By Hirschi H.B. No. 2809
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the enforcement of standards established for the
1-3 treatment of persons in nursing and convalescent homes; providing
1-4 for the accountability of persons who violate such established
1-5 standards; and providing for the facilitation of the flow of
1-6 information and opinion on the quality of nursing and convalescent
1-7 homes to enable Texans to make informed choices in the selection of
1-8 nursing and convalescent homes.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 SECTION 1. Section 242.001, Health and Safety Code, is
1-11 amended to read as follows:
1-12 The purposes <purpose> of this chapter are: <is>
1-13 (1) to promote the public health, safety, and welfare
1-14 by providing for the development, establishment, and enforcement of
1-15 standards for the treatment of residents of institutions and the
1-16 establishment, construction, maintenance, and operation of
1-17 institutions that, in the light of advancing knowledge, will
1-18 promote safe and adequate treatment of residents;
1-19 (2) to hold accountable those persons actually
1-20 responsible for violations of standards for the care and treatment
1-21 of residents of institutions and for violations of standards for
1-22 the operation and administration of such institutions; and
1-23 (3) to facilitate the free publication of information
2-1 and opinion regarding the quality of nursing facilities in Texas,
2-2 so that Texas residents will be better able to choose facilities
2-3 that meet their needs.
2-4 SECTION 2. Section 242.002, Health and Safety Code, is
2-5 amended to read as follows:
2-6 In this chapter:
2-7 (1) "Board" means the Texas Board of Human Services
2-8 <Health>.
2-9 (2) "Department" means the Texas Department of Human
2-10 Services <Health>.
2-11 (3) "Elderly person" means an individual who is 65
2-12 years of age or older.
2-13 (4) "Governmental unit" means the state or a political
2-14 subdivision of the state, including a county or municipality.
2-15 (5) "Hospital" has the meaning assigned by Chapter 241
2-16 (Texas Hospital Licensing Law).
2-17 (6) "Institution" means:
2-18 (A) an establishment that:
2-19 (i) furnishes, in one or more facilities,
2-20 food and shelter to four or more persons who are unrelated to the
2-21 proprietor of the establishment; and
2-22 (ii) provides minor treatment under the
2-23 direction and supervision of a physician licensed by the Texas
2-24 State Board of Medical Examiners, or other services that meet some
2-25 need beyond the basic provision of food, shelter, and laundry; or
3-1 (B) a foster care type residential facility that
3-2 provides room and board to fewer than five persons who:
3-3 (i) are not related within the second
3-4 degree of consanguinity or affinity, as determined under Article
3-5 5996h, Revised Statutes, to the proprietor; and
3-6 (ii) because of their physical or mental
3-7 limitation, or both, require a level of care and services suitable
3-8 to their needs that contributes to their health, comfort, and
3-9 welfare.
3-10 (7) "Person" means an individual, firm, partnership,
3-11 corporation, association, joint stock company, or other entity, and
3-12 includes a legal successor, alter ego, affiliate, manager,
3-13 controlling individual, or any other person or entity who exercises
3-14 actual managerial, policy-making, or financial control over any of
3-15 those entities.
3-16 (8) "Resident" means an individual, including a
3-17 patient, who resides in an institution.
3-18 (9) "Facility" means institution.
3-19 (10) "Home" means institution.
3-20 (11) "Affiliate" means:
3-21 (A) with respect to a partnership, each partner
3-22 of the partnership;
3-23 (B) with respect to a corporation, each:
3-24 (i) officer;
3-25 (ii) director;
4-1 (iii) stockholder who owns, holds, or has
4-2 the power to vote at least ten percent of any class of securities
4-3 issued by the corporation, regardless of whether the power is of
4-4 record or beneficial; and
4-5 (iv) controlling individual;
4-6 (C) with respect to an individual:
4-7 (i) an individual in the individual's
4-8 immediate family;
4-9 (ii) each partnership and each partner in
4-10 the partnership in which the individual or any affiliate of the
4-11 individual is a partner; and
4-12 (iv) each corporation in which the
4-13 individual or an affiliate of the individual is: an officer; a
4-14 director; a stockholder who owns, holds, or has the power to vote
4-15 at least ten percent of an interest, regardless of whether the
4-16 power is of record or beneficial; or a controlling individual;
4-17 (D) with respect to a limited partnership:
4-18 (i) each general partner; and
4-19 (ii) each limited partner who is a
4-20 controlling individual.
4-21 (12) "Controlling individual" means any individual who
4-22 has the ability, acting alone or in concert with others, to
4-23 significantly influence, direct, or cause the direction of the
4-24 management or policies of any person. "Controlling individual"
4-25 includes any management company hired to operate a facility and all
5-1 controlling individuals of the management company.
5-2 (13) "Immediate family" of an individual means each
5-3 parent, child, spouse, brother, sister, first cousin, aunt, uncle,
5-4 and grandparent of the individual, regardless of whether the
5-5 relationship arises by birth, marriage, or adoption.
5-6 SECTION 3. Section 242.014, Health and Safety Code is
5-7 amended to read as follows:
5-8 (a) Neither an <An> institution nor any affiliate, employee,
5-9 manager, owner, or other controlling individual of the institution
5-10 may <not> receive monetary or other remuneration from a person or
5-11 agency that furnishes services or materials to the institution or
5-12 its occupants for a fee.
5-13 (b) The department may revoke the license of an institution
5-14 that violates Subsection (a).
5-15 (c) The department may immediately cancel any contracts it
5-16 has with any entity if the department has reasonable cause to
5-17 believe that the entity has violated Subsection (a). The
5-18 cancellation is effective upon exhaustion of administrative
5-19 appeals, but payment under such contracts may be suspended
5-20 immediately if the department has reasonable cause to believe that
5-21 any threat to the health or safety of any resident or patient
5-22 results from such violation. Payments resume retroactively if the
5-23 institution prevails in an administrative appeal.
5-24 SECTION 4. Section 242.032, Health and Safety Code, is
5-25 amended by adding Subsection (c) to read as follows:
6-1 (c) The department may deny any application for a license if
6-2 the applicant or any owner, affiliate, employee, or controlling
6-3 individual of the applicant has violated standards promulgated
6-4 pursuant to this chapter, or if by any act or omission by a
6-5 controlling individual or employee of the applicant has:
6-6 (1) violated any provisions of this chapter or any
6-7 rules adopted under this chapter;
6-8 (2) permitted, aided, or abetted the commission of any
6-9 illegal act in the facility;
6-10 (3) obtained, or attempted to obtain, a license by
6-11 fraudulent means or misrepresentation;
6-12 (4) detrimentally affected the welfare of a patient or
6-13 resident of a facility licensed under this chapter;
6-14 (5) failed to pay any audit exception or monetary
6-15 penalty owed to the department or to a current or former resident
6-16 of the institution, or
6-17 (6) failed to reimburse the department for
6-18 disbursements from the Nursing and Convalescent Home Trust Fund, as
6-19 required by Section 242.098, Health and Safety Code.
6-20 SECTION 5. Section 242.033, Health and Safety Code, is
6-21 amended by amending Subsection (a) and adding Subsection (f) to
6-22 read as follows:
6-23 (a) After receiving an application for a license, the
6-24 department may <shall> issue the license if, there is no finding,
6-25 under Subsection (c) of Section 242.032, that the applicant; a
7-1 controlling individual related to the applicant within the third
7-2 degree by affinity or consanguinity; or any owner, affiliate, or
7-3 employee of the applicant, has violated the provisions of this
7-4 chapter or any rules promulgated under this chapter, or has failed
7-5 to pay money owed to the department or to the institution's
7-6 residents. The department is not required to issue a license if
7-7 the applicant or any owner, controlling individual, or affiliate of
7-8 the applicant has been the owner, controlling individual, or
7-9 affiliate of any facility which has, within two years of the
7-10 application, been the subject of any injunction, administrative
7-11 penalty, or judicially assessed penalty related to the violation of
7-12 standards adopted under this chapter <after inspection and
7-13 investigation, it finds that the applicant and facilities meet the
7-14 requirements established under this chapter>.
7-15 (f) The department may issue a conditional license that is
7-16 subject to conditions imposed by the department. Failure to comply
7-17 with the conditions specified in the conditional license shall
7-18 result in the suspension or revocation of the conditional license.
7-19 SECTION 6. Section 242.036, Health and Safety Code, is
7-20 amended by amending Subsection (b) and adding Subsection (f) to
7-21 read as follows:
7-22 (b) An institution may <that has a superior grade shall>
7-23 prominently display the grade for public view.
7-24 (f) Any person who purports to grade institutions in Texas
7-25 or to assess their relative quality, using any criteria, shall not
8-1 be subject to any suit or liability on account of published grading
8-2 or comparative information without a showing, with clear and
8-3 convincing proof, that such person acted with malice.
8-4 SECTION 7. Section 242.037, Health and Safety Code, is
8-5 amended by amending Subdivisions (7) and (8) and by adding
8-6 Subdivision (9) to read as follows:
8-7 (7) equipment essential to the residents' health and
8-8 welfare; <and>
8-9 (8) the use and administration of medication in
8-10 conformity with applicable law and rules; and
8-11 (9) standards for licensure for all applicants.
8-12 SECTION 8. Subsections (a) and (c), Section 242.062, Health
8-13 and Safety Code, are amended to read as follows:
8-14 (a) The department shall, without notice or a hearing,
8-15 suspend an institution's license or order an immediate closing of
8-16 part of the institution if:
8-17 (1) the department finds the institution is operating
8-18 in violation of the standards prescribed by this chapter; and
8-19 (2) the violation creates an immediate threat to the
8-20 health and safety of a resident.
8-21 (c) An order suspending a license or closing a part of an
8-22 institution under this section is immediately effective on the date
8-23 on which the license holder, a manager or controlling person of the
8-24 license holder, the administrator of the facility, or a person
8-25 acting as the administrator, or any person is in charge of the
9-1 facility receives actual <written> notice or a later date specified
9-2 in the order.
9-3 SECTION 9. Subsections (a) and (d), Section 242.063, Health
9-4 and Safety Code, is amended to read as follows:
9-5 (a) The department or the attorney general may petition a
9-6 district court for a temporary restraining order or an injunction
9-7 to prevent <restrain> a person from continuing or causing a
9-8 violation of the standards imposed <prescribed> by this chapter or
9-9 by any other law if the department finds that the violation:
9-10 (1) creates a <an immediate> threat to the health and
9-11 safety of the institution's residents; or
9-12 (2) degrades resident quality of life without good
9-13 cause.
9-14 (d) A suit for a temporary restraining order or other
9-15 injunctive relief may <must> be brought in Travis County or in the
9-16 county in which the alleged violation occurs.
9-17 SECTION 10. Section 242.065, Health and Safety Code, is
9-18 amended to read as follows:
9-19 (a) A person who violates this chapter or, who directly or
9-20 indirectly causes the violation of any, <a> rule adopted under this
9-21 chapter is liable for a civil penalty of not less than $100 or more
9-22 than $25,000 <$10,000> for each act of violation if <the department
9-23 determines> the violation threatens the health and safety of a
9-24 resident or degrades resident quality of life without good cause.
9-25 (c) The attorney general may bring a suit for civil
10-1 penalties in Travis County or in the county in which the alleged
10-2 violation occurred. Any party may request a jury trial.
10-3 (d) To satisfy a judgment under this section, the department
10-4 may offset, from any contract payment owed to any person found to
10-5 be liable, the adjudged amount.
10-6 (e) In determining the amount of the penalty, the finder of
10-7 fact shall consider any matter that justice requires, including:
10-8 (1) the seriousness of the violation, including the
10-9 nature, circumstances, extent, and gravity of the prohibited act,
10-10 and the hazard or potential hazard created by the act to the health
10-11 or safety of a resident;
10-12 (2) a history of violations by the person, or any
10-13 affiliates, employees, or controlling individuals of the person;
10-14 (3) the amount necessary to deter future violations;
10-15 (4) efforts to correct the violation;
10-16 (5) misrepresentations to the department or to the
10-17 public regarding:
10-18 (A) the quality of services rendered or to be
10-19 rendered to residents;
10-20 (B) the compliance history of the facility or
10-21 any facilities owned or controlled by its owners or controlling
10-22 individuals; or
10-23 (C) the identity of owners or controlling
10-24 individuals of the facility;
10-25 (6) the extent to which the conduct offends the
11-1 public's sense of justice and propriety;
11-2 (7) culpability of the wrongdoer(s); and
11-3 (8) any other matter which should, as a matter of
11-4 justice or equity, be considered.
11-5 (f) Any person who is found liable for penalties under this
11-6 section shall be liable to the attorney general for costs,
11-7 expenses, and fees, including attorneys' fees, reasonably incurred
11-8 by the state in investigating and litigating actions brought under
11-9 this chapter.
11-10 SECTION 11. Subsection (e), Section 242.068, Health and
11-11 Safety Code, is amended to read as follows:
11-12 (e) Proceedings under this section are subject to the
11-13 Administrative Procedure Act (Chapter 2001, Government Code)
11-14 <Administrative Procedure and Texas Register Act (Article 6252-13a,
11-15 Vernon's Texas Civil Statutes)>.
11-16 SECTION 12. Subsection (b), Section 242.091, Health and
11-17 Safety Code, is amended to read as follows:
11-18 (b) The purpose of this subchapter is to provide for:
11-19 (1) the appointment of a trustee to assume the
11-20 operations of the home in a manner that emphasizes resident care
11-21 and reduces resident trauma; <and>
11-22 (2) a fund to assist a court-appointed trustee in
11-23 meeting the basic needs of the residents; and
11-24 (3) court appointment of a monitor, where a trustee is
11-25 not necessary but the risk to resident health and safety warrants
12-1 the on-site presence of a person charged with the duty to report to
12-2 the department or the court regarding the facility's compliance
12-3 with standards and license conditions, and the facility's efforts
12-4 to correct violations.
12-5 SECTION 13. Section 242.092, Health and Safety Code, is
12-6 amended to read as follows:
12-7 Sec. 242.092. DEFINITIONS <DEFINITION>. In this
12-8 subchapter:<,>
12-9 (1) "Home" <"home"> means a nursing or convalescent
12-10 home.
12-11 (2) "Trustee" means a temporary manager with authority
12-12 to manage and control a facility and all assets related to or
12-13 derived from operation of the facility, with the powers, rights,
12-14 and duties of a receiver except as otherwise provided by court
12-15 order or department rule.
12-16 (3) "Monitor" means a person appointed by a court to
12-17 report to the department or the court regarding the facility's
12-18 compliance with standards and license conditions and the facility's
12-19 efforts to correct violations. A monitor shall have no legal or
12-20 equitable interest whatsoever in the facility being monitored, or
12-21 in any facility owned or operated by the owner or operator of the
12-22 monitored facility. The facility shall pay a reasonable fee to the
12-23 monitor. If after written request, the facility fails to pay the
12-24 fee, the facility shall also be liable for attorney's fees
12-25 reasonably incurred by the monitor in obtaining payment.
13-1 SECTION 14. Section 242.094, Health and Safety Code, is
13-2 amended by amending Subsection (c) and by adding Subsections (d)
13-3 through (k) to read as follows:
13-4 (c) After a hearing, which may be held on an emergency basis
13-5 as necessary to alleviate a threat to the health and safety of the
13-6 residents in a home, the <a> court shall appoint a trustee to take
13-7 charge of a home if the court finds that involuntary appointment of
13-8 a trustee is necessary.
13-9 (d) If the facility closes during the trustee's appointment,
13-10 any money held by the department which, after appropriate audits
13-11 and offsets, is found to be owed for services rendered to residents
13-12 shall be paid to the trustee for the fees and expenses reasonably
13-13 incurred by the trustee in performing the trustee's duties. If
13-14 such funds are inadequate to reimburse the department; the Nursing
13-15 and Convalescent Home Trust Fund; the residents or their estates;
13-16 and the trustee for reasonable trusteeship fees and expenses, the
13-17 owner(s) of the right to obtain Medicaid contracts for the Medicaid
13-18 certified beds in the facility shall forfeit all such rights to the
13-19 department.
13-20 (f) If the facility:
13-21 (1) does not close during the trustee's appointment,
13-22 the facility's owners and controlling individuals are liable to the
13-23 trustee for fees and expenses reasonably incurred by the trustee.
13-24 The trustee shall be paid no later than thirty days after the
13-25 trustee's discharge by the court, or at another time ordered by the
14-1 court.
14-2 (2) fails to pay the trustee an agreed fee plus agreed
14-3 expenses, or if a facility fails to pay an amount found by a court
14-4 to be reasonable, the facility is liable to the trustee for
14-5 attorney's fees reasonably incurred in obtaining payment.
14-6 (g) The trustee shall not be liable for refusing to honor
14-7 any obligation made by the facility if the trustee finds that
14-8 honoring the obligation would unreasonably deplete the resources
14-9 available to the trustee for providing care to the residents.
14-10 (h) Upon motion by the department, the trustee, or the
14-11 facility, the court shall determine a fair monthly rental for the
14-12 facility, taking into account all relevant factors, including the
14-13 condition of the facility and any reduction in market value
14-14 resulting from its compliance history. This rental fee shall be
14-15 paid by the trustee to a controlling individual of the facility,
14-16 for each month the trusteeship remains in effect. Notwithstanding
14-17 any other law to the contrary, no payment made to a controlling
14-18 individual by the department during a period of involuntary
14-19 trusteeship under this subchapter shall include any allowance for
14-20 profit or be based solely on any formula which includes an
14-21 allowance for profit.
14-22 (i) The trustee shall have the authority to collect, or
14-23 direct the collection, of all incoming payments, from all sources,
14-24 and apply them to costs incurred in the performance of the
14-25 trustee's duties.
15-1 (j) The trustee will be liable for any act or omission only
15-2 in his or her official capacity, except for gross negligence or
15-3 malicious conduct.
15-4 (k) No bond is required of any trustee, unless the facility
15-5 pays all expenses necessary for procuring such a bond. No bond may
15-6 impair any duties or powers of the trustee.
15-7 SECTION 15. Section 242.095, Health and Safety Code, is
15-8 amended by amending Subsections (a) and (b) and adding Subsection
15-9 (d) to read as follows:
15-10 (a) A trustee appointed under this subchapter is entitled to
15-11 a reasonable fee as determined by the court. The fee, including
15-12 expenses reasonably incurred by the trustee, is owed jointly and
15-13 severally by the facility, its owners, managers, and controlling
15-14 individuals.
15-15 (b) The trustee may petition the court to order the release
15-16 to the trustee of any payment owed <the trustee> for care and
15-17 services provided to the residents if the payment has been
15-18 withheld. <,including> This includes a payment, or part of a
15-19 payment, withheld by the Texas Department of Human Services to the
15-20 extent necessary for the trustee to provide further care and
15-21 services to the residents, or to pay the trustee for reasonable
15-22 fees and expenses after the needs of residents have been met <at
15-23 the recommendation of the department>.
15-24 (d) The trustee or the department may petition the court to
15-25 order the turnover to the trustee of tangible or intangible assets
16-1 related to or derived from operation of the facility, to the extent
16-2 such assets are:
16-3 (1) subject to the facility's control, or the control
16-4 of an owner, manager, or controlling individual of the facility;
16-5 (2) beyond the trustee's control; and
16-6 (3) needed to provide care and services to residents
16-7 or to pay the trustee's reasonable fees and expenses.
16-8 SECTION 16. Subsection (e), Section 242.096, Health and
16-9 Safety Code, is amended to read as follows:
16-10 (e) Any unencumbered amount in the nursing and convalescent
16-11 home trust fund in excess of $200,000 <$100,000> at the end of each
16-12 fiscal year shall be transferred to the <credit of the general
16-13 revenue fund and may be appropriated to the> department for its use
16-14 in administering and enforcing this chapter.
16-15 SECTION 17. Section 242.097, Health and Safety Code, is
16-16 amended to read as follows:
16-17 (a) In addition to the license fee provided by Section
16-18 242.034, the department shall adopt an annual fee to be charged and
16-19 collected if the amount of the nursing and convalescent home trust
16-20 fund is less than $200,000 <$100,000>. The fee shall be deposited
16-21 to the credit of the nursing and convalescent home trust fund
16-22 created by this subchapter.
16-23 (b) The department shall set the fee for each nursing and
16-24 convalescent home at $1 for each licensed unit of capacity or bed
16-25 space in that home or in an amount necessary to provide $200,000
17-1 <$100,000> in the fund. Any facility that has been found to
17-2 violate a standard relating to nursing care may be charged a higher
17-3 fee, as set by the department.
17-4 SECTION 18. Subsection (a), Section 242.098, Health and
17-5 Safety Code, is amended to read as follows:
17-6 (a) A home that receives emergency assistance funds under
17-7 this subchapter shall reimburse the department for the amounts
17-8 received, including interest. The department may deduct such
17-9 amounts from any payment owed to the facility or to the owner of
17-10 the facility. Any person who is required to reimburse the
17-11 department and who does not reimburse the department is ineligible
17-12 to apply for or hold a license under this chapter, and any person
17-13 or entity owned, controlled, or employed by such a person is
17-14 ineligible to apply for or hold a license under this chapter.
17-15 SECTION 19. Subsection (b), Section 242.156, Health and
17-16 Safety Code, is amended to read as follows:
17-17 (b) Except as provided by Section 242.157, the procedure by
17-18 which the department takes a disciplinary action and the procedure
17-19 by which a disciplinary action is appealed are governed by the
17-20 department's rules for a formal hearing and by the Administrative
17-21 Procedure Act (Chapter 2001, Government Code) <Administrative
17-22 Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
17-23 Civil Statutes)>.
17-24 SECTION 20. Subsection (e), Section 242.157, Health and
17-25 Safety Code, is amended to read as follows:
18-1 (e) The hearing and an appeal from a disciplinary action
18-2 related to the hearing are governed by the department's rules for a
18-3 formal hearing and the Administrative Procedure Act (Chapter 2001,
18-4 Government Code) <Administrative Procedure and Texas Register Act
18-5 (Article 6252-13a, Vernon's Texas Civil Statutes)>.
18-6 SECTION 21. SEVERABILITY. If any section, sentence, clause,
18-7 or part of this Act shall, for any reason, be held invalid, such
18-8 invalidity shall not affect the remaining portions of the Act, and
18-9 it is hereby declared to be the intention of this legislature to
18-10 have passed each section, sentence, clause, or part irrespective of
18-11 the fact that any other section, sentence, clause, or part may be
18-12 declared invalid.
18-13 SECTION 22. EFFECTIVE DATE. This Act takes effect September
18-14 1, 1995.
18-15 SECTION 23. EMERGENCY. The importance of this legislation
18-16 and the crowded condition of the calendars in both houses create an
18-17 emergency and an imperative public necessity that the
18-18 constitutional rule requiring bills to be read on three several
18-19 days in each house be suspended, and this rule is hereby suspended.