By:  Zaffirini, Moncrief                                S.B. No. 30

              Nelson

                                A BILL TO BE ENTITLED

                                       AN ACT

 1-1     relating to fraud and improper payments under the state Medicaid

 1-2     program and other welfare programs; to the creation of private

 1-3     cause of action for false claims for certain government payments;

 1-4     and to the creation of a criminal offense; providing penalties.

 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-6         ARTICLE 1.  GENERAL PROVISIONS RELATING TO WELFARE AGENCIES

 1-7           SECTION 1.01.  COLLECTION OF FOOD STAMP AND FINANCIAL

 1-8     ASSISTANCE PAYMENTS MADE IN ERROR.  (a)  Chapter 22, Human

 1-9     Resources Code, is amended by adding Sections 22.0251 through

1-10     22.0254 to read as follows:

1-11           Sec. 22.0251.  TIMELY DETERMINATION OF OVERPAYMENTS.

1-12     (a)  Subject to the approval of the commissioner of health and

1-13     human services, the department shall:

1-14                 (1)  determine and record the time taken by the

1-15     department to establish an overpayment claim in the food stamp

1-16     program or the program of financial assistance under Chapter 31;

1-17                 (2)  set progressive goals for reducing the time

1-18     described by Subdivision (1); and

1-19                 (3)  adopt a schedule to meet the goals set under

1-20     Subdivision (2).

1-21           (b)  The department shall submit to the governor, the

1-22     Legislative Budget Board, and the Health and Human Services

1-23     Commission a semiannual report detailing the department's progress

 2-1     in reaching its goals under Subsection (a)(2).  The report may be

 2-2     consolidated with any other report relating to the same subject

 2-3     that the department is required to submit under other law.

 2-4           Sec. 22.0252.  TELEPHONE COLLECTION PROGRAM.  (a)  The

 2-5     department shall use the telephone to attempt to collect

 2-6     reimbursement from a person who receives a benefit granted in error

 2-7     under the food stamp program or the program of financial assistance

 2-8     under Chapter 31.

 2-9           (b)  The department shall submit to the governor, the

2-10     Legislative Budget Board, and the Health and Human Services

2-11     Commission a semiannual report on the operation and success of the

2-12     telephone collection program.  The report may be consolidated with

2-13     any other report relating to the same subject that the department

2-14     is required to submit under other law.

2-15           Sec. 22.0253.  PARTICIPATION IN FEDERAL TAX REFUND OFFSET

2-16     PROGRAM.  The department shall participate in the Federal Tax

2-17     Refund Offset Program (FTROP) to attempt to recover benefits

2-18     granted by the department in error under the food stamp program.

2-19     The department shall submit as many claims that meet program

2-20     criteria as possible for offset against income tax returns.

2-21           Sec. 22.0254.  PROSECUTION OF FRAUDULENT CLAIMS.  (a)  The

2-22     department shall keep a record of the dispositions of referrals

2-23     made by the department to a district attorney concerning fraudulent

2-24     claims for benefits under the food stamp program or the program of

2-25     financial assistance under Chapter 31.

 3-1           (b)  The department may:

 3-2                 (1)  request status information biweekly from the

 3-3     appropriate district attorney on each major fraudulent claim

 3-4     referred by the department;

 3-5                 (2)  request a written explanation from the appropriate

 3-6     district attorney for each case referred in which the district

 3-7     attorney declines to prosecute; and

 3-8                 (3)  encourage the creation of a special welfare fraud

 3-9     unit in each district attorney's office that serves a municipality

3-10     with a population of more than 250,000, to be financed by amounts

3-11     provided by the department.

3-12           (c)  The department by rule may define what constitutes a

3-13     major fraudulent claim under Subsection (b)(1).

3-14           (b)  Chapter 22, Human Resources Code, is amended by adding

3-15     Section 22.0291 to read as follows:

3-16           Sec. 22.0291.  INFORMATION MATCHING SYSTEM RELATING TO

3-17     IMMIGRANTS AND FOREIGN VISITORS.  (a)  The department shall,

3-18     through the use of a computerized matching system, compare

3-19     department information relating to applicants for and recipients of

3-20     food stamps and financial assistance under Chapter 31 with

3-21     information obtained from the Department of State of the United

3-22     States and the United States Department of Justice relating to

3-23     immigrants and visitors to the United States for the purpose of

3-24     preventing individuals from unlawfully receiving public assistance

3-25     benefits administered by the department.

 4-1           (b)  The department may enter into an agreement with the

 4-2     Department of State of the United States and the United States

 4-3     Department of Justice as necessary to implement this section.

 4-4           (c)  The department and federal agencies sharing information

 4-5     under this section shall protect the confidentiality of the shared

 4-6     information in compliance with all existing state and federal

 4-7     privacy guidelines.

 4-8           (d)  The department shall submit to the governor, the

 4-9     Legislative Budget Board, and the Health and Human Services

4-10     Commission a semiannual report on the operation and success of the

4-11     information matching system required by this section.  The report

4-12     may be consolidated with any other report relating to the same

4-13     subject matter the department is required to submit under other

4-14     law.

4-15           (c)  Not later than January 1, 1998, the Texas Department of

4-16     Human Services shall begin operation of the telephone collection

4-17     program required by Section 22.0252, Human Resources Code, as added

4-18     by this section.

4-19           (d)  Not later than January 1, 1998, the Texas Department of

4-20     Human Services shall submit the initial reports required by

4-21     Subsection (b), Section 22.0251 and Subsection (d), Section

4-22     22.0291, Human Resources Code, as added by this section.

4-23           (e)  Not later than September 1, 1998, the Texas Department

4-24     of Human Services shall submit the initial report required by

4-25     Subsection (b), Section 22.0252, Human Resources Code, as added by

 5-1     this section.

 5-2           SECTION 1.02.  USE OF EARNED FEDERAL FUNDS.  Chapter 22,

 5-3     Human Resources Code, is amended by adding Section 22.032 to read

 5-4     as follows:

 5-5           Sec. 22.032.  USE OF EARNED FEDERAL FUNDS.  Subject to the

 5-6     General Appropriations Act, the department may use earned federal

 5-7     funds derived from recovery of amounts paid or benefits granted by

 5-8     the department as a result of fraud to pay the costs of the

 5-9     department's activities relating to preventing fraud.

5-10           SECTION 1.03.  PAYMENT OF MEDICAID CLAIMS.  (a)  Subchapter

5-11     B, Chapter 32, Human Resources Code, is amended by adding Sections

5-12     32.043 and 32.044 to read as follows:

5-13           Sec. 32.043.  DUAL MEDICAID AND MEDICARE COVERAGE.  (a)  At

5-14     least annually the department shall identify each individual

5-15     receiving medical assistance under the medical assistance program

5-16     who is eligible to receive similar assistance under the Medicare

5-17     program.

5-18           (b)  The department shall analyze claims submitted for

5-19     payment for a service provided under the medical assistance program

5-20     to an individual identified under Subsection (a) to ensure that

5-21     payment is sought first under the Medicare program to the extent

5-22     allowed by law.

5-23           Sec. 32.044.  MISDIRECTED BILLING.  To the extent authorized

5-24     by federal law, the department shall develop a procedure for the

5-25     state to:

 6-1                 (1)  match claims for payment for medical assistance

 6-2     provided under the medical assistance program against data

 6-3     available from other entities, including the Veterans

 6-4     Administration and nursing facilities, to determine alternative

 6-5     responsibility for payment of the claims; and

 6-6                 (2)  ensure that the appropriate entity bears the cost

 6-7     of a claim.

 6-8           (b)  This section takes effect on the first date that it may

 6-9     take effect under Section 39, Article III, Texas Constitution.

6-10           SECTION 1.04.  ENHANCED MEDICAID REIMBURSEMENT.

6-11     (a)  Subchapter B, Chapter 32, Human Resources Code, is amended by

6-12     adding Section 32.045 to read as follows:

6-13           Sec. 32.045.  ENHANCED REIMBURSEMENT.  The department shall

6-14     develop a procedure for:

6-15                 (1)  identifying each service provided under the

6-16     medical assistance program for which the state is eligible to

6-17     receive enhanced reimbursement of costs from the federal

6-18     government; and

6-19                 (2)  ensuring that the state seeks the highest level of

6-20     federal reimbursement available for each service provided.

6-21           (b)  The Texas Department of Health shall identify services

6-22     provided under the state Medicaid program for the period beginning

6-23     December 31, 1989, and ending immediately before the effective date

6-24     of this section for which the state was eligible but did not

6-25     receive enhanced reimbursement of costs at a 90 percent rate from

 7-1     the federal government.  For that period, the department shall seek

 7-2     from the federal government all reimbursements to which the state

 7-3     is entitled.

 7-4           (c)  This section takes effect on the first date that it may

 7-5     take effect under Section 39, Article III, Texas Constitution.

 7-6           SECTION 1.05.  MINIMUM COLLECTION GOAL.  (a)  Subchapter B,

 7-7     Chapter 531, Government Code, is amended by adding Section 531.047

 7-8     to read as follows:

 7-9           Sec. 531.047.  MINIMUM COLLECTION GOAL.  (a)  Before August

7-10     31 of each year, the commission by rule shall set a minimum goal

7-11     for the Texas Department of Human Services that specifies the

7-12     percentage of the amount of benefits granted by the department in

7-13     error under the food stamp program or the program of financial

7-14     assistance under Chapter 31, Human Resources Code, that the

7-15     department should recover.  The commission shall set the percentage

7-16     based on comparable recovery rates reported by other states.

7-17           (b)  If the department fails to meet the goal set under

7-18     Subsection (a) for the fiscal year, the commissioner shall notify

7-19     the comptroller, and the comptroller shall reduce the department's

7-20     general revenue appropriation by an amount equal to the difference

7-21     between the amount the department would have collected had the

7-22     department met the goal and the amount the department actually

7-23     collected.

7-24           (c)  The commission, the governor, and the Legislative Budget

7-25     Board shall monitor the department's performance in meeting the

 8-1     goal set under this section.  The department shall cooperate by

 8-2     providing to the commission, the governor, and the Legislative

 8-3     Budget Board, on request, information concerning the department's

 8-4     collection efforts.

 8-5           (b)  This section takes effect on the first date that it may

 8-6     take effect under Section 39, Article III, Texas Constitution.

 8-7           SECTION 1.06.  COMMISSION POWERS AND DUTIES RELATING TO

 8-8     WELFARE FRAUD.  (a)  Chapter 531, Government Code, is amended by

 8-9     adding Subchapter C to read as follows:

8-10           SUBCHAPTER C.  MEDICAID AND OTHER WELFARE FRAUD, ABUSE,

8-11                               OR OVERCHARGES

8-12           Sec. 531.101.  AWARD FOR REPORTING MEDICAID FRAUD, ABUSE, OR

8-13     OVERCHARGES.  (a)  The commission may grant an award to an

8-14     individual who reports activity that constitutes fraud or abuse of

8-15     funds in the state Medicaid program or reports overcharges in the

8-16     program if the commission determines that the disclosure results in

8-17     the recovery of an overcharge or in the termination of the

8-18     fraudulent activity or abuse of funds.

8-19           (b)  The commission shall determine the amount of an award.

8-20     The award must be equal to not less than 10 percent of the savings

8-21     to this state that result from the individual's disclosure.  In

8-22     determining the amount of the award, the commission shall consider

8-23     how important the disclosure is in ensuring the fiscal integrity of

8-24     the program.

8-25           (c)  An award under this section is subject to appropriation.

 9-1     The award must be paid from money appropriated to or otherwise

 9-2     available to the commission, and additional money may not be

 9-3     appropriated to the commission for the purpose of paying the award.

 9-4           (d)  Payment of an award under this section from federal

 9-5     funds is subject to the permissible use under federal law of funds

 9-6     for this purpose.

 9-7           (e)  A person who brings an action under Subchapter C,

 9-8     Chapter 36, Human Resources Code, is not eligible for an award

 9-9     under this section.

9-10           Sec. 531.102.  INVESTIGATIONS AND ENFORCEMENT OFFICE.

9-11     (a)  The commission, through the commission's office of

9-12     investigations and enforcement, is responsible for the

9-13     investigation of fraud in the provision of health and human

9-14     services and the enforcement of state law relating to the provision

9-15     of those services.

9-16           (b)  The commission shall set clear objectives, priorities,

9-17     and performance standards for the office that emphasize:

9-18                 (1)  coordinating investigative efforts to aggressively

9-19     recover money;

9-20                 (2)  allocating resources to cases that have the

9-21     strongest supportive evidence and the greatest potential for

9-22     recovery of money; and

9-23                 (3)  maximizing opportunities for referral of cases to

9-24     the office of the attorney general.

9-25           (c)  The commission shall train office staff to enable the

 10-1    staff to pursue priority Medicaid and welfare fraud and abuse cases

 10-2    as necessary.

 10-3          (d)  The commission may require employees of health and human

 10-4    services agencies to provide assistance to the commission in

 10-5    connection with the commission's duties relating to the

 10-6    investigation of fraud in the provision of health and human

 10-7    services.

 10-8          Sec. 531.103.  INTERAGENCY COORDINATION.  (a)  The commission

 10-9    and the office of the attorney general shall enter into a

10-10    memorandum of understanding to develop and implement joint written

10-11    procedures for processing cases of suspected fraud, waste, or abuse

10-12    under the state Medicaid program.  The memorandum of understanding

10-13    shall require:

10-14                (1)  the commission and the office of the attorney

10-15    general to set priorities and guidelines for referring cases to

10-16    appropriate state agencies for investigation to enhance deterrence

10-17    of fraud, waste, or abuse in the program and maximize the

10-18    imposition of penalties, the recovery of money, and the successful

10-19    prosecution of cases;

10-20                (2)  the commission to keep detailed records for cases

10-21    processed by the commission or the office of the attorney general,

10-22    including information on the total number of cases processed and,

10-23    for each case:

10-24                      (A)  the agency and division to which the case is

10-25    referred for investigation;

 11-1                      (B)  the date on which the case is referred; and

 11-2                      (C)  the nature of the suspected fraud, waste, or

 11-3    abuse;

 11-4                (3)  the commission to notify each appropriate division

 11-5    of the office of the attorney general of each case referred by the

 11-6    commission;

 11-7                (4)  the office of the attorney general to ensure that

 11-8    information relating to each case investigated by that office is

 11-9    available to each division of the office with responsibility for

11-10    investigating suspected fraud, waste, or abuse;

11-11                (5)  the office of the attorney general to notify the

11-12    commission of each case the attorney general declines to prosecute

11-13    or prosecutes unsuccessfully;

11-14                (6)  representatives of the commission and of the

11-15    office of the attorney general to meet not less than quarterly to

11-16    share case information and determine the appropriate agency and

11-17    division to investigate each case; and

11-18                (7)  the commission and the office of the attorney

11-19    general to submit information requested by the comptroller about

11-20    each resolved case for the comptroller's use in improving fraud

11-21    detection.

11-22          (b)  An exchange of information under this section between

11-23    the office of the attorney general and the commission or a health

11-24    and human services agency does not affect whether the information

11-25    is subject to disclosure under Chapter 552, Government Code.

 12-1          (c)  The commission and the office of the attorney general

 12-2    shall jointly prepare and submit a semiannual report to the

 12-3    governor, lieutenant governor, and speaker of the house of

 12-4    representatives concerning the activities of those agencies in

 12-5    detecting and preventing fraud, waste, and abuse under the state

 12-6    Medicaid program.  The report may be consolidated with any other

 12-7    report relating to the same subject matter the commission or office

 12-8    of the attorney general is required to submit under other law.

 12-9          (d)  The commission and the office of the attorney general

12-10    shall not assess or collect investigation and attorney's fees on

12-11    behalf of any state agency unless the office of the attorney

12-12    general or other state agency collects a penalty, restitution, or

12-13    other reimbursement payment to the state.  The commission shall

12-14    refer cases to the appropriate district attorney, county attorney,

12-15    city attorney, or private collection agency if the office of the

12-16    attorney general fails to act within 30 days of referral.  A

12-17    failure by the attorney general to act within 30 days constitutes

12-18    approval by the attorney general under Section 2107.003.  The

12-19    district attorney, county attorney, city attorney, or private

12-20    collection agency may collect costs associated with the case and 20

12-21    percent of the amount of the penalty, restitution, or other

12-22    reimbursement payment collected.

12-23          Sec. 531.104.  ASSISTING INVESTIGATIONS BY ATTORNEY GENERAL.

12-24    (a)  The commission and the attorney general shall execute a

12-25    memorandum of understanding under which the commission shall

 13-1    provide investigative support as required to the attorney general

 13-2    in connection with cases under Subchapter B, Chapter 36, Human

 13-3    Resources Code.  Under the memorandum of understanding, the

 13-4    commission shall assist in performing preliminary investigations

 13-5    and ongoing investigations for actions prosecuted by the attorney

 13-6    general under Subchapter C, Chapter 36, Human Resources Code.

 13-7          (b)  The memorandum of understanding must provide that the

 13-8    commission is not required to provide investigative support in more

 13-9    than 100 open investigations in a fiscal year.

13-10          Sec. 531.105.  FRAUD DETECTION TRAINING.  (a)  The commission

13-11    shall develop and implement a program to provide annual training to

13-12    contractors who process Medicaid claims and appropriate staff of

13-13    the Texas Department of Health and the Texas Department of Human

13-14    Services in identifying potential cases of fraud, waste, or abuse

13-15    under the state Medicaid program.  The training provided to the

13-16    contractors and staff must include clear criteria that specify:

13-17                (1)  the circumstances under which a person should

13-18    refer a potential case to the commission; and

13-19                (2)  the time by which a referral should be made.

13-20          (b)  The Texas Department of Health and the Texas Department

13-21    of Human Services, in cooperation with the commission, shall

13-22    periodically set a goal of the number of potential cases of fraud,

13-23    waste, or abuse under the state Medicaid program that each agency

13-24    will attempt to identify and refer to the commission.  The

13-25    commission shall include information on the agencies' goals and the

 14-1    success of each agency in meeting the agency's goal in the report

 14-2    required by Section 531.103(c).

 14-3          Sec. 531.106.  LEARNING OR NEURAL NETWORK TECHNOLOGY.

 14-4    (a)  The commission shall use learning or neural network technology

 14-5    to identify and deter fraud in the Medicaid program throughout this

 14-6    state.

 14-7          (b)  The commission shall contract with a private or public

 14-8    entity to develop and implement the technology.  The commission may

 14-9    require the entity it contracts with to install and operate the

14-10    technology at locations specified by the commission, including

14-11    commission offices.

14-12          (c)  The data used for neural network processing shall be

14-13    maintained as an independent subset for security purposes.

14-14          (d)  The commission shall require each health and human

14-15    services agency that performs any aspect of the state Medicaid

14-16    program to participate in the implementation and use of the

14-17    technology.

14-18          (e)  The commission shall maintain all information necessary

14-19    to apply the technology to claims data covering a period of at

14-20    least two years.

14-21          (f)  The commission shall refer cases identified by the

14-22    technology to the commission's office of investigations and

14-23    enforcement or the office of the  attorney general, as appropriate.

14-24          Sec. 531.107.  MEDICAID AND PUBLIC ASSISTANCE FRAUD OVERSIGHT

14-25    TASK FORCE.  (a)  The Medicaid and Public Assistance Fraud

 15-1    Oversight Task Force advises and assists the commission and the

 15-2    commission's office of investigations and enforcement in improving

 15-3    the efficiency of fraud investigations and collections.

 15-4          (b)  The task force is composed of a representative of the:

 15-5                (1)  attorney general's office, appointed by the

 15-6    attorney general;

 15-7                (2)  comptroller's office, appointed by the

 15-8    comptroller;

 15-9                (3)  Department of Public Safety, appointed by the

15-10    public safety director;

15-11                (4)  state auditor's office, appointed by the state

15-12    auditor;

15-13                (5)  commission, appointed by the commissioner of

15-14    health and human services;

15-15                (6)  Texas Department of Human Services, appointed by

15-16    the commissioner of human services; and

15-17                (7)  Texas Department of Insurance, appointed by the

15-18    commissioner of insurance.

15-19          (c)  The comptroller or the comptroller's designee serves as

15-20    the presiding officer of the task force.  The task force may elect

15-21    any other necessary officers.

15-22          (d)  The task force shall meet at least once each fiscal

15-23    quarter at the call of the presiding officer.

15-24          (e)  The appointing agency is responsible for the expenses of

15-25    a member's service on the task force.  Members of the task force

 16-1    receive no additional compensation for serving on the task force.

 16-2          (f)  At least once each fiscal quarter, the commission's

 16-3    office of investigations and enforcement shall provide to the task

 16-4    force:

 16-5                (1)  information detailing:

 16-6                      (A)  the number of fraud referrals made to the

 16-7    office and the origin of each referral;

 16-8                      (B)  the time spent investigating each case;

 16-9                      (C)  the number of cases investigated each month,

16-10    by program and region;

16-11                      (D)  the dollar value of each fraud case that

16-12    results in a criminal conviction; and

16-13                      (E)  the number of cases the office rejects and

16-14    the reason for rejection, by region; and

16-15                (2)  any additional information the task force

16-16    requires.

16-17          Sec. 531.108.  FRAUD PREVENTION.  (a)  The commission's

16-18    office of investigations and enforcement shall compile and

16-19    disseminate accurate information and statistics relating to:

16-20                (1)  fraud prevention; and

16-21                (2)  post-fraud referrals received and accepted or

16-22    rejected from the commission's case management system or the case

16-23    management system of a health and human services agency.

16-24          (b)  The commission shall:

16-25                (1)  aggressively publicize successful fraud

 17-1    prosecutions and fraud-prevention programs through all available

 17-2    means, including the use of statewide press releases issued in

 17-3    coordination with the Texas Department of Human Services; and

 17-4                (2)  ensure that a toll-free hotline for reporting

 17-5    suspected fraud in programs administered by the commission or a

 17-6    health and human services agency is maintained and promoted, either

 17-7    by the commission or by a health and human services agency.

 17-8          (c)  The commission shall develop a cost-effective method of

 17-9    identifying applicants for public assistance in counties bordering

17-10    other states and in metropolitan areas selected by the commission

17-11    who are already receiving benefits in other states.  If

17-12    economically feasible, the commission may develop a computerized

17-13    matching system.

17-14          (d)  The commission shall:

17-15                (1)  verify automobile information that is used as

17-16    criteria for eligibility; and

17-17                (2)  establish a computerized matching system with the

17-18    Texas Department of Criminal Justice to prevent an incarcerated

17-19    individual from illegally receiving public assistance benefits

17-20    administered by the commission.

17-21          (e)  The commission shall submit to the governor and

17-22    Legislative Budget Board a semiannual report on the results of

17-23    computerized matching of commission information with information

17-24    from neighboring states, if any, and information from the Texas

17-25    Department of Criminal Justice.  The report may be consolidated

 18-1    with any other report relating to the same subject matter the

 18-2    commission is required to submit under other law.

 18-3          Sec. 531.109.  DISPOSITION OF FUNDS.  (a)  The commission

 18-4    shall deposit the state's share of money collected under this

 18-5    subchapter in a special account in the state treasury.

 18-6          (b)  The commission may spend money in the account for the

 18-7    administration of this subchapter, subject to the General

 18-8    Appropriations Act.

 18-9          (b)  Subsection (c), Section 22.028, Human Resources Code, is

18-10    amended to read as follows:

18-11          (c)  No later than the first day of each month, the

18-12    department shall send the comptroller a report listing the accounts

18-13    on which enforcement actions or other steps were taken by the

18-14    department in response to the records received from the EBT

18-15    operator under this section, and the action taken by the

18-16    department.  The comptroller shall promptly review the report and,

18-17    as appropriate, may solicit the advice of the Medicaid and Public

18-18    Assistance Fraud Oversight Task Force regarding the results of the

18-19    department's enforcement actions.

18-20          (c)  Section 531.104, Government Code, as added by this

18-21    section, takes effect only if the transfer of employees of the

18-22    Texas Department of Human Services and the Texas Department of

18-23    Health to the Health and Human Services Commission, as proposed by

18-24    Section 1.07 of this article, or similar legislation, is enacted by

18-25    the 75th Legislature in regular session and becomes law.

 19-1          (d)  Not later than January 1, 1998, the Health and Human

 19-2    Services Commission shall award the contract for the learning or

 19-3    neural network technology required by Section 531.106, Government

 19-4    Code, as added by this section, and the contractor shall begin

 19-5    operations not later than that date.  If the commission fails to

 19-6    award the contract or the contractor cannot begin operations on or

 19-7    before January 1, 1998, the commissioner of health and human

 19-8    services shall enter into an interagency agreement with the

 19-9    comptroller to enable the comptroller to perform the duties

19-10    prescribed by Section 531.106.  In addition to the interagency

19-11    agreement, the commissioner of health and human services and the

19-12    comptroller shall execute a memorandum of understanding to ensure

19-13    that the comptroller receives all data and resources necessary to

19-14    operate the learning or neural network technology system.

19-15          (e)  Not later than April 1, 1998, the Health and Human

19-16    Services Commission shall submit the initial report required by

19-17    Subsection (e), Section 531.108, Government Code, as added by this

19-18    section.

19-19          (f)  In addition to the substantive changes in law made by

19-20    this section, this section, in adding Section 531.101, Government

19-21    Code, conforms to a change in the law made by Section 1, Chapter

19-22    444, Acts of the 74th Legislature, 1995.

19-23          (g)  Section 16G, Article 4413(502), Revised Statutes, as

19-24    added by Section 1, Chapter 444, Acts of the 74th Legislature,

19-25    1995, is repealed.

 20-1          (h)  To the extent of any conflict, this Act prevails over

 20-2    another Act of the 75th Legislature, Regular Session, 1997,

 20-3    relating to nonsubstantive additions to and corrections in enacted

 20-4    codes.

 20-5          (i)  Sections 21.0145 and 22.027, Human Resources Code, are

 20-6    repealed.

 20-7          (j)  Sections 531.102 and 531.106, Government Code, as added

 20-8    by this section, take effect on the first date that those sections

 20-9    may take effect under Section 39, Article III, Texas Constitution.

20-10          SECTION 1.07.  CONSOLIDATION OF STAFF.  (a)  On September 1,

20-11    1997, or an earlier date provided by an interagency agreement with

20-12    the affected agencies:

20-13                (1)  all powers, duties, functions, programs, and

20-14    activities performed by or assigned to the Texas Department of

20-15    Human Services' utilization and assessment review function

20-16    immediately before September 1, 1997, are transferred to the Health

20-17    and Human Services Commission;

20-18                (2)  all funds, obligations, contracts, property, and

20-19    records of the Texas Department of Human Services' utilization and

20-20    assessment review function are transferred to the Health and Human

20-21    Services Commission; and

20-22                (3)  all employees of the Texas Department of Human

20-23    Services responsible for the department's utilization and

20-24    assessment review function become employees of the Health and Human

20-25    Services Commission, to be assigned duties by the commissioner of

 21-1    health and human services.

 21-2          (b)  On September 1, 1997, or an earlier date provided by an

 21-3    interagency agreement with the affected agencies:

 21-4                (1)  all powers, duties, functions, programs, and

 21-5    activities performed by or assigned to the Texas Department of

 21-6    Health's claims review and analysis group and policy and data

 21-7    analysis group immediately before September 1, 1997, are

 21-8    transferred to the Health and Human Services Commission;

 21-9                (2)  all funds, obligations, contracts, property, and

21-10    records of the Texas Department of Health's claims review and

21-11    analysis group and policy and data analysis group are transferred

21-12    to the Health and Human Services Commission; and

21-13                (3)  all employees of the Texas Department of Health's

21-14    claims review and analysis group and policy and data analysis group

21-15    become employees of the Health and Human Services Commission, to be

21-16    assigned duties by the commissioner of health and human services.

21-17          (c)  A rule or form adopted by the Texas Department of Human

21-18    Services that relates to the utilization and assessment review

21-19    function or by the Texas Department of Health that relates to the

21-20    claims review and analysis group or the policy and data analysis

21-21    group is a rule or form of the Health and Human Services Commission

21-22    and remains in effect until altered by the commission.  The

21-23    secretary of state is authorized to adopt rules as necessary to

21-24    expedite the implementation of this subsection.

21-25          (d)  The commissioner of health and human services shall

 22-1    oversee and assist in the transfer of powers, duties, functions,

 22-2    programs, and activities prescribed by Subsections (a) and (b) of

 22-3    this section.

 22-4          (e)  The commissioner of health and human services shall

 22-5    determine for each power, duty, function, program, or activity

 22-6    scheduled for transfer:

 22-7                (1)  the relevant agency actions that constitute each

 22-8    power, duty, function, program, or activity;

 22-9                (2)  the relevant records, property, and equipment used

22-10    by a state agency for each power, duty, function, program, or

22-11    activity;

22-12                (3)  the state agency employees whose duties directly

22-13    or indirectly involve a power, duty, function, program, or

22-14    activity; and

22-15                (4)  state agency funds and obligations that are

22-16    related to the power, duty, function, program, or activity.

22-17          (f)  Based on the determinations made under Subsection (e) of

22-18    this section, the commissioner of health and human services shall

22-19    assist the agencies in transferring powers, duties, functions,

22-20    programs, activities, records, equipment, property, funds,

22-21    obligations, and employees in accordance with the transfer

22-22    schedule.

22-23          (g)  The commissioner of health and human services shall file

22-24    any federal plan changes required by this section.

22-25          (h)  The transfer of  powers, duties, functions, programs,

 23-1    and activities under this section does not affect or impair any act

 23-2    done, any obligation, right, order, license, permit, rule,

 23-3    criterion, standard, or requirement existing, any investigation

 23-4    begun, or any penalty accrued under former law, and that law

 23-5    remains in effect for any action concerning those matters.

 23-6          (i)  An action brought or proceeding commenced before the

 23-7    effective date of this section, including a contested case or a

 23-8    remand of an action or proceeding by a reviewing court, is governed

 23-9    by the law and rules applicable to the action or proceeding before

23-10    the effective date of this section.

23-11          (j)  This section takes effect on the first date that it may

23-12    take effect under Section 39, Article III, Texas Constitution.

23-13          SECTION 1.08.  USE OF PRIVATE COLLECTION AGENTS.  (a)  With

23-14    assistance from the Council on Competitive Government and subject

23-15    to approval by the attorney general under Section 2107.003,

23-16    Government Code, the Texas Department of Human Services shall, in

23-17    addition to other methods of collection, use private collection

23-18    agents to collect reimbursements for benefits granted by the

23-19    department in error under the food stamp program or the program of

23-20    financial assistance under Chapter 31, Human Resources Code.

23-21          (b)  If approved by the attorney general, the Texas

23-22    Department of Human Services shall ensure that the collection

23-23    agents are engaged in collection work on behalf of the department

23-24    not later than March 1, 1998.  The department shall strive to refer

23-25    approximately 20 percent of the department's claims for

 24-1    reimbursement to the collection agents.

 24-2          (c)  On March 1, 1998, and September 1, 1998, the Texas

 24-3    Department of Human Services shall submit a progress report to the

 24-4    governor, the Legislative Budget Board, and the Health and Human

 24-5    Services Commission on the department's efforts to use private

 24-6    collection agents to collect reimbursements for erroneous benefits.

 24-7    On March 1, 1999, the department shall submit to the governor, the

 24-8    Legislative Budget Board, and the Health and Human Services

 24-9    Commission a final report on the success of the private collection

24-10    effort.

24-11          (d)  Unless otherwise directed by the 76th Legislature, the

24-12    Texas Department of Human Services shall evaluate the success of

24-13    the use of private collection agents to collect benefit

24-14    reimbursements and adjust the number of claims referred to the

24-15    agents, as appropriate.

24-16          SECTION 1.09.  EXPEDITED FOOD STAMP DELIVERY; IMPACT ON

24-17    FRAUDULENT CLAIMS.  (a)  The Texas Department of Human Services

24-18    shall conduct a study to determine the impact of the one-day

24-19    screening and service delivery requirements prescribed by

24-20    Subsection (e), Section 33.002, Human Resources Code, on the level

24-21    of fraud in the food stamp program.

24-22          (b)  Not later than January 1, 1999, the Texas Department of

24-23    Human Services shall submit to the governor, the Legislative Budget

24-24    Board, and the Health and Human Services Commission a report on the

24-25    results of the study.  The report must include:

 25-1                (1)  detailed statistics by region on the number of

 25-2    fraudulent claims linked to the one-day screening and service

 25-3    delivery requirements; and

 25-4                (2)  recommendations on modifying the one-day screening

 25-5    and service delivery requirements, as authorized by Subsection (g),

 25-6    Section 33.002, Human Resources Code.

 25-7          SECTION 1.10.  STUDY ON COLLECTION OF ERRONEOUS FOOD STAMP OR

 25-8    FINANCIAL ASSISTANCE BENEFITS THROUGH LIENS OR WAGE GARNISHMENT.

 25-9    (a)  The Texas Department of Human Services shall conduct a study

25-10    to determine the feasibility of collecting amounts of benefits

25-11    granted by the department in error under the food stamp program or

25-12    the program of financial assistance under Chapter 31, Human

25-13    Resources Code, by the garnishment of wages or the filing of liens

25-14    against property.

25-15          (b)  Not later than March 1, 1999, the Texas Department of

25-16    Human Services shall submit to the governor, the Legislative Budget

25-17    Board, and the Health and Human Services Commission a report on the

25-18    results of the study.

25-19          SECTION 1.11.  OPERATION RESTORE TRUST.  (a)  To the extent

25-20    authorized by law, the Health and Human Services Commission and the

25-21    Office of the Attorney General shall cooperate with entities in

25-22    other states that are participating in "Operation Restore Trust"

25-23    and share information regarding service providers excluded from the

25-24    state Medicaid program.

25-25          (b)  In this section, "Operation Restore Trust" means the

 26-1    federal program directed at detecting health-care fraud primarily

 26-2    in home health care, nursing home care, and durable medical

 26-3    equipment in certain states.

 26-4                  ARTICLE 2.  MEDICAID SERVICE PROVIDERS

 26-5          SECTION 2.01.  AUTHORIZATION FOR AMBULANCE SERVICES.

 26-6    (a)  Section 32.024, Human Resources Code, is amended by adding

 26-7    Subsection (t) to read as follows:

 26-8          (t)  The department by rule shall require a physician,

 26-9    nursing facility, or other health care provider to obtain

26-10    authorization from the department or a person authorized to act on

26-11    behalf of the department before an ambulance is used to transport a

26-12    recipient of medical assistance under this chapter in circumstances

26-13    not involving an emergency.  The rules must provide that:

26-14                (1)  a request for authorization must be evaluated

26-15    based on the recipient's medical needs and may be granted for a

26-16    length of time appropriate to the recipient's medical condition;

26-17                (2)  a response to a request for authorization must be

26-18    made not later than 48 hours after receipt of the request; and

26-19                (3)  a person denied payment for services rendered

26-20    because of failure to obtain prior authorization or because a

26-21    request for prior authorization was denied is entitled to appeal

26-22    the denial of payment to the department.

26-23          (b)  Not later than January 1, 1998, the Health and Human

26-24    Services Commission and each appropriate health and human services

26-25    agency that operates part of the state Medicaid program shall adopt

 27-1    the rules required by Subsection (t), Section 32.024, Human

 27-2    Resources Code, as added by this section.

 27-3          (c)  This section takes effect on the first date that it may

 27-4    take effect under Section 39, Article III, Texas Constitution.

 27-5          SECTION 2.02.  DURABLE MEDICAL EQUIPMENT.  (a)  Section

 27-6    32.024, Human Resources Code, is amended by adding Subsection (u)

 27-7    to read as follows:

 27-8          (u)  The department by rule shall require a health care

 27-9    provider who arranges for durable medical equipment for a child who

27-10    receives medical assistance under this chapter to:

27-11                (1)  ensure that the child receives the equipment

27-12    prescribed, the equipment fits properly, if applicable, and the

27-13    child or the child's parent or guardian, as appropriate considering

27-14    the age of the child, receives instruction regarding the

27-15    equipment's use; and

27-16                (2)  make a notation in the child's medical records of

27-17    the date on which the requirements of Subdivision (1) are met.

27-18          (b)  Not later than January 1, 1998, the Health and Human

27-19    Services Commission and each appropriate health and human services

27-20    agency that operates part of the state Medicaid program shall adopt

27-21    the rules required by Subsection (u), Section 32.024, Human

27-22    Resources Code, as added by this section.

27-23          (c)  This section takes effect on the first date that it may

27-24    take effect under Section 39, Article III, Texas Constitution.

27-25          SECTION 2.03.  SURETY BOND.  Subchapter B, Chapter 32, Human

 28-1    Resources Code, is amended by adding Section 32.0321 to read as

 28-2    follows:

 28-3          Sec. 32.0321.  SURETY BOND.  (a)  The department by rule may

 28-4    require each provider of medical assistance in a provider type that

 28-5    has demonstrated significant potential for fraud or abuse to file

 28-6    with the department a surety bond in a reasonable amount.

 28-7          (b)  The bond must be payable to the department to compensate

 28-8    the department for damages resulting from or penalties or fines

 28-9    imposed in connection with an act of fraud or abuse committed by

28-10    the provider under the medical assistance program.

28-11          SECTION 2.04.  CRIMINAL HISTORY INFORMATION.  (a)  Subchapter

28-12    B, Chapter 32, Human Resources Code, is amended by adding Section

28-13    32.0322 to read as follows:

28-14          Sec. 32.0322.  CRIMINAL HISTORY RECORD INFORMATION.  (a)  The

28-15    department may obtain from any law enforcement or criminal justice

28-16    agency the criminal history record information that relates to a

28-17    provider under the medical assistance program or a person applying

28-18    to enroll as a provider under the medical assistance program.

28-19          (b)  The department by rule shall establish criteria for

28-20    revoking a provider's enrollment or denying a person's application

28-21    to enroll as a provider under the medical assistance program based

28-22    on the results of a criminal history check.

28-23          (b)  Subchapter F, Chapter 411, Government Code, is amended

28-24    by adding Section 411.132 to read as follows:

28-25          Sec. 411.132.  ACCESS TO CRIMINAL HISTORY RECORD INFORMATION;

 29-1    AGENCIES OPERATING PART OF MEDICAL ASSISTANCE PROGRAM.  (a)  The

 29-2    Health and Human Services Commission or an agency operating part of

 29-3    the medical assistance program under Chapter 32, Human Resources

 29-4    Code, is entitled to obtain from the department the criminal

 29-5    history record information maintained by the department that

 29-6    relates to a provider under the medical assistance program or a

 29-7    person applying to enroll as a provider under the medical

 29-8    assistance program.

 29-9          (b)  Criminal history record information obtained by the

29-10    commission or an agency under Subsection (a) may not be released or

29-11    disclosed to any person except in a criminal proceeding, in an

29-12    administrative proceeding, on court order, or with the consent of

29-13    the provider or applicant.

29-14          SECTION 2.05.  MANAGED CARE ORGANIZATIONS.  (a)  Section 16A,

29-15    Article 4413(502), Revised Statutes, is amended by amending

29-16    Subsection (n) and adding Subsections (o) through (t) to read as

29-17    follows:

29-18          (n)  A managed care organization that contracts with the

29-19    state to provide or arrange to provide health care benefits or

29-20    services to Medicaid eligible individuals shall:

29-21                (1)  report to the commission or the state's Medicaid

29-22    claims administrator, as appropriate, all information required by

29-23    commission rule, including information necessary to set rates,

29-24    detect fraud, neglect, and physical abuse, and ensure quality of

29-25    care;

 30-1                (2)  not later than 30 days after execution of the

 30-2    contract, develop and submit to the operating agency for approval

 30-3    by the commission a plan for preventing, detecting, and reporting

 30-4    fraud and abuse that:

 30-5                      (A)  conforms to guidelines developed by the

 30-6    operating agency with assistance from the commission and the office

 30-7    of the attorney general; and

 30-8                      (B)  requires the managed care organization to

 30-9    report any known or suspected act of fraud or abuse to the

30-10    operating agency for referral to the commission for investigation;

30-11                (3)  include standard provisions developed by the

30-12    operating agency in each subcontract entered into by the managed

30-13    care organization that affects the delivery of or payment for

30-14    Medicaid services;

30-15                (4)  submit to the commission for approval each

30-16    subcontract entered into by the managed care organization that

30-17    affects the delivery of or payment for Medicaid services; and

30-18                (5)  submit annual disclosure statements to the

30-19    commission containing information on:

30-20                      (A)  the financial condition of the managed care

30-21    organization and each of its affiliates; and

30-22                      (B)  ownership interests in the managed care

30-23    organization or any of its affiliates.

30-24          (o)  The operating agency shall require that each contract

30-25    between a managed care organization and the state to provide or

 31-1    arrange to provide health care benefits or services to Medicaid

 31-2    eligible individuals contain provisions:

 31-3                (1)  stating that information provided by a managed

 31-4    care organization under this section may be used as necessary to

 31-5    detect fraud and abuse;

 31-6                (2)  specifying the responsibilities of the managed

 31-7    care organization in reducing fraud and abuse; and

 31-8                (3)  authorizing specific penalties for failure to

 31-9    provide information required by commission rules.

31-10          (p)  At least once every three years the operating agency

31-11    shall audit each managed care organization that contracts with the

31-12    state to provide or arrange to provide health care benefits or

31-13    services to Medicaid eligible individuals.

31-14          (q)  A managed care organization audited under Subsection (p)

31-15    of this section is responsible for paying the costs of the audit.

31-16    The costs of the audit may be allowed as a credit against premium

31-17    taxes paid by the managed care organization, except as provided by

31-18    Section 2, Article 1.28, Insurance Code.

31-19          (r)  The operating agency and the Texas Department of

31-20    Insurance shall enter into a memorandum of understanding to

31-21    coordinate audits of managed care organizations.  The memorandum

31-22    shall:

31-23                (1)  identify information required in  an operating

31-24    agency audit that is not customarily required in a department

31-25    audit;

 32-1                (2)  encourage the department to include to the extent

 32-2    possible information identified under Subdivision (1) of this

 32-3    subsection in department audits;

 32-4                (3)  establish procedures for initiating and

 32-5    distributing the findings of audits of a managed care organization;

 32-6                (4)  identify the records of physicians or Medicaid

 32-7    eligible individuals that are served by managed care organizations,

 32-8    that are subject to audit; and

 32-9                (5)  require that operating agency and department

32-10    personnel that audit a managed care organization receive specific

32-11    training in detecting Medicaid fraud and abuse.

32-12          (s)  In this section, "operating agency" means the

32-13    appropriate health and human services agency operating part of the

32-14    state Medicaid program.

32-15          (t)  This section expires September 1, 2001.

32-16          (b)  Section 532.001, Government Code, as added by H.B. No.

32-17    1845 or S.B. No. 898, Acts of the 75th Legislature, Regular

32-18    Session, 1997, relating to nonsubstantive additions to and

32-19    corrections in enacted codes, is amended by adding Subdivision (5)

32-20    to read as follows:

32-21                (5)  "Operating agency" means the appropriate health

32-22    and human services agency operating part of the state Medicaid

32-23    program.

32-24          (c)  Subchapter B, Chapter 532, Government Code, as added by

32-25    H.B. No. 1845 or S.B. No. 898, Acts of the 75th Legislature,

 33-1    Regular Session, 1997, relating to nonsubstantive additions to and

 33-2    corrections in enacted codes, is amended by adding Sections 532.112

 33-3    and 532.113 to read as follows:

 33-4          Sec. 532.112.  DUTIES OF MANAGED CARE ORGANIZATION;

 33-5    CONTRACTUAL PROVISIONS.  (a)  A managed care organization that

 33-6    contracts with the state to provide or arrange to provide health

 33-7    care benefits or services to Medicaid eligible individuals shall:

 33-8                (1)  report to the commission or the state's Medicaid

 33-9    claims administrator, as appropriate, all information required by

33-10    commission rule, including information necessary to set rates,

33-11    detect fraud, neglect, and physical abuse, and ensure quality of

33-12    care;

33-13                (2)  not later than 30 days after execution of the

33-14    contract, develop and submit to the operating agency for approval

33-15    by the commission a plan for preventing, detecting, and reporting

33-16    fraud and abuse that:

33-17                      (A)  conforms to guidelines developed by the

33-18    operating agency with assistance from the commission and the office

33-19    of the attorney general; and

33-20                      (B)  requires the managed care organization to

33-21    report any known or suspected act of fraud or abuse to the

33-22    operating agency for referral to the commission for investigation;

33-23                (3)  include standard provisions developed by the

33-24    operating agency in each subcontract entered into by the managed

33-25    care organization that affects the delivery of or payment for

 34-1    Medicaid services;

 34-2                (4)  submit to the commission for approval each

 34-3    subcontract entered into by the managed care organization that

 34-4    affects the delivery of or payment for Medicaid services; and

 34-5                (5)  submit annual disclosure statements to the

 34-6    commission containing information on:

 34-7                      (A)  the financial condition of the managed care

 34-8    organization and each of its affiliates; and

 34-9                      (B)  ownership interests in the managed care

34-10    organization or any of its affiliates.

34-11          (b)  The operating agency shall require that each contract

34-12    between a managed care organization and the state to provide or

34-13    arrange to provide health care benefits or services to Medicaid

34-14    eligible individuals contain provisions:

34-15                (1)  stating that information provided by a managed

34-16    care organization under this section may be used as necessary to

34-17    detect fraud and abuse;

34-18                (2)  specifying the responsibilities of the managed

34-19    care organization in reducing fraud and abuse; and

34-20                (3)  authorizing specific penalties for failure to

34-21    provide information required by commission rules.

34-22          Sec. 532.113.  AUDITS; MEMORANDUM OF UNDERSTANDING.  (a)  At

34-23    least once every three years the operating agency shall audit each

34-24    managed care organization that contracts with the state to provide

34-25    or arrange to provide health care benefits or services to Medicaid

 35-1    eligible individuals.

 35-2          (b)  A managed care organization audited under Subsection (a)

 35-3    is responsible for paying the costs of the audit.  The costs of the

 35-4    audit may be allowed as a credit against premium taxes paid by the

 35-5    managed care organization, except as provided by Section 2, Article

 35-6    1.28, Insurance Code.

 35-7          (c)  The operating agency and the Texas Department of

 35-8    Insurance shall enter into a memorandum of understanding to

 35-9    coordinate audits of managed care organizations.  The memorandum

35-10    shall:

35-11                (1)  identify information required in an operating

35-12    agency audit that is not customarily required in a department

35-13    audit;

35-14                (2)  encourage the department to include to the extent

35-15    possible information identified under Subdivision (1) in department

35-16    audits;

35-17                (3)  establish procedures for initiating and

35-18    distributing the findings of audits of a managed care organization;

35-19                (4)  identify the records of physicians or Medicaid

35-20    eligible individuals that are served by managed care organizations

35-21    that are subject to audit; and

35-22                (5)  require that operating agency and department

35-23    personnel that audit a managed care organization receive specific

35-24    training in detecting Medicaid fraud and abuse.

35-25          (d)  Not later than November 1, 1997, the Texas Department of

 36-1    Health or the appropriate health and human services agency

 36-2    operating part of the state Medicaid program shall develop

 36-3    guidelines applicable to a managed care organization's plan for

 36-4    preventing, detecting, and reporting Medicaid fraud.

 36-5          (e)  Subdivision (2), Subsection (n), Section 16A, Article

 36-6    4413(502), Revised Statutes, as amended by this section, or

 36-7    Subdivision (2), Subsection (a), Section 532.112, Government Code,

 36-8    as added by this section, depending on which provision takes

 36-9    effect, applies only to a managed care organization that enters

36-10    into a contract or renews a contract on or after November 1, 1997,

36-11    with the state to provide or arrange to provide health care

36-12    benefits to Medicaid eligible individuals.

36-13          (f)  This section applies only to a contract entered into or

36-14    renewed on or after the effective date of this section.  A contract

36-15    entered into or renewed before the effective date of this section

36-16    is governed by the law in effect immediately before the effective

36-17    date of this section, and the former law is continued in effect for

36-18    that purpose.

36-19          (g)  A managed care organization that contracts with the

36-20    state to provide or arrange to provide health care benefits to

36-21    Medicaid eligible individuals before the effective date of this

36-22    section is not required by this section to:

36-23                (1)  include standard provisions developed by the state

36-24    in a subcontract executed before the effective date of this

36-25    section;

 37-1                (2)  submit a subcontract executed before the effective

 37-2    date of this section to the commission for approval; or

 37-3                (3)  modify a contract between the managed care

 37-4    organization and the state executed before the effective date of

 37-5    this section.

 37-6          (h)  A managed care organization that renews a contract or

 37-7    subcontract subject to this section after the effective date of

 37-8    this section shall include in the renewed contract or subcontract

 37-9    all provisions required to be included by this section.

37-10          (i)  Subsection (a) of this section takes effect only if

37-11    neither H.B. No. 1845 nor S.B. No. 898, Acts of the 75th

37-12    Legislature, Regular Session, 1997, relating to nonsubstantive

37-13    additions to and corrections in enacted codes, take effect.

37-14          (j)  Subsections (b) and (c) of this section take effect only

37-15    if H.B. No. 1845 or S.B. No. 898, Acts of the 75th Legislature,

37-16    Regular Session, 1997, relating to nonsubstantive additions to and

37-17    corrections in enacted codes, takes effect.

37-18          SECTION 2.06.  PILOT PROGRAM; ON-SITE REVIEWS OF PROSPECTIVE

37-19    PROVIDERS.  (a)  The Health and Human Services Commission by rule

37-20    shall establish a pilot program to reduce fraud by conducting

37-21    random on-site reviews of persons who apply to provide health care

37-22    services under the state Medicaid program before authorizing those

37-23    persons to provide the services.

37-24          (b)  The Health and Human Services Commission shall implement

37-25    the pilot program initially in not more than five or fewer than

 38-1    three urban counties selected by the commission.  The commission

 38-2    shall select counties for the pilot program that:

 38-3                (1)  offer the greatest potential for achieving a

 38-4    reduction of provider fraud; and

 38-5                (2)  contain established field offices of the

 38-6    commission or the Texas Department of Human Services, as

 38-7    appropriate.

 38-8          (c)  At a minimum, the pilot program shall provide for random

 38-9    on-site reviews of durable medical equipment providers, home health

38-10    providers, therapists, and laboratories.  The Health and Human

38-11    Services Commission may include other groups of providers in the

38-12    pilot program.

38-13          (d)  The Health and Human Services Commission shall develop

38-14    questions to be used during an on-site review of a prospective

38-15    provider to verify that the provider has the ability to provide the

38-16    proposed services.

38-17          (e)  The on-site reviews shall be conducted by personnel in

38-18    the appropriate field offices of the Health and Human Services

38-19    Commission or the Texas Department of Human Services.

38-20          (f)  The Health and Human Services Commission may waive an

38-21    on-site review of a prospective provider if the provider has been

38-22    subject to a comparable review by a certifying body in the

38-23    preceding year.

38-24          (g)  If the pilot program is successful in reducing provider

38-25    fraud in the counties initially selected under Subsection (b) of

 39-1    this section, the Health and Human Services Commission may expand

 39-2    the pilot program to include additional counties.

 39-3          (h)  Not later than January 15, 1999, the Health and Human

 39-4    Services Commission shall submit to the governor and the

 39-5    legislature a report concerning the effectiveness of the pilot

 39-6    program that includes:

 39-7                (1)  the number of applications denied as a result of

 39-8    an on-site review; and

 39-9                (2)  recommendations on expanding the pilot program.

39-10          (i)  This section expires September 1, 1999.

39-11          SECTION 2.07.  DEVELOPMENT OF NEW PROVIDER CONTRACT.  (a)  As

39-12    soon as possible after the effective date of this section, the

39-13    Health and Human Services Commission shall develop a new provider

39-14    contract for health care services that contains provisions designed

39-15    to strengthen the commission's ability to prevent provider fraud

39-16    under the state Medicaid program.

39-17          (b)  In developing the new provider contract, the Health and

39-18    Human Services Commission shall solicit suggestions and comments

39-19    from representatives of providers in the state Medicaid program.

39-20          (c)  As soon as possible after development of the new

39-21    provider contract, the Health and Human Services Commission and

39-22    each agency operating part of the state Medicaid program by rule

39-23    shall require each provider who enrolled in the program before the

39-24    effective date of this section to reenroll in the program under the

39-25    new contract.  A provider must reenroll in the state Medicaid

 40-1    program not later than September 1, 1999, to retain eligibility to

 40-2    participate in the program.

 40-3          SECTION 2.08.  COMPETITIVE PROCESS FOR OBTAINING DURABLE

 40-4    MEDICAL EQUIPMENT.  (a)  As soon as possible and not later than the

 40-5    45th day after the effective date of this section:

 40-6                (1)  the Texas Department of Health shall develop a

 40-7    process for selecting providers of durable medical equipment and

 40-8    supplies that encourages competition; and

 40-9                (2)  the Health and Human Services Commission shall

40-10    submit an amendment to the state's Medicaid plan authorizing

40-11    implementation of the process developed by the Texas Department of

40-12    Health.

40-13          (b)  This section takes effect on the first date that it may

40-14    take effect under Section 39, Article III, Texas Constitution.

40-15          SECTION 2.09.  REVIEW OF SERVICE PROVIDER BILLING PRACTICES.

40-16    (a)  The Texas Department of Health shall conduct an automated

40-17    review of physician, laboratory, and radiology services to identify

40-18    improper billing practices designed to inflate a service provider's

40-19    claim for payment for services provided under the state Medicaid

40-20    program.

40-21          (b)  After completing the review required by Subsection (a)

40-22    of this section, the Texas Department of Health shall:

40-23                (1)  refer each identified improper billing practice to

40-24    the Health and Human Services Commission's office of investigations

40-25    and enforcement; and

 41-1                (2)  require the entity that administers the state

 41-2    Medicaid program on behalf of the department to modify the entity's

 41-3    claims processing and monitoring procedures and computer technology

 41-4    as necessary to prevent improper billing by service providers.

 41-5          (c)  This section takes effect on the first date that it may

 41-6    take effect under Section 39, Article III, Texas Constitution.

 41-7            ARTICLE 3.  ADMINISTRATIVE PENALTIES AND SANCTIONS

 41-8                        RELATING TO MEDICAID FRAUD

 41-9          SECTION 3.01.  ADMINISTRATIVE PENALTIES.  (a)  Section

41-10    32.039, Human Resources Code, is amended to read as follows:

41-11          Sec. 32.039.  [CIVIL] DAMAGES AND PENALTIES.  (a)  In this

41-12    section:

41-13                (1)  "Claim" [, "claim"] means an application for

41-14    payment of health care services under Title XIX of the federal

41-15    Social Security Act  that is submitted by a person who is under a

41-16    contract or provider agreement with the department.

41-17                (2)  "Managed care organization" means any entity or

41-18    person that is authorized or otherwise permitted by law to arrange

41-19    for or provide a managed care plan.

41-20                (3)  "Managed care plan" means a plan under which a

41-21    person undertakes to provide, arrange for, pay for, or reimburse

41-22    any part of the cost of any health care service.  A part of the

41-23    plan must consist of arranging for or providing health care

41-24    services as distinguished from indemnification against the cost of

41-25    those services on a prepaid basis through insurance or otherwise.

 42-1    The term does not include a plan that indemnifies a person for the

 42-2    cost of health care services through insurance.

 42-3          (b)  A person commits a violation if the person:

 42-4                (1)  presents or causes to be presented to the

 42-5    department a claim that contains a statement or representation the

 42-6    person knows to be false; or

 42-7                (2)  is a managed care organization that contracts with

 42-8    the department to provide or arrange to provide health care

 42-9    benefits or services to individuals eligible for medical assistance

42-10    and:

42-11                      (A)  fails to provide to an individual a health

42-12    care benefit or service that the organization is required to

42-13    provide under the contract with the department;

42-14                      (B)  fails to provide to the department

42-15    information required to be provided by law, department rule, or

42-16    contractual provision; or

42-17                      (C)  engages in a fraudulent activity in

42-18    connection with the enrollment in the organization's managed care

42-19    plan of an individual eligible for medical assistance or in

42-20    connection with marketing the organization's services to an

42-21    individual eligible for medical assistance.

42-22          (c) [(b)]  A person who commits a violation under Subsection

42-23    (b) [presents or causes to be presented to the department a claim

42-24    that contains a statement or representation the person knows to be

42-25    false] is liable to the department for:

 43-1                (1)  the amount paid, if any, as a result [because] of

 43-2    the violation [false claim] and interest on that amount determined

 43-3    at the rate provided by law for legal judgments and accruing from

 43-4    the date on which the payment was made; and

 43-5                (2)  payment of an administrative [a civil] penalty of

 43-6    an amount not to exceed twice the amount paid, if any, as a result

 43-7    [because] of the violation, plus an amount:

 43-8                      (A)  not less than $5,000 or more than $15,000

 43-9    for each violation that results in injury to a person younger than

43-10    18 years of age or a person who is elderly or disabled; or

43-11                      (B)  not more than $10,000 for each violation

43-12    that does not result in injury to a person younger than 18 years of

43-13    age or a person who is elderly or disabled [false claim; and]

43-14                [(3)  payment of a civil penalty of not more than

43-15    $2,000 for each item or service for which payment was claimed].

43-16          (d) [(c)]  Unless the provider submitted information to the

43-17    department for use in preparing a voucher that the provider knew

43-18    was false or failed to correct information that the provider knew

43-19    was false when provided an opportunity to do so, this section does

43-20    not apply to a claim based on the voucher if the department

43-21    calculated and printed the amount of the claim on the voucher and

43-22    then submitted the voucher to the provider for the provider's

43-23    signature.  In addition, the provider's signature on the voucher

43-24    does not constitute fraud.  The department shall adopt rules that

43-25    establish a grace period during which errors contained in a voucher

 44-1    prepared by the department may be corrected without penalty to the

 44-2    provider.

 44-3          (e) [(d)]  In determining the amount of the penalty to be

 44-4    assessed under Subsection (c)(2) [Subdivision (3) of Subsection (b)

 44-5    of this section], the department shall consider:

 44-6                (1)  the seriousness of the violation;

 44-7                (2)  whether the person had previously committed a

 44-8    violation [submitted false claims]; and

 44-9                (3)  the amount necessary to deter the person from

44-10    committing [submitting] future violations [false claims].

44-11          (f) [(e)]  If after an examination of the facts the

44-12    department concludes that the person committed a violation [did

44-13    submit a false claim], the department may issue a preliminary

44-14    report stating the facts on which it based its conclusion,

44-15    recommending that an administrative [a civil] penalty under this

44-16    section be imposed and recommending the amount of the proposed

44-17    penalty.

44-18          (g) [(f)]  The department shall give written notice of the

44-19    report to the person charged with committing the violation

44-20    [submitting the false claim].  The notice must include a brief

44-21    summary of the facts, a statement of the amount of the recommended

44-22    penalty, and a statement of the person's right to an informal

44-23    review of the alleged violation [false claim], the amount of the

44-24    penalty, or both the alleged violation [false claim] and the amount

44-25    of the penalty.

 45-1          (h) [(g)]  Not later than the 10th day after the date on

 45-2    which the person charged with committing the violation [submitting

 45-3    the false claim] receives the notice, the person may either give

 45-4    the department written consent to the report, including the

 45-5    recommended penalty, or make a written request for an informal

 45-6    review by the department.

 45-7          (i) [(h)]  If the person charged with committing the

 45-8    violation [submitting the false claim] consents to the penalty

 45-9    recommended by the department or fails to timely request an

45-10    informal review, the department shall assess the penalty.  The

45-11    department shall give the person written notice of its action.  The

45-12    person shall pay the penalty not later than the 30th day after the

45-13    date on which the person receives the notice.

45-14          (j) [(i)]  If the person charged with committing the

45-15    violation [submitting a false claim] requests an informal review as

45-16    provided by Subsection (h) [(g) of this section], the department

45-17    shall conduct the review.  The department shall give the person

45-18    written notice of the results of the review.

45-19          (k) [(j)]  Not later than the 10th day after the date on

45-20    which the person charged with committing the violation [submitting

45-21    the false claim] receives the notice prescribed by Subsection (j)

45-22    [(i) of this section], the person may make to the department a

45-23    written request for a hearing.  The hearing must be conducted in

45-24    accordance with Chapter 2001, Government Code.

45-25          (l) [(k)]  If, after informal review, a person who has been

 46-1    ordered to pay a penalty fails to request a formal hearing in a

 46-2    timely manner, the department shall assess the penalty.  The

 46-3    department shall give the person written notice of its action.  The

 46-4    person shall pay the penalty not later than the 30th day after the

 46-5    date on which the person receives the notice.

 46-6          (m)  Within 30 days after the date on which the board's order

 46-7    issued after a hearing under Subsection (k) becomes final as

 46-8    provided by Section 2001.144, Government Code, the person shall:

 46-9                (1)  pay the amount of the penalty;

46-10                (2)  pay the amount of the penalty and file a petition

46-11    for judicial review contesting the occurrence of the violation, the

46-12    amount of the penalty, or both the occurrence of the violation and

46-13    the amount of the penalty; or

46-14                (3)  without paying the amount of the penalty, file a

46-15    petition for judicial review contesting the occurrence of the

46-16    violation, the amount of the penalty, or both the occurrence of the

46-17    violation and the amount of the penalty.

46-18          (n)  A person who acts under Subsection (m)(3) within the

46-19    30-day period may:

46-20                (1)  stay enforcement of the penalty by:

46-21                      (A)  paying the amount of the penalty to the

46-22    court for placement in an escrow account; or

46-23                      (B)  giving to the court a supersedeas bond that

46-24    is approved by the court for the amount of the penalty and that is

46-25    effective until all judicial review of the department's order is

 47-1    final; or

 47-2                (2)  request the court to stay enforcement of the

 47-3    penalty by:

 47-4                      (A)  filing with the court a sworn affidavit of

 47-5    the person stating that the person is financially unable to pay the

 47-6    amount of the penalty and is financially unable to give the

 47-7    supersedeas bond; and

 47-8                      (B)  giving a copy of the affidavit to the

 47-9    commissioner by certified mail.

47-10          (o)  If the commissioner receives a copy of an affidavit

47-11    under Subsection (n)(2), the commissioner may file with the court,

47-12    within five days after the date the copy is received, a contest to

47-13    the affidavit.  The court shall hold a hearing on the facts alleged

47-14    in the affidavit as soon as practicable and shall stay the

47-15    enforcement of the penalty on finding that the alleged facts are

47-16    true.  The person who files an affidavit has the burden of proving

47-17    that the person is financially unable to pay the amount of the

47-18    penalty and to give a supersedeas bond.

47-19          (p) [(l)  Except as provided by Subsection (m) of this

47-20    section, not later than 30 days after the date on which the

47-21    department issues a final decision after a hearing under Subsection

47-22    (j) of this section, a person who has been ordered to pay a penalty

47-23    under this section shall pay the penalty in full.]

47-24          [(m)  If the person seeks judicial review of either the fact

47-25    of the submission of a false claim or the amount of the penalty or

 48-1    of both the fact of the submission and the amount of the penalty,

 48-2    the person shall forward the amount of the penalty to the

 48-3    department for placement in an escrow account or, instead of

 48-4    payment into an escrow account, post with the department a

 48-5    supersedeas bond in a form approved by the department for the

 48-6    amount of the penalty.  The bond must be effective until all

 48-7    judicial review of the order or decision is final.]

 48-8          [(n)  Failure to forward the money to or to post the bond

 48-9    with the department within the period provided by Subsection (l) or

48-10    (m) of this section results in a waiver of all legal rights to

48-11    judicial review.]  If the person charged does not pay the amount of

48-12    the penalty and the enforcement of the penalty is not stayed [fails

48-13    to forward the money or post the bond within the period provided by

48-14    Subsection (h), (k), (l), or (m) of this section], the department

48-15    may forward the matter to the attorney general for enforcement of

48-16    the penalty and interest as provided by law for legal judgments.

48-17    An action to enforce a penalty order under this section must be

48-18    initiated in a court of competent jurisdiction in Travis County or

48-19    in the county in [from] which the violation [false claim] was

48-20    committed [submitted].

48-21          (q) [(o)]  Judicial review of a department order or review

48-22    under this section assessing a penalty is under the substantial

48-23    evidence rule.  A suit may be initiated by filing a petition with a

48-24    district court in Travis County, as provided by Subchapter G,

48-25    Chapter 2001, Government Code.

 49-1          (r) [(p)]  If a penalty is reduced or not assessed, the

 49-2    department shall remit to the person the appropriate amount plus

 49-3    accrued interest if the penalty has been paid or shall execute a

 49-4    release of the bond if a supersedeas bond has been posted.  The

 49-5    accrued interest on amounts remitted by the department under this

 49-6    subsection shall be paid at a rate equal to the rate provided by

 49-7    law for legal judgments and shall be paid for the period beginning

 49-8    on the date the penalty is paid to the department under this

 49-9    section and ending on the date the penalty is remitted.

49-10          (s) [(q)]  A damage, cost, or penalty collected under this

49-11    section is not an allowable expense in a claim or cost report that

49-12    is or could be used to determine a rate or payment under the

49-13    medical assistance program.

49-14          (t) [(r)]  All funds collected under this section shall be

49-15    deposited in the State Treasury to the credit of the General

49-16    Revenue Fund.

49-17          (u)  A person found liable for a violation under Subsection

49-18    (c) that resulted in injury to a person younger than 18 years of

49-19    age or a person who is elderly or disabled may not provide or

49-20    arrange to provide health care services under the medical

49-21    assistance program for a period of 10 years.  The department by

49-22    rule may provide for a period of ineligibility longer than 10

49-23    years.  The period of ineligibility begins on the date on which the

49-24    determination that the person is liable becomes final.  This

49-25    subsection does not apply to a person who operates a nursing

 50-1    facility.

 50-2          (v)  A person found liable for a violation under Subsection

 50-3    (c) that did not result in injury to a person younger than 18 years

 50-4    of age or a person who is elderly or disabled may not provide or

 50-5    arrange to provide health care services under the medical

 50-6    assistance program for a period of three years.  The department by

 50-7    rule may provide for a period of ineligibility longer than three

 50-8    years.  The period of ineligibility begins on the date on which the

 50-9    determination that the person is liable becomes final.  This

50-10    subsection does not apply to a person who operates a nursing

50-11    facility.

50-12          (b)  The change in law made by this section applies only to a

50-13    violation committed on or after the effective date of this section.

50-14    For purposes of this subsection, a violation is committed on or

50-15    after the effective date of this section only if each element of

50-16    the violation occurs on or after that date.  A violation committed

50-17    before the effective date of this section is covered by the law in

50-18    effect when the violation was committed, and the former law is

50-19    continued in effect for that purpose.

50-20          SECTION 3.02.  SANCTIONS APPLICABLE TO VENDOR DRUG PROGRAM.

50-21    Subchapter B, Chapter 32, Human Resources Code, is amended by

50-22    adding Section 32.046 to read as follows:

50-23          Sec. 32.046.  VENDOR DRUG PROGRAM; SANCTIONS AND PENALTIES.

50-24    (a)  The department shall adopt rules governing sanctions and

50-25    penalties that apply to a provider in the vendor drug program who

 51-1    submits an improper claim for reimbursement under the program.

 51-2          (b)  The department shall notify each provider in the vendor

 51-3    drug program that the provider is subject to sanctions and

 51-4    penalties for submitting an improper claim.

 51-5          SECTION 3.03.  PROHIBITION OF CERTAIN PERSONS CONVICTED OF

 51-6    FRAUD.  Subchapter B, Chapter 32, Human Resources Code, is amended

 51-7    by adding Section 32.047 to read as follows:

 51-8          Sec. 32.047.  PROHIBITION OF CERTAIN HEALTH CARE SERVICE

 51-9    PROVIDERS.  A person is permanently prohibited from providing or

51-10    arranging to provide health care services under the medical

51-11    assistance program if:

51-12                (1)  the person is convicted of an offense arising from

51-13    a fraudulent act under the program; and

51-14                (2)  the person's fraudulent act results in injury to a

51-15    person younger than 18 years of age or a person who is elderly or

51-16    disabled.

51-17          SECTION 3.04.  DEDUCTIONS FROM LOTTERY WINNINGS.

51-18    (a)  Subsections (a) and (c), Section 466.407, Government Code, are

51-19    amended to read as follows:

51-20          (a)  The executive director shall deduct the amount of a

51-21    delinquent tax or other money from the winnings of a person who has

51-22    been finally determined to be:

51-23                (1)  delinquent in the payment of a tax or other money

51-24    collected by the comptroller[, the state treasurer,] or the Texas

51-25    Alcoholic Beverage Commission;

 52-1                (2)  delinquent in making child support payments

 52-2    administered or collected by the attorney general;

 52-3                (3)  delinquent in reimbursing the Texas Department of

 52-4    Human Services for a benefit granted in error under the food stamp

 52-5    program or the program of financial assistance under Chapter 31,

 52-6    Human Resources Code;

 52-7                (4)  in default on a loan made under Chapter 52,

 52-8    Education Code; or

 52-9                (5) [(4)]  in default on a loan guaranteed under

52-10    Chapter 57, Education Code.

52-11          (c)  The attorney general, comptroller, [state treasurer,]

52-12    Texas Alcoholic Beverage Commission, Texas Department of Human

52-13    Services, Texas Higher Education Coordinating Board, and Texas

52-14    Guaranteed Student Loan Corporation shall each provide the

52-15    executive director with a report of persons who have been finally

52-16    determined to be delinquent in the payment of a tax or other money

52-17    collected by the agency.  The commission shall adopt rules

52-18    regarding the form and frequency of reports under this subsection.

52-19          (b)  The Texas Department of Human Services shall take all

52-20    action necessary to implement the change in law made by this

52-21    section not later than January 1, 1998.  The department may not

52-22    seek recovery through lottery prize deduction of an amount of a

52-23    benefit granted in error to a person under the food stamp program

52-24    or the program of financial assistance under Chapter 31, Human

52-25    Resources Code, before September 1, 1997.

 53-1          (c)  The executive director of the Texas Lottery Commission

 53-2    is not required under Section 466.407, Government Code, as amended

 53-3    by this section, to deduct from lottery prizes erroneous amounts

 53-4    granted to lottery winners by the Texas Department of Human

 53-5    Services until the department provides to the commission all

 53-6    necessary information and reports required for implementation of

 53-7    that section.

 53-8           ARTICLE 4.  CIVIL REMEDIES RELATING TO MEDICAID FRAUD

 53-9                     AND CREATION OF CRIMINAL OFFENSE

53-10          SECTION 4.01.  REDESIGNATION.  (a)  Chapter 36, Human

53-11    Resources Code, is amended by designating Sections 36.001, 36.002,

53-12    36.007, 36.008, 36.009, 36.010, 36.011, and 36.012 as Subchapter A,

53-13    renumbering Sections 36.007, 36.008, 36.009, 36.010, 36.011, and

53-14    36.012 as Sections 36.003, 36.004, 36.005, 36.006, 36.007, and

53-15    36.008, respectively, and adding a subchapter heading to read as

53-16    follows:

53-17                     SUBCHAPTER A.  GENERAL PROVISIONS

53-18          (b)  Chapter 36, Human Resources Code, is amended by

53-19    designating Sections 36.003, 36.004, 36.005, and 36.006 as

53-20    Subchapter B, renumbering those sections as Sections 36.051,

53-21    36.052, 36.053, and 36.054, respectively, and adding a subchapter

53-22    heading to read as follows:

53-23                 SUBCHAPTER B.  ACTION BY ATTORNEY GENERAL

53-24          SECTION 4.02.  DEFINITIONS.  Section 36.001, Human Resources

53-25    Code, is amended by amending Subdivisions (5) through (11) and

 54-1    adding Subdivision (12) to read as follows:

 54-2                (5)  "Managed care organization" has the meaning

 54-3    assigned by Section 32.039(a).

 54-4                (6)  "Medicaid program" means the state Medicaid

 54-5    program.

 54-6                (7) [(6)]  "Medicaid recipient" means an individual on

 54-7    whose behalf a person claims or receives a payment from the

 54-8    Medicaid program or a fiscal agent, without regard to whether the

 54-9    individual was eligible for benefits under the Medicaid program.

54-10                (8) [(7)]  "Physician" means a physician licensed to

54-11    practice medicine in this state.

54-12                (9) [(8)]  "Provider" means a person who participates

54-13    in or who has applied to participate in the Medicaid program as a

54-14    supplier of a product or service and includes:

54-15                      (A)  a management company that manages, operates,

54-16    or controls another provider;

54-17                      (B)  a person, including a medical vendor, that

54-18    provides a product or service to a provider or to a fiscal agent;

54-19    [and]

54-20                      (C)  an employee of a provider; and

54-21                      (D)  a managed care organization.

54-22                (10) [(9)]  "Service" includes care or treatment of a

54-23    Medicaid recipient.

54-24                (11) [(10)]  "Signed" means to have affixed a signature

54-25    directly or indirectly by means of handwriting, typewriting,

 55-1    signature stamp, computer impulse, or other means recognized by

 55-2    law.

 55-3                (12) [(11)]  "Unlawful act" means an act declared to be

 55-4    unlawful under Section 36.002.

 55-5          SECTION 4.03.  UNLAWFUL ACTS RELATING TO MANAGED CARE

 55-6    ORGANIZATION.  Section 36.002, Human Resources Code, is amended to

 55-7    read as follows:

 55-8          Sec. 36.002.  UNLAWFUL ACTS.  A person commits an unlawful

 55-9    act if the person:

55-10                (1)  knowingly or intentionally makes or causes to be

55-11    made a false statement or misrepresentation of a material fact:

55-12                      (A)  on an application for a contract, benefit,

55-13    or payment under the Medicaid program; or

55-14                      (B)  that is intended to be used to determine a

55-15    person's eligibility for a benefit or payment under the Medicaid

55-16    program;

55-17                (2)  knowingly or intentionally conceals or fails to

55-18    disclose an event:

55-19                      (A)  that the person knows affects the initial or

55-20    continued right to a benefit or payment under the Medicaid program

55-21    of:

55-22                            (i)  the person; or

55-23                            (ii)  another person on whose behalf the

55-24    person has applied for a benefit or payment or is receiving a

55-25    benefit or payment; and

 56-1                      (B)  to permit a person to receive a benefit or

 56-2    payment that is not authorized or that is greater than the payment

 56-3    or benefit that is authorized;

 56-4                (3)  knowingly or intentionally applies for and

 56-5    receives a benefit or payment on behalf of another person under the

 56-6    Medicaid program and converts any part of the benefit or payment to

 56-7    a use other than for the benefit of the person on whose behalf it

 56-8    was received;

 56-9                (4)  knowingly or intentionally makes, causes to be

56-10    made, induces, or seeks to induce the making of a false statement

56-11    or misrepresentation of material fact concerning:

56-12                      (A)  the conditions or operation of a facility in

56-13    order that the facility may qualify for certification or

56-14    recertification required by the Medicaid program, including

56-15    certification or recertification as:

56-16                            (i)  a hospital;

56-17                            (ii)  a nursing facility or skilled nursing

56-18    facility;

56-19                            (iii)  a hospice;

56-20                            (iv)  an intermediate care facility for the

56-21    mentally retarded;

56-22                            (v)  a personal care facility; or

56-23                            (vi)  a home health agency; or

56-24                      (B)  information required to be provided by a

56-25    federal or state law, rule, regulation, or provider agreement

 57-1    pertaining to the Medicaid program;

 57-2                (5)  except as authorized under the Medicaid program,

 57-3    knowingly or intentionally charges, solicits, accepts, or receives,

 57-4    in addition to an amount paid under the Medicaid program, a gift,

 57-5    money, a donation, or other consideration as a condition to the

 57-6    provision of a service or continued service to a Medicaid recipient

 57-7    if the cost of the service provided to the Medicaid recipient is

 57-8    paid for, in whole or in part, under the Medicaid program;

 57-9                (6)  knowingly or intentionally presents or causes to

57-10    be presented a claim for payment under the Medicaid program for a

57-11    product provided or a service rendered by a person who:

57-12                      (A)  is not licensed to provide the product or

57-13    render the service, if a license is required; or

57-14                      (B)  is not licensed in the manner claimed;

57-15                (7)  knowingly or intentionally makes a claim under the

57-16    Medicaid program for:

57-17                      (A)  a service or product that has not been

57-18    approved or acquiesced in by a treating physician or health care

57-19    practitioner;

57-20                      (B)  a service or product that is substantially

57-21    inadequate or inappropriate when compared to generally recognized

57-22    standards within the particular discipline or within the health

57-23    care industry; or

57-24                      (C)  a product that has been adulterated,

57-25    debased, mislabeled, or that is otherwise inappropriate;

 58-1                (8)  makes a claim under the Medicaid program and

 58-2    knowingly or intentionally fails to indicate the type of license

 58-3    and the identification number of the licensed health care provider

 58-4    who actually provided the service; [or]

 58-5                (9)  knowingly or intentionally enters into an

 58-6    agreement, combination, or conspiracy to defraud the state by

 58-7    obtaining or aiding another person in obtaining an unauthorized

 58-8    payment or benefit from the Medicaid program or a fiscal agent; or

 58-9                (10)  is a managed care organization that contracts

58-10    with the Health and Human Services Commission or other state agency

58-11    to provide or arrange to provide health care benefits or services

58-12    to individuals eligible under the Medicaid program and knowingly or

58-13    intentionally:

58-14                      (A)  fails to provide to an individual a health

58-15    care benefit or service that the organization is required to

58-16    provide under the contract;

58-17                      (B)  fails to provide to the commission or

58-18    appropriate state agency information required to be provided by

58-19    law, commission or agency rule, or contractual provision;

58-20                      (C)  engages in a fraudulent activity in

58-21    connection with the enrollment of an individual eligible under the

58-22    Medicaid program in the organization's managed care plan or in

58-23    connection with marketing the organization's services to an

58-24    individual eligible under the Medicaid program; or

58-25                      (D)  obstructs an investigation by the attorney

 59-1    general of an alleged unlawful act under this section.

 59-2          SECTION 4.04.  APPLICABLE PENALTIES AND CONFORMING AMENDMENT.

 59-3    Section 36.004, Human Resources Code, as renumbered by this article

 59-4    as Section 36.052, is amended by amending Subsections (a) and (e)

 59-5    to read as follows:

 59-6          (a)  Except as provided by Subsection (c), a person who

 59-7    commits an unlawful act is liable to the state for:

 59-8                (1)  restitution of the value of any payment or

 59-9    monetary or in-kind benefit provided under the Medicaid program,

59-10    directly or indirectly, as a result of the unlawful act;

59-11                (2)  interest on the value of the payment or benefit

59-12    described by Subdivision (1) at the prejudgment interest rate in

59-13    effect on the day the payment or benefit was received or paid, for

59-14    the period from the date the benefit was received or paid to the

59-15    date that restitution is paid to the state;

59-16                (3)  a civil penalty of:

59-17                      (A)  not less than $5,000 or more than $15,000

59-18    for each unlawful act committed by the person that results in

59-19    injury to a person younger than 18 years of age or a person who is

59-20    elderly or disabled; or

59-21                      (B)  not less than $1,000 or more than $10,000

59-22    for each unlawful act committed by the person that does not result

59-23    in injury to a person younger than 18 years of age or a person who

59-24    is elderly or disabled; and

59-25                (4)  two times the value of the payment or benefit

 60-1    described by Subdivision (1).

 60-2          (e)  The attorney general may:

 60-3                (1)  bring an action for civil remedies under this

 60-4    section together with a suit for injunctive relief under Section

 60-5    36.051 [36.003]; or

 60-6                (2)  institute an action for civil remedies

 60-7    independently of an action for injunctive relief.

 60-8          SECTION 4.05.  CONFORMING AMENDMENT.  Section 36.005, Human

 60-9    Resources Code, as renumbered by this article as Section 36.053, is

60-10    amended by amending Subsection (b) to read as follows:

60-11          (b)  In investigating an unlawful act, the attorney general

60-12    may:

60-13                (1)  require the person to file on a prescribed form a

60-14    statement in writing, under oath or affirmation, as to all the

60-15    facts and circumstances concerning the alleged unlawful act and

60-16    other information considered necessary by the attorney general;

60-17                (2)  examine under oath a person in connection with the

60-18    alleged unlawful act; and

60-19                (3)  execute in writing and serve on the person a civil

60-20    investigative demand requiring the person to produce the

60-21    documentary material and permit inspection and copying of the

60-22    material under Section 36.054 [36.006].

60-23          SECTION 4.06.  ADDITIONAL SANCTIONS FOR MEDICAID FRAUD.

60-24    Section 36.009, Human Resources Code, as renumbered by this article

60-25    as Section 36.005, is amended to read as follows:

 61-1          Sec. 36.005 [36.009].  SUSPENSION OR REVOCATION OF AGREEMENT;

 61-2    PROFESSIONAL DISCIPLINE.  (a)  The commissioner of human services,

 61-3    the commissioner of public health, the commissioner of mental

 61-4    health and mental retardation, the executive director of the

 61-5    Department of Protective and Regulatory Services, or the executive

 61-6    director of another state health care regulatory agency:

 61-7                (1)  shall suspend or revoke:

 61-8                      (A)  a provider agreement between the department

 61-9    or agency and a person, other than a person who operates a nursing

61-10    facility, found liable under Section 36.052; and

61-11                      (B)  a permit, license, or certification granted

61-12    by the department or agency to a person, other than a person who

61-13    operates a nursing facility, found liable under Section 36.052; and

61-14                (2)  may suspend or revoke:

61-15                      (A) [(1)]  a provider agreement between the

61-16    department or agency and a person who operates a nursing facility

61-17    found liable under Section 36.052 [36.004]; or

61-18                      (B) [(2)]  a permit, license, or certification

61-19    granted by the department or agency to a person who operates a

61-20    nursing facility found liable under Section 36.052 [36.004].

61-21          (b)  A person found liable under Section 36.052 for an

61-22    unlawful act may not provide or arrange to provide health care

61-23    services under the Medicaid program for a period of 10 years.  The

61-24    board of a state agency that operates part of the Medicaid program

61-25    may by rule provide for a period of ineligibility longer than 10

 62-1    years.  The period of ineligibility begins on the date on which the

 62-2    determination that the person is liable becomes final.  This

 62-3    section does not apply to a person who operates a nursing facility.

 62-4          (c)  A person licensed by a state regulatory agency who

 62-5    commits an unlawful act is subject to professional discipline under

 62-6    the applicable licensing law or rules adopted under that law.

 62-7          (d)  For purposes of this section, a person is considered to

 62-8    have been found liable under Section 36.052 if the person is found

 62-9    liable in an action brought under Subchapter C.

62-10          SECTION 4.07.  AUTHORITY OF ATTORNEY GENERAL.

62-11    (a)  Subchapter B, Chapter 36, Human Resources Code, as designated

62-12    by this article, is amended by adding Section 36.055 to read as

62-13    follows:

62-14          Sec. 36.055.  ATTORNEY GENERAL AS RELATOR IN FEDERAL ACTION.

62-15    To the extent permitted by 31 U.S.C. Sections 3729-3733, the

62-16    attorney general may bring an action as relator under 31 U.S.C.

62-17    Section 3730 with respect to an act in connection with the Medicaid

62-18    program for which a person may be held liable under 31 U.S.C.

62-19    Section 3729.  The attorney general may contract with a private

62-20    attorney to represent the state under this section.

62-21          (b)  The Office of the Attorney General shall develop

62-22    strategies to increase state recoveries under 31 U.S.C. Sections

62-23    3729 through 3733.  The office shall report the results of the

62-24    office's effort to the legislature not later than September 1,

62-25    1998.

 63-1          SECTION 4.08.  CIVIL ACTION BY PRIVATE PERSON FOR MEDICAID

 63-2    FRAUD.  Chapter 36, Human Resources Code, is amended by adding

 63-3    Subchapter C to read as follows:

 63-4                 SUBCHAPTER C.  ACTION BY PRIVATE PERSONS

 63-5          Sec. 36.101.  ACTION BY PRIVATE PERSON AUTHORIZED.  (a)  A

 63-6    person may bring a civil action for a violation of Section 36.002

 63-7    for the person and for the state.  The action shall be brought in

 63-8    the name of the person and of the state.

 63-9          (b)  In an action brought under this subchapter, a person who

63-10    violates Section 36.002 is liable as provided by Section 36.052.

63-11          Sec. 36.102.  INITIATION OF ACTION.  (a)  A person bringing

63-12    an action under this subchapter shall serve a copy of the petition

63-13    and a written disclosure of substantially all material evidence and

63-14    information the person possesses on the attorney general in

63-15    compliance with the Texas Rules of Civil Procedure.

63-16          (b)  The petition shall be filed in camera and shall remain

63-17    under seal until at least the 60th day after the date the petition

63-18    is filed.  The petition may not be served on the defendant until

63-19    the court orders service on the defendant.

63-20          (c)  The state may elect to intervene and proceed with the

63-21    action not later than the 60th day after the date the attorney

63-22    general receives the petition and the material evidence and

63-23    information.

63-24          (d)  The state may, for good cause shown, move the court to

63-25    extend the time during which the petition remains under seal under

 64-1    Subsection (b).  A motion under this subsection may be supported by

 64-2    affidavits or other submissions in camera.

 64-3          (e)  An action under this subchapter may be dismissed before

 64-4    the end of the period prescribed by Subsection (b), as extended as

 64-5    provided by Subsection (d), if applicable, only if the court and

 64-6    the attorney general consent in writing to the dismissal and state

 64-7    their reasons for consenting.

 64-8          Sec. 36.103.  ANSWER BY DEFENDANT.  A defendant is not

 64-9    required to file an answer to a petition filed under this

64-10    subchapter until the 20th day after the date the petition is

64-11    unsealed and served on the defendant in compliance with the Texas

64-12    Rules of Civil Procedure.

64-13          Sec. 36.104.  CONTINUATION OR DISMISSAL OF ACTION BASED ON

64-14    STATE DECISION.  (a)  Not later than the last day of the period

64-15    prescribed by Section 36.102(b), as extended as provided by Section

64-16    36.102(d), if applicable, the state shall:

64-17                (1)  proceed with the action; or

64-18                (2)  notify the court that the state declines to take

64-19    over the action.

64-20          (b)  If the state declines to take over the action, the court

64-21    shall dismiss the action.

64-22          Sec. 36.105.  REPRESENTATION OF STATE BY PRIVATE ATTORNEY.

64-23    The attorney general may contract with a private attorney to

64-24    represent the state in an action under this subchapter with which

64-25    the state elects to proceed.

 65-1          Sec. 36.106.  INTERVENTION BY OTHER PARTIES PROHIBITED.  A

 65-2    person other than the state may not intervene or bring a related

 65-3    action based on the facts underlying a pending action brought under

 65-4    this subchapter.

 65-5          Sec. 36.107.  RIGHTS OF PARTIES IF STATE CONTINUES ACTION.

 65-6    (a)  If the state proceeds with the action, the state has the

 65-7    primary responsibility for prosecuting the action and is not bound

 65-8    by an act of the person bringing the action.  The person bringing

 65-9    the action has the right to continue as a party to the action,

65-10    subject to the limitations set forth by this section.

65-11          (b)  The state may dismiss the action notwithstanding the

65-12    objections of the person bringing the action if:

65-13                (1)  the attorney general notifies the person that the

65-14    state has filed a motion to dismiss; and

65-15                (2)  the court provides the person with an opportunity

65-16    for a hearing on the motion.

65-17          (c)  The state may settle the action with the defendant

65-18    notwithstanding the objections of the person bringing the action if

65-19    the court determines, after a hearing, that the proposed settlement

65-20    is fair, adequate, and reasonable under all the circumstances.  On

65-21    a showing of good cause, the hearing may be held in camera.

65-22          (d)  On a showing by the state that unrestricted

65-23    participation during the course of the litigation by the person

65-24    bringing the action would interfere with or unduly delay the

65-25    state's prosecution of the case, or would be repetitious,

 66-1    irrelevant, or for purposes of harassment, the court may impose

 66-2    limitations on the person's participation, including:

 66-3                (1)  limiting the number of witnesses the person may

 66-4    call;

 66-5                (2)  limiting the length of the testimony of witnesses

 66-6    called by the person;

 66-7                (3)  limiting the person's cross-examination of

 66-8    witnesses; or

 66-9                (4)  otherwise limiting the participation by the person

66-10    in the litigation.

66-11          (e)  On a showing by the defendant that unrestricted

66-12    participation during the course of the litigation by the person

66-13    bringing the action would be for purposes of harassment or would

66-14    cause the defendant undue burden or unnecessary expense, the court

66-15    may limit the participation by the person in the litigation.

66-16          Sec. 36.108.  STAY OF CERTAIN DISCOVERY.  (a)  On a showing

66-17    by the state that certain actions of discovery by the person

66-18    bringing the action would interfere with the state's investigation

66-19    or prosecution of a criminal or civil matter arising out of the

66-20    same facts, the court may stay the discovery for a period not to

66-21    exceed 60 days.

66-22          (b)  The court shall hear a motion to stay discovery under

66-23    this section in camera.

66-24          (c)  The court may extend the period prescribed by Subsection

66-25    (a) on a further showing in camera that the state has pursued the

 67-1    criminal or civil investigation or proceedings with reasonable

 67-2    diligence and that any proposed discovery in the civil action will

 67-3    interfere with the ongoing criminal or civil investigation or

 67-4    proceedings.

 67-5          Sec. 36.109.  PURSUIT OF ALTERNATE REMEDY BY STATE.

 67-6    (a)  Notwithstanding Section 36.101, the state may elect to pursue

 67-7    the state's claim through any alternate remedy available to the

 67-8    state, including any administrative proceeding to determine an

 67-9    administrative penalty.  If an alternate remedy is pursued in

67-10    another proceeding, the person bringing the action has the same

67-11    rights in the other proceeding as the person would have had if the

67-12    action had continued under this subchapter.

67-13          (b)  A finding of fact or conclusion of law made in the other

67-14    proceeding that has become final is conclusive on all parties to an

67-15    action under this subchapter.  For purposes of this subsection, a

67-16    finding or conclusion is final if:

67-17                (1)  the finding or conclusion has been finally

67-18    determined on appeal to the appropriate court;

67-19                (2)  no appeal has been filed with respect to the

67-20    finding or conclusion and all time for filing an appeal has

67-21    expired; or

67-22                (3)  the finding or conclusion is not subject to

67-23    judicial review.

67-24          Sec. 36.110.  AWARD TO PRIVATE PLAINTIFF.  (a)  If the state

67-25    proceeds with an action under this subchapter, the person bringing

 68-1    the action is entitled, except as provided by Subsection (b), to

 68-2    receive at least 10 percent but not more than 25 percent of the

 68-3    proceeds of the action, depending on the extent to which the person

 68-4    substantially contributed to the prosecution of the action.

 68-5          (b)  If the court finds that the action is based primarily on

 68-6    disclosures of specific information, other than information

 68-7    provided by the person bringing the action, relating to allegations

 68-8    or transactions in a criminal or civil hearing, in a legislative or

 68-9    administrative report, hearing, audit, or investigation, or from

68-10    the news media, the court may award the amount the court considers

68-11    appropriate but not more than seven percent of the proceeds of the

68-12    action.  The court shall consider the significance of the

68-13    information and the role of the person bringing the action in

68-14    advancing the case to litigation.

68-15          (c)  A payment to a person under this section shall be made

68-16    from the proceeds of the action.  A person receiving a payment

68-17    under this section is also entitled to receive an amount for

68-18    reasonable expenses that the court finds to have been necessarily

68-19    incurred, plus reasonable attorney's fees and costs.  Expenses,

68-20    fees, and costs shall be awarded against the defendant.

68-21          (d)  In this section, "proceeds of the action" includes

68-22    proceeds of a settlement of the action.

68-23          Sec. 36.111.  REDUCTION OF AWARD.  (a)  If the court finds

68-24    that the action was brought by a person who planned and initiated

68-25    the violation of Section 36.002 on which the action was brought,

 69-1    the court may, to the extent the court considers appropriate,

 69-2    reduce the share of the proceeds of the action the person would

 69-3    otherwise receive under Section 36.110, taking into account the

 69-4    person's role in advancing the case to litigation and any relevant

 69-5    circumstances pertaining to the violation.

 69-6          (b)  If the person bringing the action is convicted of

 69-7    criminal conduct arising from the person's role in the violation of

 69-8    Section 36.002, the court shall dismiss the person from the civil

 69-9    action and the person may not receive any share of the proceeds of

69-10    the action.  A dismissal under this subsection does not prejudice

69-11    the right of the state to continue the action.

69-12          Sec. 36.112.  AWARD TO DEFENDANT FOR FRIVOLOUS ACTION.

69-13    Chapter 105, Civil Practice and Remedies Code, applies in an action

69-14    under this subchapter with which the state proceeds.

69-15          Sec. 36.113.  CERTAIN ACTIONS BARRED.  (a)  A person may not

69-16    bring an action under this subchapter that is based on allegations

69-17    or transactions that are the subject of a civil suit or an

69-18    administrative penalty proceeding in which the state is already a

69-19    party.

69-20          (b)  A person may not bring an action under this subchapter

69-21    that is based on the public disclosure of allegations or

69-22    transactions in a criminal or civil hearing, in a legislative or

69-23    administrative report, hearing, audit, or investigation, or from

69-24    the news media, unless the person bringing the action is an

69-25    original source of the information.  In this subsection, "original

 70-1    source" means an individual who has direct and independent

 70-2    knowledge of the information on which the allegations are based and

 70-3    has voluntarily provided the information to the state before filing

 70-4    an action under this subchapter that is based on the information.

 70-5          Sec. 36.114.  STATE NOT LIABLE FOR CERTAIN EXPENSES.  The

 70-6    state is not liable for expenses that a person incurs in bringing

 70-7    an action under this subchapter.

 70-8          Sec. 36.115.  RETALIATION BY EMPLOYER AGAINST PERSON BRINGING

 70-9    SUIT PROHIBITED.  (a)  A person who is discharged, demoted,

70-10    suspended, threatened, harassed, or in any other manner

70-11    discriminated against in the terms of employment by the person's

70-12    employer because of a lawful act taken by the person in furtherance

70-13    of an action under this subchapter, including investigation for,

70-14    initiation of, testimony for, or assistance in an action filed or

70-15    to be filed under this subchapter, is entitled to:

70-16                (1)  reinstatement with the same seniority status the

70-17    person would have had but for the discrimination; and

70-18                (2)  not less than two times the amount of back pay,

70-19    interest on the back pay, and compensation for any special damages

70-20    sustained as a result of the discrimination, including litigation

70-21    costs and reasonable attorney's fees.

70-22          (b)  A person may bring an action in the appropriate district

70-23    court for the relief provided in this section.

70-24          Sec. 36.116.  SOVEREIGN IMMUNITY NOT WAIVED.  Except as

70-25    provided by Section 36.112, this subchapter does not waive

 71-1    sovereign immunity.

 71-2          Sec. 36.117.  ATTORNEY GENERAL COMPENSATION.  The office of

 71-3    the attorney general may retain a reasonable portion of recoveries

 71-4    under this subchapter, not to exceed amounts specified in the

 71-5    General Appropriations Act, for the administration of this

 71-6    subchapter.

 71-7          SECTION 4.09.  CRIMINAL OFFENSE AND REVOCATION OF CERTAIN

 71-8    LICENSES.  Chapter 36, Human Resources Code, is amended by adding

 71-9    Subchapter D to read as follows:

71-10        SUBCHAPTER D.  CRIMINAL PENALTIES AND REVOCATION OF CERTAIN

71-11                           OCCUPATIONAL LICENSES

71-12          Sec. 36.131.  CRIMINAL OFFENSE.  (a)  A person commits an

71-13    offense if the person commits an unlawful act under Section 36.002.

71-14          (b)  An offense under this section is:

71-15                (1)  a Class C misdemeanor if the value of any payment

71-16    or monetary or in-kind benefit provided under the Medicaid program,

71-17    directly or indirectly, as a result of the unlawful act is less

71-18    than $50;

71-19                (2)  a Class B misdemeanor if the value of any payment

71-20    or monetary or in-kind benefit provided under the Medicaid program,

71-21    directly or indirectly, as a result of the unlawful act is $50 or

71-22    more but less than $500;

71-23                (3)  a Class A misdemeanor if the value of any payment

71-24    or monetary or in-kind benefit provided under the Medicaid program,

71-25    directly or indirectly, as a result of the unlawful act is $500 or

 72-1    more but less than $1,500;

 72-2                (4)  a state jail felony if the value of any payment or

 72-3    monetary or in-kind benefit provided under the Medicaid program,

 72-4    directly or indirectly, as a result of the unlawful act is $1,500

 72-5    or more but less than $20,000;

 72-6                (5)  a felony of the third degree if the value of any

 72-7    payment or monetary or in-kind benefit provided under the Medicaid

 72-8    program, directly or indirectly, as a result of the unlawful act is

 72-9    $20,000 or more but less than $100,000;

72-10                (6)  a felony of the second degree if the value of any

72-11    payment or monetary or in-kind benefit provided under the Medicaid

72-12    program, directly or indirectly, as a result of the unlawful act is

72-13    $100,000 or more but less than $200,000; or

72-14                (7)  a felony of the first degree if the value of any

72-15    payment or monetary or in-kind benefit provided under the Medicaid

72-16    program, directly or indirectly, as a result of the unlawful act is

72-17    $200,000 or more.

72-18          (c)  If conduct constituting an offense under this section

72-19    also constitutes an offense under another provision of law,

72-20    including a provision in the Penal Code, the actor may be

72-21    prosecuted under either this section or the other provision.

72-22          (d)  When multiple payments or monetary or in-kind benefits

72-23    are provided under the Medicaid program as a result of one scheme

72-24    or continuing course of conduct, the conduct may be considered as

72-25    one offense and the amounts of the payments or monetary or in-kind

 73-1    benefits aggregated in determining the grade of the offense.

 73-2          Sec. 36.132.  REVOCATION OF LICENSES.  (a)  In this section:

 73-3                (1)  "License" means a license, certificate,

 73-4    registration, permit, or other authorization that:

 73-5                      (A)  is issued by a licensing authority;

 73-6                      (B)  is subject before expiration to suspension,

 73-7    revocation, forfeiture, or termination by an issuing licensing

 73-8    authority; and

 73-9                      (C)  must be obtained before a person may

73-10    practice or engage in a particular business, occupation, or

73-11    profession.

73-12                (2)  "Licensing authority" means:

73-13                      (A)  the Texas State Board of Medical Examiners;

73-14                      (B)  the State Board of Dental Examiners;

73-15                      (C)  the Texas State Board of Examiners of

73-16    Psychologists;

73-17                      (D)  the Texas State Board of Social Worker

73-18    Examiners;

73-19                      (E)  the Board of Nurse Examiners;

73-20                      (F)  the Board of Vocational Nurse Examiners;

73-21                      (G)  the Texas Board of Physical Therapy

73-22    Examiners; or

73-23                      (H)  the Texas Board of Occupational Therapy

73-24    Examiners.

73-25          (b)  A licensing authority shall revoke a license issued by

 74-1    the authority to a person if the person is convicted of a felony

 74-2    under Section 36.131.  In revoking the license, the licensing

 74-3    authority shall comply with all procedures generally applicable to

 74-4    the licensing authority in revoking licenses.

 74-5          SECTION 4.10.  APPLICATION.  (a)  The changes in law made by

 74-6    this article apply only to a violation committed on or after the

 74-7    effective date of this article.  For purposes of this section, a

 74-8    violation is committed on or after the effective date of this

 74-9    article only if each element of the violation occurs on or after

74-10    that date.

74-11          (b)  A violation committed before the effective date of this

74-12    article is covered by the law in effect when the violation was

74-13    committed, and the former law is continued in effect for this

74-14    purpose.

74-15                    ARTICLE 5.  SUSPENSION OF LICENSES

74-16          SECTION 5.01.  SUSPENSION OF LICENSES.  (a)  Subtitle B,

74-17    Title 2, Human Resources Code, is amended by adding Chapter 23 to

74-18    read as follows:

74-19            CHAPTER 23.  SUSPENSION OF DRIVER'S OR RECREATIONAL

74-20                LICENSE FOR FAILURE TO REIMBURSE DEPARTMENT

74-21          Sec. 23.001.  DEFINITIONS.  In this chapter:

74-22                (1)  "License" means a license, certificate,

74-23    registration, permit, or other authorization that:

74-24                      (A)  is issued by a licensing authority;

74-25                      (B)  is subject before expiration to suspension,

 75-1    revocation, forfeiture, or termination by an issuing licensing

 75-2    authority; and

 75-3                      (C)  a person must obtain to:

 75-4                            (i)  operate a motor vehicle; or

 75-5                            (ii)  engage in a recreational activity,

 75-6    including hunting and fishing, for which a license or permit is

 75-7    required.

 75-8                (2)  "Order suspending a license" means an order issued

 75-9    by the department directing a licensing authority to suspend a

75-10    license.

75-11          Sec. 23.002.  LICENSING AUTHORITIES SUBJECT TO CHAPTER.  In

75-12    this chapter, "licensing authority" means:

75-13                (1)  the Parks and Wildlife Department; and

75-14                (2)  the Department of Public Safety of the State of

75-15    Texas.

75-16          Sec. 23.003.  SUSPENSION OF LICENSE.  The department may

75-17    issue an order suspending a license as provided by this chapter of

75-18    a person who, after notice:

75-19                (1)  has failed to reimburse the department for an

75-20    amount in excess of $250 granted in error to the person under the

75-21    food stamp program or the program of financial assistance under

75-22    Chapter 31;

75-23                (2)  has been provided an opportunity to make payments

75-24    toward the amount owed under a repayment schedule; and

75-25                (3)  has failed to comply with the repayment schedule.

 76-1          Sec. 23.004.  INITIATION OF PROCEEDING.  (a)  The department

 76-2    may initiate a proceeding to suspend a person's license by filing a

 76-3    petition with the department's hearings division.

 76-4          (b)  The proceeding shall be conducted by the department's

 76-5    hearings division.  The proceeding is a contested case under

 76-6    Chapter 2001, Government Code, except that Section 2001.054 does

 76-7    not apply.

 76-8          (c)  The commissioner shall render a final decision in the

 76-9    proceeding.

76-10          Sec. 23.005.  CONTENTS OF PETITION.  A petition under this

76-11    chapter must state that license suspension is authorized under

76-12    Section 23.003 and allege:

76-13                (1)  the name and, if known, social security number of

76-14    the person;

76-15                (2)  the type of license the person is believed to hold

76-16    and the name of the licensing authority; and

76-17                (3)  the amount owed to the department.

76-18          Sec. 23.006.  NOTICE.  (a)  On initiating a proceeding under

76-19    Section 23.004, the department shall give the person named in the

76-20    petition:

76-21                (1)  notice of the person's right to a hearing before

76-22    the hearings division of the department;

76-23                (2)  notice of the deadline for requesting a hearing;

76-24    and

76-25                (3)  a form requesting a hearing.

 77-1          (b)  Notice under this section may be served as in civil

 77-2    cases generally.

 77-3          (c)  The notice must state that an order suspending a license

 77-4    shall be rendered on the 60th day after the date of service of the

 77-5    notice unless by that date:

 77-6                (1)  the person pays the amount owed to the department;

 77-7                (2)  the person presents evidence of a payment history

 77-8    satisfactory to the department in compliance with a reasonable

 77-9    repayment schedule; or

77-10                (3)  the person appears at a hearing before the

77-11    hearings division and shows that the request for suspension should

77-12    be denied or stayed.

77-13          Sec. 23.007.  HEARING ON PETITION TO SUSPEND LICENSE.  (a)  A

77-14    request for a hearing and motion to stay suspension must be filed

77-15    with the department not later than the 20th day after the date of

77-16    service of the notice under Section 23.006.

77-17          (b)  If a request for a hearing is filed, the hearings

77-18    division of the department shall:

77-19                (1)  promptly schedule a hearing;

77-20                (2)  notify the person and an appropriate

77-21    representative of the department of the date, time, and location of

77-22    the hearing; and

77-23                (3)  stay suspension pending the hearing.

77-24          Sec. 23.008.  ORDER SUSPENDING LICENSE.  (a)  On making the

77-25    findings required by Section 23.003, the department shall render an

 78-1    order suspending a license.

 78-2          (b)  The department may stay an order suspending a license

 78-3    conditioned on the person's compliance with a reasonable repayment

 78-4    schedule that is incorporated in the order.  An order suspending a

 78-5    license with a stay of the suspension  may not be served on the

 78-6    licensing authority unless the stay is revoked as provided by this

 78-7    chapter.

 78-8          (c)  A final order suspending a license rendered by the

 78-9    department shall be forwarded to the appropriate licensing

78-10    authority.

78-11          (d)  If the department renders an order suspending a license,

78-12    the person may also be ordered not to engage in the licensed

78-13    activity.

78-14          (e)  If the department finds that the petition for suspension

78-15    should be denied, the petition shall be dismissed without

78-16    prejudice, and an order suspending a license may not be rendered.

78-17          Sec. 23.009.  DEFAULT ORDER.  The department shall consider

78-18    the allegations of the petition for suspension to be admitted and

78-19    shall render an order suspending a license if the person fails to:

78-20                (1)  respond to a notice issued under Section 23.006;

78-21                (2)  request a hearing; or

78-22                (3)  appear at a hearing.

78-23          Sec. 23.010.  REVIEW OF FINAL ADMINISTRATIVE ORDER.  An order

78-24    issued by the department under this chapter is a final agency

78-25    decision and is subject to review as provided by Chapter 2001,

 79-1    Government Code.

 79-2          Sec. 23.011.  ACTION BY LICENSING AUTHORITY.  (a)  On receipt

 79-3    of a final order suspending a license, the licensing authority

 79-4    shall immediately determine if the authority has issued a license

 79-5    to the person named on the order and, if a license has been issued:

 79-6                (1)  record the suspension of the license in the

 79-7    licensing authority's records;

 79-8                (2)  report the suspension as appropriate; and

 79-9                (3)  demand surrender of the suspended license if

79-10    required by law for other cases in which a license is suspended.

79-11          (b)  A licensing authority shall implement the terms of a

79-12    final order suspending a license without additional review or

79-13    hearing.  The authority may provide notice as appropriate to the

79-14    license holder or to others concerned with the license.

79-15          (c)  A licensing authority may not modify, remand, reverse,

79-16    vacate, or stay an order suspending a license issued under this

79-17    chapter and may not review, vacate, or reconsider the terms of a

79-18    final order suspending a license.

79-19          (d)  A person who is the subject of a final order suspending

79-20    a license is not entitled to a refund for any fee or deposit paid

79-21    to the licensing authority.

79-22          (e)  A person who continues to engage in the licensed

79-23    activity after the implementation of the order suspending a license

79-24    by the licensing authority is liable for the same civil and

79-25    criminal penalties provided for engaging in the licensed activity

 80-1    without a license or while a license is suspended that apply to any

 80-2    other license holder of that licensing authority.

 80-3          (f)  A licensing authority is exempt from liability to a

 80-4    license holder for any act authorized under this chapter performed

 80-5    by the authority.

 80-6          (g)  Except as provided by this chapter, an order suspending

 80-7    a license or dismissing a petition for the suspension of a license

 80-8    does not affect the power of a licensing authority to grant, deny,

 80-9    suspend, revoke, terminate, or renew a license.

80-10          (h)  The denial or suspension of a driver's license under

80-11    this chapter is governed by this chapter and not by Subtitle B,

80-12    Title 7, Transportation Code.

80-13          Sec. 23.012.  MOTION TO REVOKE STAY.  (a)  The department may

80-14    file a motion with the department's hearings division to revoke the

80-15    stay of an order suspending a license if the person does not comply

80-16    with the terms of a reasonable repayment plan entered into by the

80-17    person.

80-18          (b)  Notice to the person of a motion to revoke stay under

80-19    this section may be given by personal service or by mail to the

80-20    address provided by the person, if any, in the order suspending a

80-21    license.  The notice must include a notice of hearing before the

80-22    hearings division.  The notice must be provided to the person not

80-23    less than 10 days before the date of the hearing.

80-24          (c)  A motion to revoke stay must allege the manner in which

80-25    the person failed to comply with the repayment plan.

 81-1          (d)  If the department finds that the person is not in

 81-2    compliance with the terms of the repayment plan, the department

 81-3    shall revoke the stay of the order suspending a license and render

 81-4    a final order suspending a license.

 81-5          Sec. 23.013.  VACATING OR STAYING ORDER SUSPENDING A LICENSE.

 81-6    (a)  The department may render an order vacating or staying an

 81-7    order suspending a license if the person has paid all amounts owed

 81-8    to the department or has established a satisfactory payment record.

 81-9          (b)  The department shall promptly deliver an order vacating

81-10    or staying an order suspending a license to the appropriate

81-11    licensing authority.

81-12          (c)  On receipt of an order vacating or staying an order

81-13    suspending a license, the licensing authority shall promptly

81-14    reinstate and return the affected license to the person if the

81-15    person is otherwise qualified for the license.

81-16          (d)  An order rendered under this section does not affect the

81-17    right of the department to any other remedy provided by law,

81-18    including the right to seek relief under this chapter.  An order

81-19    rendered under this section does not affect the power of a

81-20    licensing authority to grant, deny, suspend, revoke, terminate, or

81-21    renew a license as otherwise provided by law.

81-22          Sec. 23.014.  FEE BY LICENSING AUTHORITY.  A licensing

81-23    authority may charge a fee to a person who is the subject of an

81-24    order suspending a license in an amount sufficient to recover the

81-25    administrative costs incurred by the authority under this chapter.

 82-1          Sec. 23.015.  COOPERATION BETWEEN LICENSING AUTHORITIES AND

 82-2    DEPARTMENT.  (a)  The department may request from each licensing

 82-3    authority the name, address, social security number, license

 82-4    renewal date, and other identifying information for each individual

 82-5    who holds, applies for, or renews a license issued by the

 82-6    authority.

 82-7          (b)  A licensing authority shall provide the requested

 82-8    information in the manner agreed to by the department and the

 82-9    licensing authority.

82-10          (c)  The department may enter into a cooperative agreement

82-11    with a licensing authority to administer this chapter in a

82-12    cost-effective manner.

82-13          (d)  The department may adopt a reasonable implementation

82-14    schedule for the requirements of this section.

82-15          Sec. 23.016.  RULES, FORMS, AND PROCEDURES.  The department

82-16    by rule shall prescribe forms and procedures for the implementation

82-17    of this chapter.

82-18          (b)  The Texas Department of Human Services shall take all

82-19    action necessary to implement the change in law made by this

82-20    article not later than January 1, 1998.  The department may not

82-21    suspend a license because of a person's failure to reimburse the

82-22    department for a benefit granted in error under the food stamp

82-23    program or the program of financial assistance under Chapter 31,

82-24    Human Resources Code, before September 1, 1997.

 83-1                     ARTICLE 6.  MEASUREMENT OF FRAUD

 83-2          SECTION 6.01.  HEALTH CARE FRAUD STUDY.  (a)  Subchapter B,

 83-3    Chapter 403, Government Code, is amended by adding Section 403.026

 83-4    to read as follows:

 83-5          Sec. 403.026.  HEALTH CARE FRAUD STUDY.  (a)  The comptroller

 83-6    shall conduct a study each biennium to determine the number and

 83-7    type of fraudulent claims for medical or health care benefits

 83-8    submitted:

 83-9                (1)  under the state Medicaid program;

83-10                (2)  under group health insurance programs administered

83-11    through the Employees Retirement System of Texas for active and

83-12    retired state employees; or

83-13                (3)  by or on behalf of a state employee and

83-14    administered by the attorney general under Chapter 501, Labor Code.

83-15          (b)  A state agency that administers a program identified by

83-16    Subsection (a) shall cooperate with the comptroller and provide any

83-17    information required by the comptroller in connection with the

83-18    study.  A state agency may enter into a memorandum of understanding

83-19    with the comptroller regarding the use and confidentiality of the

83-20    information provided.  This subsection does not require a state

83-21    agency to provide confidential information if release of the

83-22    information is prohibited by law.

83-23          (c)  The comptroller shall report the results of the study to

83-24    each state agency that administers a program included in the study

83-25    so that the agency may modify its fraud control procedures as

 84-1    necessary.

 84-2          (b)  The comptroller of public accounts shall complete the

 84-3    initial study required by Section 403.026, Government Code, as

 84-4    added by this section, not later than December 1, 1998.

 84-5          SECTION 6.02.  COMPILATION OF STATISTICS.  (a)  Subchapter B,

 84-6    Chapter 531, Government Code, is amended by adding Section 531.0215

 84-7    to read as follows:

 84-8          Sec. 531.0215.  COMPILATION OF STATISTICS RELATING TO FRAUD.

 84-9    The commission and each health and human services agency that

84-10    administers a part of the state Medicaid program shall maintain

84-11    statistics on the number, type, and disposition of fraudulent

84-12    claims for benefits submitted under the part of the program the

84-13    agency administers.

84-14          (b)  Subchapter C, Chapter 501, Labor Code, is amended by

84-15    adding Section 501.0431 to read as follows:

84-16          Sec. 501.0431.  COMPILATION OF STATISTICS RELATING TO FRAUD.

84-17    The director shall maintain statistics on the number, type, and

84-18    disposition of fraudulent claims for medical benefits under this

84-19    chapter.

84-20          (c)  Subsection (a), Section 17, Texas Employees Uniform

84-21    Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas

84-22    Insurance Code), is amended to read as follows:

84-23          (a)  The trustee shall:

84-24                (1)  make a continuing study of the operation and

84-25    administration of this Act, including surveys and reports of group

 85-1    coverages and benefits available to employees and on the experience

 85-2    thereof; and

 85-3                (2)  maintain statistics on the number, type, and

 85-4    disposition of fraudulent claims for benefits under this Act.

 85-5              ARTICLE 7.  WAIVERS; EFFECTIVE DATE; EMERGENCY

 85-6          SECTION 7.01.  WAIVERS.  If before implementing any provision

 85-7    of this Act, a state agency determines that a waiver or

 85-8    authorization from a federal agency is necessary for implementation

 85-9    of that provision, the agency affected by the provision shall

85-10    request the waiver or authorization and may delay implementing that

85-11    provision until the waiver or authorization is granted.

85-12          SECTION 7.02.  EFFECTIVE DATE.  Except as otherwise provided

85-13    by this Act, this Act takes effect September 1, 1997.

85-14          SECTION 7.03.  EMERGENCY.  The importance of this legislation

85-15    and the crowded condition of the calendars in both houses create an

85-16    emergency and an imperative public necessity that the

85-17    constitutional rule requiring bills to be read on three several

85-18    days in each house be suspended, and this rule is hereby suspended,

85-19    and that this Act take effect and be in force according to its

85-20    terms, and it is so enacted.