By: Lucio S.B. No. 1775
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
AN ACT
1-1 relating to creating the Insurance Fraud Prevention Board and the
1-2 insurance fraud prevention fund and making an appropriation.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subtitle B (Law Enforcement and Public
1-5 Protection), Government Code, is amended by adding Chapter 420 to
1-6 read as follows:
1-7 CHAPTER 420. INSURANCE FRAUD PREVENTION BOARD.
1-8 Section 420.001. DEFINITIONS. In this article:
1-9 (1) "Board" means the Insurance Fraud Prevention
1-10 Board.
1-11 (2) "Member" means a member of the board.
1-12 (3) "Fund" means the insurance fraud prevention fund.
1-13 (4) "Insurance fraud" means any activity defined as an
1-14 offense under Chapter 35 of the Penal Code (relating to insurance
1-15 fraud) or any fraud perpetrated against an insurer for financial
1-16 gain of the perpetrator.
1-17 (5) "Insurer" means an individual, corporation, or
1-18 association engaging in the business of insurance in this state,
1-19 including:
1-20 (A) an insurer that is not authorized to do
1-21 business in this state;
2-1 (B) a health maintenance organization;
2-2 (C) a group hospital service corporation
2-3 regulated under Chapter 20, Insurance Code; and
2-4 (D) any individual, corporation, or association
2-5 that self-insures and provides health care to its employees.
2-6 (6) "Subscriber" means any individual entitled to
2-7 receive benefits under a policy issued by an insurer.
2-8 Section 420.002. ESTABLISHMENT OF BOARD. (a) The Insurance
2-9 Fraud Prevention Board is hereby established in the Office of the
2-10 Attorney General and is an advisory board to the Attorney General.
2-11 The board shall consist of the Attorney General, or his designee,
2-12 and six other members appointed by the Attorney General, including:
2-13 (1) two representatives of insurance consumers;
2-14 (2) two representatives of state law enforcement
2-15 agencies; and
2-16 (3) two representatives of insurance companies writing
2-17 automobile, property and casualty, worker's compensation, or health
2-18 insurance policies in this state.
2-19 (b) The Attorney General, or his designee, shall serve as
2-20 chairman of the board.
2-21 (c) Appointments to the board shall be made without regard
2-22 to race, color, handicap, sex, religion, age, or national origin of
2-23 the appointees.
2-24 (d) The six members of the board appointed by the Attorney
2-25 General shall serve staggered six-year terms, with the terms of two
3-1 members expiring February 1 of each odd-numbered year. If there is
3-2 a vacancy during a term, the Attorney General shall appoint a
3-3 replacement who meets the requirements of the vacant office to fill
3-4 the unexpired term.
3-5 (e) It is a ground for removal from the board if a member:
3-6 (1) did not have at the time of appointment the
3-7 qualifications required by Subsection (a) of this section;
3-8 (2) does not maintain during service on the board the
3-9 qualifications required by Subsection (a) of this section;
3-10 (3) cannot perform the member's duties for a
3-11 substantial part of the term for which the member is appointed
3-12 because of illness or disability; or
3-13 (4) is absent from more than half of the regularly
3-14 scheduled board meetings that the member is eligible to attend
3-15 during a calendar year, unless the absence is excused by majority
3-16 vote of the board.
3-17 (f) If a member has knowledge that a potential ground for
3-18 removal exists, the member shall notify the Attorney General of
3-19 that fact.
3-20 Section 420.003. SERVICE ADDITIONAL DUTY OF OFFICE. Service
3-21 on the board by a public officer or employee is an additional duty
3-22 of the office or employment.
3-23 Section 420.004. EXPENSES. A member of the board serves
3-24 without compensation for service on the board, but is entitled to
3-25 reimbursement for expenses incurred in performing board duties.
4-1 Section 420.005. APPOINTMENT OF OTHER ADVISORY BODIES. The
4-2 board may establish advisory task forces or committees that the
4-3 board considers necessary to accomplish the purposes of this
4-4 chapter.
4-5 Section 420.006. MEETINGS. The board shall meet at the call
4-6 of the chairman or at the call of at least four members.
4-7 Section 420.007. DUTIES OF BOARD. The board shall advise
4-8 the Attorney General on issues relating directly to the duties of
4-9 the Attorney General as imposed by this chapter.
4-10 Section 420.008. ADOPTION OF RULES. The Attorney General
4-11 shall adopt rules to implement its powers and duties under this
4-12 chapter.
4-13 Section 420.009. APPROPRIATIONS. (a) The legislature may
4-14 appropriate money to the attorney general for the purpose of
4-15 carrying out the duties imposed under this chapter.
4-16 (b) Money and appropriations received by the Attorney
4-17 General under this section shall be deposited as provided by
4-18 Section 420.013.
4-19 Section 420.010. PERSONNEL. The Attorney General may employ
4-20 personnel to perform the duties of this chapter.
4-21 Section 420.011. CONTRACTUAL AUTHORITY. The Attorney
4-22 General may contract for various services as needed to carry out
4-23 its purposes, powers, and duties.
4-24 Section 420.012. PLAN OF OPERATION. (a) The Attorney
4-25 General shall develop and implement a plan of operation.
5-1 (b) The plan of operation must include:
5-2 (1) an assessment of the scope of the problems of
5-3 insurance fraud, including types of policies targeted and the
5-4 particular areas of the state where the problems are greatest;
5-5 (2) an analysis of various methods of combating the
5-6 problems of insurance fraud, including state and local criminal
5-7 justice policies, programs and plans;
5-8 (3) plans, programs, and strategies for providing
5-9 financial support to combat insurance fraud, improve the
5-10 administration of the insurance fraud laws, and provide a forum for
5-11 identification of critical problems for those persons and entities
5-12 dealing with insurance fraud; and
5-13 (4) an estimate of the funds required to implement the
5-14 plan of operation.
5-15 Section 420.013. INSURANCE FRAUD PREVENTION FUND. (a) The
5-16 insurance fraud prevention fund is created as a dedicated account
5-17 in the state treasury. Section 403.095, Government Code, does not
5-18 apply to the fund.
5-19 (b) The comptroller shall administer the fund and may invest
5-20 the fund in the same manner as other state funds.
5-21 (c) The comptroller shall deposit to the credit of the fund
5-22 any gift or grant of money accepted by the Attorney General and
5-23 money collected under Sections 420.009 and 420.013 of this chapter.
5-24 The comptroller shall draw warrants on the fund at the request of
5-25 the Attorney General, except that a warrant may not exceed the
6-1 amount in the fund.
6-2 (d) Interest or income on amounts deposited in the insurance
6-3 fraud prevention fund shall be credited to the fund.
6-4 (e) The fund shall be used by the Attorney General to pay
6-5 administrative costs, including those incurred by the Attorney
6-6 General, and to achieve the purposes of this Article, including:
6-7 (1) providing financial support to law enforcement
6-8 agencies for insurance fraud enforcement teams;
6-9 (2) providing financial support to law enforcement
6-10 agencies, local prosecutors, judicial agencies, and neighborhood,
6-11 community, business, and nonprofit organizations for programs
6-12 designed to reduce the incidence of insurance fraud.
6-13 Section 420.014. FEE. (a) Each insurer shall pay to the
6-14 authority, on or before March 1 of each year, a fee of fifty cents
6-15 ($.50) per subscriber for each year, or portion of year, of
6-16 insurance coverage for all types of automobile, property and
6-17 casualty, and health insurance policies delivered, issued for
6-18 delivery, or renewed by the insurer during the preceding calendar
6-19 year.
6-20 (c) The fee imposed by this section is in addition to any
6-21 other fee or tax imposed by law on an insurer.
6-22 (d) The Attorney General shall have authority to conduct an
6-23 audit of any insurer to determine if the fee required by this
6-24 section has been paid. The Attorney General shall notify the State
6-25 Board of Insurance of any insurer that fails to pay the fee
7-1 required by this section, and the State Board of Insurance shall
7-2 revoke the insurer's certificate of authority until such time as
7-3 the fee is paid.
7-4 SECTION 2. SEVERABILITY. If any section, sentence, clause,
7-5 or part of this Act shall, for any reason, be held invalid, such
7-6 invalidity shall not affect the remaining portions of the Act, and
7-7 it is hereby declared to be the intention of this legislature to
7-8 have passed each section, sentence, clause, or part irrespective of
7-9 the fact that any other section, sentence, or part may be declared
7-10 invalid.
7-11 SECTION 3. APPROPRIATION OF FEES, COSTS, AND CIVIL AND
7-12 CRIMINAL PENALTIES. In addition to moneys appropriated elsewhere,
7-13 the Office of the Attorney General is hereby appropriated all fees
7-14 assessed pursuant to and all recovered expenses incurred in
7-15 obtaining administrative, civil, or criminal penalties authorized
7-16 by this Act and credited to the insurance fraud prevention fund.
7-17 Recovered expenses include, but are not limited to investigative
7-18 costs, witness fees, attorneys' fees, and deposition expenses.
7-19 Moneys hereby appropriated may be expended only for purposes of
7-20 enforcing the provisions of this Act, and may not be appropriated
7-21 for any other purpose. Unexpended balances credited to the account
7-22 at the end of each biennium are carried over to each successive
7-23 biennium.
7-24 SECTION 4. EFFECTIVE DATE. This Act takes effect on
7-25 September 1, 1997.
8-1 SECTION 5. EMERGENCY. The importance of this legislation
8-2 and the crowded condition of the calendars in both houses create an
8-3 emergency and an imperative public necessity that the
8-4 constitutional rule requiring bills to be read on three several
8-5 days in each house be suspended, and this rule is hereby suspended,
8-6 and it is so enacted.