrender the documentary material, the attorney general
12-11 may file in a district court of Travis County a petition for an
12-12 order to enforce the investigative demand.
12-13 (l) If a petition is filed under Subsection (k), the court
12-14 may determine the matter presented and may enter an order to
12-15 implement this section.
12-16 (m) Failure to comply with a final order entered under
12-17 Subsection (l) is punishable by contempt.
12-18 (n) A final order issued by a district court under
12-19 Subsection (l) is subject to appeal to the supreme court.
12-20 Sec. 36.007. DOCUMENTARY MATERIAL IN POSSESSION OF STATE
12-21 AGENCY. (a) A state agency, including the Health and Human
12-22 Services Commission, the Texas Department of Human Services, the
12-23 Texas Department of Health, the Texas Department of Mental Health
12-24 and Mental Retardation, or the Department of Protective and
12-25 Regulatory Services, shall provide the attorney general access to
12-26 all documentary materials of persons and Medicaid recipients under
12-27 the Medicaid program to which that agency has access. Documentary
13-1 material provided under this subsection is provided to permit
13-2 investigation of an alleged unlawful act or for use or potential
13-3 use in an administrative or judicial proceeding.
13-4 (b) Except as ordered by a court for good cause shown, the
13-5 office of the attorney general may not produce for inspection or
13-6 copying or otherwise disclose the contents of documentary material
13-7 obtained under this section to a person other than:
13-8 (1) an authorized employee of the attorney general;
13-9 (2) an agency of this state, the United States, or
13-10 another state;
13-11 (3) a criminal district attorney, district attorney,
13-12 or county attorney of this state;
13-13 (4) the United States attorney general; or
13-14 (5) a state or federal grand jury.
13-15 Sec. 36.008. IMMUNITY. Notwithstanding any other law, a
13-16 person is not civilly or criminally liable for providing access to
13-17 documentary material under this chapter to:
13-18 (1) an authorized employee of the attorney general;
13-19 (2) an agency of this state, the United States, or
13-20 another state;
13-21 (3) a criminal district attorney, district attorney,
13-22 or county attorney of this state;
13-23 (4) the United States attorney general; or
13-24 (5) a state or federal grand jury.
13-25 Sec. 36.009. SUSPENSION OR REVOCATION OF AGREEMENT;
13-26 PROFESSIONAL DISCIPLINE. (a) The commissioner of human services,
13-27 the commissioner of public health, the commissioner of mental
14-1 health and mental retardation, the executive director of the
14-2 Department of Protective and Regulatory Services, or the executive
14-3 director of another state health care regulatory agency may suspend
14-4 or revoke:
14-5 (1) a provider agreement between the department or
14-6 agency and a person found liable under Section 36.004; or
14-7 (2) a permit, license, or certification granted by the
14-8 department or agency to a person found liable under Section 36.004.
14-9 (b) A person licensed by a state regulatory agency who
14-10 commits an unlawful act is subject to professional discipline under
14-11 the applicable licensing law or rules adopted under that law.
14-12 Sec. 36.010. APPLICATION OF OTHER LAW. The application of a
14-13 civil remedy under this chapter does not preclude the application
14-14 of another common law, statutory, or regulatory remedy, except that
14-15 a person may not be liable for a civil remedy under this chapter
14-16 and civil damages or a penalty under Section 32.039 if the civil
14-17 remedy and civil damages or penalty are assessed for the same act.
14-18 Sec. 36.011. RECOVERY OF COSTS, FEES, AND EXPENSES. The
14-19 attorney general may recover fees, expenses, and costs reasonably
14-20 incurred in obtaining injunctive relief or civil remedies or in
14-21 conducting investigations under this chapter, including court
14-22 costs, reasonable attorney's fees, witness fees, and deposition
14-23 fees.
14-24 Sec. 36.012. USE OF MONEY RECOVERED. (a) Money recovered
14-25 by the attorney general under this chapter shall be deposited to
14-26 the credit of a special account in the general revenue fund.
14-27 (b) To the extent necessary to fund the responsibilities of
15-1 the attorney general under this chapter, as determined by the
15-2 legislature, money recovered under this chapter may be appropriated
15-3 only to the attorney general for the enforcement of this chapter.
15-4 (c) Sections 403.094 and 403.095, Government Code, do not
15-5 apply to money recovered under this chapter.
15-6 SECTION 2. This Act takes effect September 1, 1995.
15-7 SECTION 3. The importance of this legislation and the
15-8 crowded condition of the calendars in both houses create an
15-9 emergency and an imperative public necessity that the
15-10 constitutional rule requiring bills to be read on three several
15-11 days in each house be suspended, and this rule is hereby suspended.