By:  Montford                                         S.B. No. 1351
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to provisions governing insurance fraud, creating a penal
    1-2  offense; and making an appropriation.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Title 7, Penal Code, is amended by the addition
    1-5  of Chapter 35, which reads as follows:
    1-6                     CHAPTER 35.  INSURANCE FRAUD.
    1-7        Sec. 35.01.  DEFINITIONS.  In this chapter:
    1-8              (1)  "Insurer" means any person or government who does
    1-9  business as an insurer in this state, including an insurer that is
   1-10  not authorized to do business in this state.  The term includes a
   1-11  health maintenance organization, a company subject to Chapter 20,
   1-12  Insurance Code, and an organization that is self-insured and that
   1-13  provides health care benefits to its employees.
   1-14              (2)  "Statement" means any oral or written
   1-15  communication, or any record or documented representation of fact
   1-16  evidencing a loss, injury or expense.  A statement may be
   1-17  computer-generated.
   1-18              (3)  "Health care provider" means a person who renders
   1-19  or causes to be rendered health care services or an agent or
   1-20  employee of an organization that renders or provides the facility
   1-21  and means to render health care services, and includes whether
   1-22  licensed or unlicensed:  physicians, surgeons, persons who may be
   1-23  selected by an insured or a beneficiary under Article 21.52,
    2-1  Insurance Code, and persons defined as a provider of health care
    2-2  under Article 4495b, Subchapter A, Section 2.05(d)(1), Texas
    2-3  Medical Practice Act.
    2-4              (4)  "Health care services" includes all services
    2-5  intended to improve or maintain the physical or mental condition of
    2-6  an individual rendered, directed or supervised by a health care
    2-7  provider.
    2-8              (5)  "Health care goods" means any tangible product,
    2-9  device, medicine or other object, whether provided permanently or
   2-10  temporarily in conjunction with a health care service.
   2-11        Sec. 35.02.  INSURANCE FRAUD.  (a)  A person commits an
   2-12  offense if, with intent to defraud or deceive an insurer:
   2-13              (1)  the person causes to be prepared or presents to an
   2-14  insurer in support of a claim for payment under a health or
   2-15  property insurance policy a statement that the person knows
   2-16  contains false or misleading information concerning a matter that
   2-17  is material to the claim that effects:
   2-18                    (A)  a person's right to a payment; or
   2-19                    (B)  the amount of payment to which a person is
   2-20  entitled; or
   2-21              (2)  the person causes to be prepared or presents to an
   2-22  insurer in support of a claim for payment under a health or
   2-23  property insurance policy a statement that the person knows
   2-24  conceals or fails to disclose a material fact that affects:
   2-25                    (A)  a person's right to a payment;
    3-1                    (B)  the amount of payment to which a person is
    3-2  entitled.
    3-3        (b)  A person commits an offense if the person, with intent
    3-4  to defraud or deceive an insurer, solicits, offers, pays or
    3-5  receives a benefit in connection with the furnishing of health care
    3-6  goods or services for which payment is sought under an insurance
    3-7  policy.
    3-8        (c)  For purposes of Subsection (a) of this chapter,
    3-9  information concerning a matter that is material to a claim for
   3-10  payment under an insurance policy includes, but is not limited to,
   3-11  information concerning:
   3-12              (1)  whether health care goods or services were
   3-13  provided;
   3-14              (2)  whether health care goods or services were
   3-15  medically necessary under professionally accepted standards;
   3-16              (3)  the nature of the health care goods or services
   3-17  provided;
   3-18              (4)  the date on which health care goods or services
   3-19  were provided;
   3-20              (5)  the medical record of goods or services provided;
   3-21              (6)  the condition treated or diagnosis made;
   3-22              (7)  the identity and applicable license of the
   3-23  provider or the recipient of health care goods or services;
   3-24              (8)  whether property was damaged or lost in the manner
   3-25  and under the circumstances described in a statement related to a
    4-1  claim for insurance payment; or
    4-2              (9)  whether any other claim for insurance payment has
    4-3  been communicated to any other insurer concerning property damage
    4-4  or loss to the same property.
    4-5        (d)  Except as provided by Subsection (e) of this section, an
    4-6  offense under this section is:
    4-7              (1)  a Class C misdemeanor if the value of the claim is
    4-8  less than $20; or
    4-9              (2)  a Class B misdemeanor if the value of the claim is
   4-10  $20 or more but less than $500;
   4-11              (3)  a Class A misdemeanor if the value of the claim is
   4-12  $500 or more but less than $1,500;
   4-13              (4)  a state jail felony if the value of the claim is
   4-14  $1,500 or more but less than $20,000;
   4-15              (5)  a felony of the third degree if the value of the
   4-16  claim is $20,000 or more but less than $100,000;
   4-17              (6)  a felony of the second degree if the value of the
   4-18  claim is $100,000 but less than $200,000; or
   4-19              (7)  a felony of the first degree if the value of the
   4-20  claim is $200,000 or more.
   4-21        (e)  A person who is subject to prosecution under both this
   4-22  section and another section of this code may be prosecuted under
   4-23  either or both sections.
   4-24        Sec. 35.03.  AGGREGATION AND MULTIPLE OFFENSES.  (a)  When
   4-25  separate insurance claims in violation of this chapter are
    5-1  communicated to an insurer or group of insurers pursuant to one
    5-2  scheme or continuing course of conduct, the conduct may be
    5-3  considered as one offense and the amounts aggregated in determining
    5-4  the category of the offense, and paragraph (b) of this section
    5-5  shall not apply.
    5-6        (b)  When three or more separate claims in violation of this
    5-7  chapter are communicated to an insurer or group of insurers, the
    5-8  penalty for such multiple offenses shall be one category higher
    5-9  than the most serious single offense proven from the separate
   5-10  claims, unless aggregation under paragraph (a) of this section has
   5-11  already been applied to raise the category above the most serious
   5-12  single offense proven from the separate claims; except that if the
   5-13  most serious single offense is a felony of the first degree, the
   5-14  offense is a felony of the first degree.
   5-15        Sec. 35.04.  JURISDICTION OF ATTORNEY GENERAL.  (a)  The
   5-16  attorney general may offer the investigative, technical, and
   5-17  litigation assistance of his office in any prosecution of alleged
   5-18  violations brought by a district attorney, criminal district
   5-19  attorney, county attorney with felony responsibility, or county
   5-20  attorney.
   5-21        (b)  If he is requested to do so by the district attorney,
   5-22  criminal district attorney, county attorney with felony
   5-23  responsibilities, or county attorney, the attorney general may
   5-24  prosecute or assist in the prosecution of offenses under this
   5-25  chapter.
    6-1        Sec. 35.05.  PROPERTY DISTRIBUTION UNDER ASSET FORFEITURE.
    6-2  (a)  If a person's assets are forfeited under Chapter 59, Code of
    6-3  Criminal Procedure, pursuant to enforcement of this chapter, the
    6-4  priority of payment for the distribution of those assets is as
    6-5  follows:
    6-6              (1)  the attorney general, if the attorney general has
    6-7  investigated, prosecuted, or assisted in the prosecution of the
    6-8  case; and
    6-9              (2)  the district attorney, criminal district attorney,
   6-10  county attorney with felony responsibilities, or county attorney,
   6-11  if that person has investigated, prosecuted or assisted in the
   6-12  prosecution of the case.
   6-13        (b)  Pursuant to the provisions of Chapter 47, Code of
   6-14  Criminal Procedure, the judge may order that any remaining proceeds
   6-15  be remitted to the property insurance or health insurance company
   6-16  or companies that were defrauded.
   6-17        SECTION 2.  Subsection (2), Article 59.01, Code of Criminal
   6-18  Procedure, is amended to read as follows:
   6-19              (2)  "Contraband" means property of any nature,
   6-20  including real, personal, tangible, or intangible, that is:
   6-21                    (A)  used in the commission of:
   6-22                          (i)  any first or second degree felony
   6-23  under the Penal Code;
   6-24                          (ii)  any felony under Chapters 29, 30, 31,
   6-25  or 32, Penal Code; or
    7-1                          (iii)  any felony under The Securities Act
    7-2  (Article 581-1 et seq., Vernon's Texas Civil Statutes);
    7-3                    (B)  used or intended to be used in the
    7-4  commission of:
    7-5                          (i)  any felony under Chapter 481, Health
    7-6  and Safety Code (Texas Controlled Substances Act);
    7-7                          (ii)  any felony under Chapter 483, Health
    7-8  and Safety Code;
    7-9                          (iii)  a felony under Article 350, Revised
   7-10  Statutes; <or>
   7-11                          (iv)  any felony under Chapter 34, Penal
   7-12  Code; <or>
   7-13                          (v) <(iv)>  a Class A misdemeanor under
   7-14  Subchapter B, Chapter 365, Health and Safety Code, if the defendant
   7-15  has been previously convicted twice of an offense under that
   7-16  subchapter;
   7-17                          (vi) <(v)>  any felony under The Sale of
   7-18  Checks Act (Article 489d, Vernon's Texas Civil Statutes); or
   7-19                          (vii)  any felony under Chapter 35, Penal
   7-20  Code.
   7-21                    (C)  the proceeds gained from the commission of a
   7-22  felony listed in Paragraph (A) or (B) of this subdivision or a
   7-23  crime of violence; or
   7-24                    (D)  acquired with proceeds gained from the
   7-25  commission of a felony listed in Paragraph (A) or (B) of this
    8-1  subdivision of a crime of violence.
    8-2        SECTION 3.  SEVERABILITY.  If any section, sentence, clause,
    8-3  or part of this Act shall, for any reason, be held invalid, such
    8-4  invalidity shall not affect the remaining portions of the Act, and
    8-5  it is hereby declared to be the intention of this legislature to
    8-6  have passed each section, sentence, clause, or part irrespective of
    8-7  the fact that any other section, sentence, clause, or part may be
    8-8  declared invalid.
    8-9        SECTION 4.  CRIMINAL OFFENSES OR VIOLATIONS.  (a)  The
   8-10  changes in law made by this Act apply only to a criminal offense
   8-11  committed or a violation that occurs on or after the effective date
   8-12  of this Act.  For the purposes of this Act, a criminal offense is
   8-13  committed or a violation occurs before the effective date of this
   8-14  Act if any element of the offense or violation occurs before that
   8-15  date.
   8-16        (b)  A criminal offense committed or violation that occurs
   8-17  before the effective date of this Act is covered by the law in
   8-18  effect when the criminal offense was committed or the violation
   8-19  occurred, and the former law is continued in effect for this
   8-20  purpose.
   8-21        SECTION 5.  APPROPRIATION OF FEES, COSTS, AND CIVIL AND
   8-22  CRIMINAL PENALTIES.  In addition to moneys appropriated elsewhere,
   8-23  the attorney general is hereby appropriated all fees assessed
   8-24  pursuant to and all recovered expenses incurred in obtaining
   8-25  administrative and/or civil penalties authorized by Chapter 35,
    9-1  Penal Code and credited to the attorney general law enforcement
    9-2  account.  Recovered expenses include, but are not limited to,
    9-3  investigative costs, witness fees, attorneys' fees, and deposition
    9-4  expenses.  Moneys hereby appropriated may be expended only for
    9-5  purposes of enforcing the provisions of Chapter 35, Penal Code, and
    9-6  may not be appropriated for any other purpose.  Unexpended balances
    9-7  credited to the account at the end of each biennium are carried
    9-8  over to each successive biennium.
    9-9        SECTION 6.  EFFECTIVE DATE.  This Act takes effect on
   9-10  September 1, 1995.
   9-11        SECTION 7.  EMERGENCY.  The importance of this legislation
   9-12  and the crowded condition of the calendars in both houses create an
   9-13  emergency and an imperative public necessity that the
   9-14  constitutional rule requiring bill to be read on three several days
   9-15  in each house be suspended, and this rule is hereby suspended, and
   9-16  it is so enacted.