1-1 By: McDonald (Senate Sponsor - West) H.B. No. 2523
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 Health
1-4 and Human Services; May 23, 1995, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 5, Nays
1-6 0; May 23, 1995, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 2523 By: Madla
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the prevention of Medicaid fraud; imposing civil
1-11 penalties.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Title 2, Human Resources Code, is amended by
1-14 adding Chapter 36 to read as follows:
1-15 CHAPTER 36. MEDICAID FRAUD PREVENTION
1-16 Sec. 36.001. DEFINITIONS. In this chapter:
1-17 (1) "Claim" means a written or electronically
1-18 submitted request or demand that:
1-19 (A) is signed by a provider or a fiscal agent
1-20 and that identifies a product or service provided or purported to
1-21 have been provided to a Medicaid recipient as reimbursable under
1-22 the Medicaid program, without regard to whether the money that is
1-23 requested or demanded is paid; or
1-24 (B) states the income earned or expense incurred
1-25 by a provider in providing a product or a service and that is used
1-26 to determine a rate of payment under the Medicaid program.
1-27 (2) "Documentary material" means a record, document,
1-28 or other tangible item of any form, including:
1-29 (A) a medical document or X ray prepared by a
1-30 person in relation to the provision or purported provision of a
1-31 product or service to a Medicaid recipient;
1-32 (B) a medical, professional, or business record
1-33 relating to:
1-34 (i) the provision of a product or service
1-35 to a Medicaid recipient; or
1-36 (ii) a rate or amount paid or claimed for
1-37 a product or service, including a record relating to a product or
1-38 service provided to a person other than a Medicaid recipient as
1-39 needed to verify the rate or amount;
1-40 (C) a record required to be kept by an agency
1-41 that regulates health care providers; or
1-42 (D) a record necessary to disclose the extent of
1-43 services a provider furnishes to Medicaid recipients.
1-44 (3) "Fiscal agent" means:
1-45 (A) a person who, through a contractual
1-46 relationship with the Texas Department of Human Services, the Texas
1-47 Department of Health, or another state agency, receives, processes,
1-48 and pays a claim under the Medicaid program; or
1-49 (B) the designated agent of a person described
1-50 by Paragraph (A).
1-51 (4) "Health care practitioner" means a dentist,
1-52 podiatrist, psychologist, physical therapist, chiropractor,
1-53 registered nurse, or other provider licensed to provide health care
1-54 services in this state.
1-55 (5) "Medicaid program" means the state Medicaid
1-56 program.
1-57 (6) "Medicaid recipient" means an individual on whose
1-58 behalf a person claims or receives a payment from the Medicaid
1-59 program or a fiscal agent, without regard to whether the individual
1-60 was eligible for benefits under the Medicaid program.
1-61 (7) "Physician" means a physician licensed to practice
1-62 medicine in this state.
1-63 (8) "Provider" means a person who participates in or
1-64 who has applied to participate in the Medicaid program as a
1-65 supplier of a product or service and includes:
1-66 (A) a management company that manages, operates,
1-67 or controls another provider;
1-68 (B) a person, including a medical vendor, that
2-1 provides a product or service to a provider or to a fiscal agent;
2-2 and
2-3 (C) an employee of a provider.
2-4 (9) "Service" includes care or treatment of a Medicaid
2-5 recipient.
2-6 (10) "Signed" means to have affixed a signature
2-7 directly or indirectly by means of handwriting, typewriting,
2-8 signature stamp, computer impulse, or other means recognized by
2-9 law.
2-10 (11) "Unlawful act" means an act declared to be
2-11 unlawful under Section 36.002.
2-12 Sec. 36.002. UNLAWFUL ACTS. A person commits an unlawful
2-13 act if the person:
2-14 (1) knowingly or intentionally makes or causes to be
2-15 made a false statement or misrepresentation of a material fact:
2-16 (A) on an application for a contract, benefit,
2-17 or payment under the Medicaid program; or
2-18 (B) that is intended to be used to determine a
2-19 person's eligibility for a benefit or payment under the Medicaid
2-20 program;
2-21 (2) knowingly or intentionally conceals or fails to
2-22 disclose an event:
2-23 (A) that the person knows affects the initial or
2-24 continued right to a benefit or payment under the Medicaid program
2-25 of:
2-26 (i) the person; or
2-27 (ii) another person on whose behalf the
2-28 person has applied for a benefit or payment or is receiving a
2-29 benefit or payment; and
2-30 (B) to permit a person to receive a benefit or
2-31 payment that is not authorized or that is greater than the payment
2-32 or benefit that is authorized;
2-33 (3) knowingly or intentionally applies for and
2-34 receives a benefit or payment on behalf of another person under the
2-35 Medicaid program and converts any part of the benefit or payment to
2-36 a use other than for the benefit of the person on whose behalf it
2-37 was received;
2-38 (4) knowingly or intentionally makes, causes to be
2-39 made, induces, or seeks to induce the making of a false statement
2-40 or misrepresentation of material fact concerning:
2-41 (A) the conditions or operation of a facility in
2-42 order that the facility may qualify for certification or
2-43 recertification required by the Medicaid program, including
2-44 certification or recertification as:
2-45 (i) a hospital;
2-46 (ii) a nursing facility or skilled nursing
2-47 facility;
2-48 (iii) a hospice;
2-49 (iv) an intermediate care facility for the
2-50 mentally retarded;
2-51 (v) a personal care facility; or
2-52 (vi) a home health agency; or
2-53 (B) information required to be provided by a
2-54 federal or state law, rule, regulation, or provider agreement
2-55 pertaining to the Medicaid program;
2-56 (5) except as authorized under the Medicaid program,
2-57 knowingly or intentionally charges, solicits, accepts, or receives,
2-58 in addition to an amount paid under the Medicaid program, a gift,
2-59 money, a donation, or other consideration as a condition to the
2-60 provision of a service or continued service to a Medicaid recipient
2-61 if the cost of the service provided to the Medicaid recipient is
2-62 paid for, in whole or in part, under the Medicaid program;
2-63 (6) knowingly or intentionally presents or causes to
2-64 be presented a claim for payment under the Medicaid program for a
2-65 product provided or a service rendered by a person who:
2-66 (A) is not licensed to provide the product or
2-67 render the service, if a license is required; or
2-68 (B) is not licensed in the manner claimed;
2-69 (7) knowingly or intentionally makes a claim under the
2-70 Medicaid program for:
3-1 (A) a service or product that has not been
3-2 approved or acquiesced in by a treating physician or health care
3-3 practitioner;
3-4 (B) a service or product that is substantially
3-5 inadequate or inappropriate when compared to generally recognized
3-6 standards within the particular discipline or within the health
3-7 care industry; or
3-8 (C) a product that has been adulterated,
3-9 debased, mislabeled, or that is otherwise inappropriate;
3-10 (8) makes a claim under the Medicaid program and
3-11 knowingly or intentionally fails to indicate the type of license
3-12 and the identification number of the licensed health care provider
3-13 who actually provided the service; or
3-14 (9) knowingly or intentionally enters into an
3-15 agreement, combination, or conspiracy to defraud the state by
3-16 obtaining or aiding another person in obtaining an unauthorized
3-17 payment or benefit from the Medicaid program or a fiscal agent.
3-18 Sec. 36.003. INJUNCTIVE RELIEF. (a) If the attorney
3-19 general has reason to believe that a person is committing, has
3-20 committed, or is about to commit an unlawful act, the attorney
3-21 general may institute an action for an appropriate order to
3-22 restrain the person from committing or continuing to commit the
3-23 act.
3-24 (b) An action under this section shall be brought in a
3-25 district court of Travis County or of a county in which any part of
3-26 the unlawful act occurred, is occurring, or is about to occur.
3-27 Sec. 36.004. CIVIL REMEDIES. (a) Except as provided by
3-28 Subsection (c), a person who commits an unlawful act is liable to
3-29 the state for:
3-30 (1) restitution of the value of any payment or
3-31 monetary or in-kind benefit provided under the Medicaid program,
3-32 directly or indirectly, as a result of the unlawful act;
3-33 (2) interest on the value of the payment or benefit
3-34 described by Subdivision (1) at the prejudgment interest rate in
3-35 effect on the day the payment or benefit was received or paid, for
3-36 the period from the date the benefit was received or paid to the
3-37 date that restitution is paid to the state;
3-38 (3) a civil penalty of not less than $1,000 or more
3-39 than $10,000 for each unlawful act committed by the person; and
3-40 (4) two times the value of the payment or benefit
3-41 described by Subdivision (1).
3-42 (b) In determining the amount of the civil penalty described
3-43 by Subsection (a)(3), the trier of fact shall consider:
3-44 (1) whether the person has previously violated the
3-45 provisions of this chapter;
3-46 (2) the seriousness of the unlawful act committed by
3-47 the person, including the nature, circumstances, extent, and
3-48 gravity of the unlawful act;
3-49 (3) whether the health and safety of the public or an
3-50 individual was threatened by the unlawful act;
3-51 (4) whether the person acted in bad faith when the
3-52 person engaged in the conduct that formed the basis of the unlawful
3-53 act; and
3-54 (5) the amount necessary to deter future unlawful
3-55 acts.
3-56 (c) The trier of fact may assess a total of not more than
3-57 two times the value of a payment or benefit described by Subsection
3-58 (a)(1) if the trier of fact finds that:
3-59 (1) the person furnished the attorney general with all
3-60 information known to the person about the unlawful act not later
3-61 than the 30th day after the date on which the person first obtained
3-62 the information; and
3-63 (2) at the time the person furnished all the
3-64 information to the attorney general, the attorney general had not
3-65 yet begun an investigation under this chapter.
3-66 (d) An action under this section shall be brought in Travis
3-67 County or in a county in which any part of the unlawful act
3-68 occurred.
3-69 (e) The attorney general may:
3-70 (1) bring an action for civil remedies under this
4-1 section together with a suit for injunctive relief under Section
4-2 36.003; or
4-3 (2) institute an action for civil remedies
4-4 independently of an action for injunctive relief.
4-5 Sec. 36.005. INVESTIGATION. (a) The attorney general may
4-6 take action under Subsection (b) if the attorney general has reason
4-7 to believe that:
4-8 (1) a person has information or custody or control of
4-9 documentary material relevant to the subject matter of an
4-10 investigation of an alleged unlawful act;
4-11 (2) a person is committing, has committed, or is about
4-12 to commit an unlawful act; or
4-13 (3) it is in the public interest to conduct an
4-14 investigation to ascertain whether a person is committing, has
4-15 committed, or is about to commit an unlawful act.
4-16 (b) In investigating an unlawful act, the attorney general
4-17 may:
4-18 (1) require the person to file on a prescribed form a
4-19 statement in writing, under oath or affirmation, as to all the
4-20 facts and circumstances concerning the alleged unlawful act and
4-21 other information considered necessary by the attorney general;
4-22 (2) examine under oath a person in connection with the
4-23 alleged unlawful act; and
4-24 (3) execute in writing and serve on the person a civil
4-25 investigative demand requiring the person to produce the
4-26 documentary material and permit inspection and copying of the
4-27 material under Section 36.006.
4-28 Sec. 36.006. CIVIL INVESTIGATIVE DEMAND. (a) An
4-29 investigative demand must:
4-30 (1) state the rule or statute under which the alleged
4-31 unlawful act is being investigated and the general subject matter
4-32 of the investigation;
4-33 (2) describe the class or classes of documentary
4-34 material to be produced with reasonable specificity to fairly
4-35 indicate the documentary material demanded;
4-36 (3) prescribe a return date within which the
4-37 documentary material is to be produced; and
4-38 (4) identify an authorized employee of the attorney
4-39 general to whom the documentary material is to be made available
4-40 for inspection and copying.
4-41 (b) A civil investigative demand may require disclosure of
4-42 any documentary material that is discoverable under the Texas Rules
4-43 of Civil Procedure.
4-44 (c) Service of an investigative demand may be made by:
4-45 (1) delivering an executed copy of the demand to the
4-46 person to be served or to a partner, an officer, or an agent
4-47 authorized by appointment or by law to receive service of process
4-48 on behalf of that person;
4-49 (2) delivering an executed copy of the demand to the
4-50 principal place of business in this state of the person to be
4-51 served; or
4-52 (3) mailing by registered or certified mail an
4-53 executed copy of the demand addressed to the person to be served at
4-54 the person's principal place of business in this state or, if the
4-55 person has no place of business in this state, to a person's
4-56 principal office or place of business.
4-57 (d) Documentary material demanded under this section shall
4-58 be produced for inspection and copying during normal business hours
4-59 at the office of the attorney general or as agreed by the person
4-60 served and the attorney general.
4-61 (e) Except as ordered by a court for good cause shown, the
4-62 office of the attorney general may not produce for inspection or
4-63 copying or otherwise disclose the contents of documentary material
4-64 obtained under this section to a person other than an authorized
4-65 employee of the attorney general without the consent of the person
4-66 who produced the documentary material. The attorney general shall
4-67 prescribe reasonable terms and conditions allowing the documentary
4-68 material to be available for inspection and copying by the person
4-69 who produced the material or by an authorized representative of
4-70 that person. The attorney general may use the documentary material
5-1 or copies of it as the attorney general determines necessary in the
5-2 enforcement of this chapter, including presentation before a court.
5-3 (f) A person may file a petition, stating good cause, to
5-4 extend the return date for the demand or to modify or set aside the
5-5 demand. A petition under this section shall be filed in a district
5-6 court of Travis County and must be filed before the earlier of:
5-7 (1) the return date specified in the demand; or
5-8 (2) the 20th day after the date the demand is served.
5-9 (g) Except as provided by court order, a person on whom a
5-10 demand has been served under this section shall comply with the
5-11 terms of an investigative demand.
5-12 (h) A person who has committed an unlawful act in relation
5-13 to the Medicaid program in this state has submitted to the
5-14 jurisdiction of this state and personal service of an investigative
5-15 demand under this section may be made on the person outside of this
5-16 state.
5-17 (i) This section does not limit the authority of the
5-18 attorney general to conduct investigations or to access a person's
5-19 documentary materials or other information under another state or
5-20 federal law, the Texas Rules of Civil Procedure, or the Federal
5-21 Rules of Civil Procedure.
5-22 (j) If a person fails to comply with an investigative
5-23 demand, or if copying and reproduction of the documentary material
5-24 demanded cannot be satisfactorily accomplished and the person
5-25 refuses to surrender the documentary material, the attorney general
5-26 may file in a district court of Travis County a petition for an
5-27 order to enforce the investigative demand.
5-28 (k) If a petition is filed under Subsection (j), the court
5-29 may determine the matter presented and may enter an order to
5-30 implement this section.
5-31 (l) Failure to comply with a final order entered under
5-32 Subsection (k) is punishable by contempt.
5-33 (m) A final order issued by a district court under
5-34 Subsection (k) is subject to appeal to the supreme court.
5-35 Sec. 36.007. DOCUMENTARY MATERIAL IN POSSESSION OF STATE
5-36 AGENCY. (a) A state agency, including the Health and Human
5-37 Services Commission, the Texas Department of Human Services, the
5-38 Texas Department of Health, the Texas Department of Mental Health
5-39 and Mental Retardation, or the Department of Protective and
5-40 Regulatory Services, shall provide the attorney general access to
5-41 all documentary materials of persons and Medicaid recipients under
5-42 the Medicaid program to which that agency has access. Documentary
5-43 material provided under this subsection is provided to permit
5-44 investigation of an alleged unlawful act or for use or potential
5-45 use in an administrative or judicial proceeding.
5-46 (b) Except as ordered by a court for good cause shown, the
5-47 office of the attorney general may not produce for inspection or
5-48 copying or otherwise disclose the contents of documentary material
5-49 obtained under this section to a person other than:
5-50 (1) an authorized employee of the attorney general;
5-51 (2) an agency of this state, the United States, or
5-52 another state;
5-53 (3) a criminal district attorney, district attorney,
5-54 or county attorney of this state;
5-55 (4) the United States attorney general; or
5-56 (5) a state or federal grand jury.
5-57 Sec. 36.008. IMMUNITY. Notwithstanding any other law, a
5-58 person is not civilly or criminally liable for providing access to
5-59 documentary material under this chapter to:
5-60 (1) an authorized employee of the attorney general;
5-61 (2) an agency of this state, the United States, or
5-62 another state;
5-63 (3) a criminal district attorney, district attorney,
5-64 or county attorney of this state;
5-65 (4) the United States attorney general; or
5-66 (5) a state or federal grand jury.
5-67 Sec. 36.009. SUSPENSION OR REVOCATION OF AGREEMENT;
5-68 PROFESSIONAL DISCIPLINE. (a) The commissioner of human services,
5-69 the commissioner of public health, the commissioner of mental
5-70 health and mental retardation, the executive director of the
6-1 Department of Protective and Regulatory Services, or the executive
6-2 director of another state health care regulatory agency may suspend
6-3 or revoke:
6-4 (1) a provider agreement between the department or
6-5 agency and a person found liable under Section 36.004; or
6-6 (2) a permit, license, or certification granted by the
6-7 department or agency to a person found liable under Section 36.004.
6-8 (b) A person licensed by a state regulatory agency who
6-9 commits an unlawful act is subject to professional discipline under
6-10 the applicable licensing law or rules adopted under that law.
6-11 Sec. 36.010. APPLICATION OF OTHER LAW. The application of a
6-12 civil remedy under this chapter does not preclude the application
6-13 of another common law, statutory, or regulatory remedy, except that
6-14 a person may not be liable for a civil remedy under this chapter
6-15 and civil damages or a penalty under Section 32.039 if the civil
6-16 remedy and civil damages or penalty are assessed for the same act.
6-17 Sec. 36.011. RECOVERY OF COSTS, FEES, AND EXPENSES. The
6-18 attorney general may recover fees, expenses, and costs reasonably
6-19 incurred in obtaining injunctive relief or civil remedies or in
6-20 conducting investigations under this chapter, including court
6-21 costs, reasonable attorney's fees, witness fees, and deposition
6-22 fees.
6-23 Sec. 36.012. USE OF MONEY RECOVERED. The legislature, in
6-24 appropriating money recovered under this chapter, shall consider
6-25 the requirements of the attorney general and other affected state
6-26 agencies in investigating Medicaid fraud and enforcing this
6-27 chapter.
6-28 SECTION 2. This Act takes effect September 1, 1995.
6-29 SECTION 3. The importance of this legislation and the
6-30 crowded condition of the calendars in both houses create an
6-31 emergency and an imperative public necessity that the
6-32 constitutional rule requiring bills to be read on three several
6-33 days in each house be suspended, and this rule is hereby suspended.
6-34 * * * * *