By Davis of Harris H.B. No. 2096
76R8321 T
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the control of health insurance fraud.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Texas Insurance Code, Part I, Chapter 3, Life,
1-5 Accident and Health Insurance, is amended to add a new Article
1-6 3.101 of a new Subchapter L, Insurer Anti-fraud Programs, as
1-7 follows:
1-8 Art. 3.101. STATEMENT OF PUBLIC POLICY. The Legislature
1-9 finds and declares that the business of health insurance involves
1-10 many transactions which have potential for abuse and illegal
1-11 activities. There are numerous law enforcement agencies on the
1-12 state and local levels charged with the responsibility for
1-13 investigating and prosecuting fraudulent activity. This chapter is
1-14 intended to permit the full utilization of the expertise of the
1-15 commissioner and the department so that they may more effectively
1-16 investigate and discover insurance frauds, halt fraudulent
1-17 activities, and assist and receive assistance from federal, state,
1-18 local, and administrative law enforcement agencies in prosecution
1-19 of persons who are parties in insurance frauds.
1-20 SECTION 2. Texas Insurance Code, Part I, Chapter 3, Life,
1-21 Accident and Health Insurance, is amended to add a new Article
1-22 3.101-1 of a new Subchapter L, Insurer Anti-fraud Programs, as
1-23 follows:
1-24 Art. 3.101-1. NOTICE OF PENALTY FOR FALSE OR FRAUDULENT
2-1 CLAIMS; DISPLAY ON FORMS. Any insurer who, in connection with any
2-2 insurance contract or provision of contract described in this
2-3 subsection, prints, reproduces, or furnishes a form to any person
2-4 upon which that person gives notice to the insurer or makes claim
2-5 against it by reason of accident, injury, or other noticed or
2-6 claimed loss, or on a rider attached thereto, shall cause to be
2-7 printed or displayed in comparative prominence with other content
2-8 the statement or a statement substantially similar to the following
2-9 in terms of intent and language: "Any person who knowingly
2-10 presents false or fraudulent claim for the payment of a loss is
2-11 guilty of a crime and may be subject to fines and confinement in
2-12 state prison." This statement shall be preceded by the words:
2-13 "For your protection, Texas law requires the following to appear on
2-14 this form" or other explanatory words of similar meaning.
2-15 SECTION 3. Texas Insurance Code, Part I, Chapter 3, Life,
2-16 Accident and Health Insurance, is amended to add a new Article
2-17 3.101-2 of a new Subchapter L, Insurer Anti-fraud Programs, as
2-18 follows:
2-19 Art. 3.101-2. ADMINISTRATIVE ACTION FOR FRAUD. If the
2-20 commissioner of insurance determines that an insurer has been
2-21 defrauded by the action of a health care provider, including a
2-22 hospital, physician, dentist, chiropractor, nurse, or other
2-23 practitioner of the health care or healing arts, the commissioner
2-24 may order that the insurer retain such amounts that otherwise would
2-25 be owed to that health care provider.
2-26 SECTION 4. Texas Insurance Code, Part I, Chapter 3, Life,
2-27 Accident and Health Insurance, is amended to add a new Article
3-1 3.101-3 of a new Subchapter L, Insurer Anti-fraud Programs, as
3-2 follows:
3-3 Art. 3.101-3. INSURER ANTI-FRAUD INVESTIGATIVE UNITS. (a)
3-4 Every insurer admitted to do business in this state that at any
3-5 time in the previous calendar year had $10 million or more in
3-6 direct premiums written shall:
3-7 (1) Establish and maintain a division within the
3-8 company to investigate possible fraudulent claims by insureds or by
3-9 persons making claims against policies held by insureds; or
3-10 (2) Contract with others to investigate possible
3-11 fraudulent claims against policies held by insureds.
3-12 (b) An insurer subject to this chapter shall file annually
3-13 for approval with the insurance fraud unit of the department (Texas
3-14 Insurance Code Article 1.10D) beginning on or before July 1, 2001,
3-15 a detailed description of the division established pursuant to this
3-16 statute and the results of its investigations.
3-17 (c) Every insurer admitted to do business in this state,
3-18 that in the previous calendar year had less than $10 million in
3-19 direct premiums written, must adopt annually an anti-fraud plan and
3-20 file it for approval with the insurance fraud unit of the
3-21 department beginning on or before July 1, 2001. After the
3-22 insurer's satisfaction of its first filing requirement under this
3-23 statute, the insurer shall thereafter comply with the filing dates
3-24 as established by the commissioner.
3-25 (d) In discharge of its obligation to establish and maintain
3-26 an anti-fraud division, an insurer may contract with others to
3-27 investigate possible fraudulent claims against policies held by
4-1 insureds.
4-2 (e) If an insurer establishes and maintains an anti-fraud
4-3 division, then insurer's anti-fraud plan shall include:
4-4 (1) A description of the insurer's procedures for
4-5 detecting and investigating possible fraudulent insurance acts;
4-6 (2) A description of the insurer's procedures for the
4-7 mandatory reporting of possible fraudulent insurance acts to the
4-8 Insurance fraud unit of the department;
4-9 (3) A description of the insurer's plan for anti-fraud
4-10 education and training of its claims adjusters or other personnel;
4-11 (4) The names, addresses, telephone numbers, and fax
4-12 numbers of the persons assigned by the insurer to staff the
4-13 insurer's anti-fraud division; and
4-14 (5) A written description or chart outlining the
4-15 organizational arrangement of the insurer's anti-fraud personnel
4-16 who are responsible for the investigation and reporting of possible
4-17 fraudulent insurance acts.
4-18 (f) If an insurer elects to contract with others to
4-19 investigate possible fraudulent claims against policies held by
4-20 insureds, then the insurer shall file for approval with the
4-21 insurance fraud unit of the department:
4-22 (1) A copy of the written contract between the insurer
4-23 and the entity with which the insurer has entered into an agreement
4-24 to investigate possible fraudulent insurance claims;
4-25 (2) The names, addresses, telephone numbers, and fax
4-26 numbers of the principals of the entity with which the insurer has
4-27 entered into an agreement to investigate possible fraudulent
5-1 claims; and
5-2 (3) The qualifications of the principals of the entity
5-3 with which the insurer has entered into an agreement to investigate
5-4 possible fraudulent claims.
5-5 (g) Any insurer who obtains a certificate of authority after
5-6 January 1, 2000, shall have 18 months in which to comply with the
5-7 requirements of this section. After the insurer's satisfaction of
5-8 its first filing requirement under this statute, the insurer shall
5-9 thereafter comply with the filing dates as established by the
5-10 commissioner.
5-11 (h) For purposes of this section, the term "division"
5-12 includes the assignment of fraud investigation to employees whose
5-13 principal responsibilities are the investigation and disposition of
5-14 claims.
5-15 (i) If an insurer hires additional employees or contracts
5-16 with another entity to fulfill the requirements of this section,
5-17 the additional cost incurred must be included as an administrative
5-18 expense for ratemaking purposes.
5-19 SECTION 5. Texas Insurance Code, Part I, Chapter 3, Life,
5-20 Accident and Health Insurance, is amended to add a new Article
5-21 3.101-4 of a new Subchapter L, Insurer Anti-fraud Programs, as
5-22 follows:
5-23 Art. 3.101-4. IMMUNITY FOR INSURER-TO INSURER INFORMATION
5-24 SHARING. (a) In the course of investigating possible insurance
5-25 fraud claims, an insurer or its contracting entity may share
5-26 information with other insurers or entities that have contracted
5-27 with insurers to provide anti-fraud investigative services.
6-1 (b) The sharing of this information between insurers and
6-2 their contracting entities under this statute will not subject the
6-3 parties that are sharing the information to liability for
6-4 defamation by the health care provider if the purpose of the
6-5 provision of information is for the purpose of reporting,
6-6 detecting, or preventing the commission of fraudulent insurance
6-7 acts and is made without malice, fraudulent intent, or bad faith.
6-8 (c) This section does not affect or modify any common law or
6-9 statutory privilege or immunity.
6-10 SECTION 6. Texas Health & Safety Code, Title 1, is amended
6-11 by adding Section 2.001, as part of a new chapter 2, Health Care
6-12 Fraud Programs as follows:
6-13 Sec. 2.001. PUBLIC POLICY. It shall be the policy of this
6-14 state to confront aggressively the problem of health care fraud in
6-15 Texas by facilitating the detection and prevention of fraud at its
6-16 source.
6-17 SECTION 7. Texas Health & Safety Code, Title 1, is amended
6-18 by adding Section 2.002. as part of a new chapter 2, Health Care
6-19 Fraud Programs as follows:
6-20 Sec. 2.002. DEFINITIONS. (a) "Insurer" means
6-21 (1) any life, health, & accident insurer; health &
6-22 accident insurer; or health insurer; health maintenance
6-23 organization; or any other company operating pursuant to Chapter 3,
6-24 10, 20, 20A, 22, or 26 of the Code and that is authorized to issue,
6-25 deliver, or issue for delivery in this state policies,
6-26 certificates, or contracts;
6-27 (2) any approved nonprofit health corporation that is
7-1 certified under Section 5.01(a), Medical Practice Act (Article
7-2 4495b, Vernon's Texas Civil Statutes), and that holds a certificate
7-3 of authority issued by the commissioner of insurance under Article
7-4 21.52F, Insurance Code;
7-5 (3) any entity that direct contracts with employers,
7-6 employees, labor unions, trade associations, or other groups to
7-7 provide health benefit coverage; or
7-8 (4) any insurer authorized by the Texas Department of
7-9 Insurance to write workers' compensation insurance in this state.
7-10 (b) "Health maintenance organization" means an organization
7-11 as defined in Article 20A.02 of the Code.
7-12 (c) "Health care provider" means any person or entity that
7-13 holds a license, certificate, or other form of authorization issued
7-14 by an agency, board, commission, or other governmental unit of this
7-15 state by which the holder is authorized to deliver, render, or
7-16 otherwise provide health care or medical services to the public;
7-17 this definition shall include but not be limited to all such
7-18 persons who hold such licenses, certificates, or other
7-19 authorizations issued pursuant to the provisions of Title 71 of the
7-20 Texas Revised Civil Statutes and Title 4 of the Texas Health &
7-21 Safety Code.
7-22 SECTION 8. Texas Health & Safety Code, Title 1, is amended
7-23 by adding Section 2.003. as part of a new chapter 2, Health Care
7-24 Fraud Programs as follows:
7-25 Sec. 2.003. UNPROFESSIONAL CONDUCT. (a) It shall
7-26 constitute unprofessional conduct and grounds for disciplinary
7-27 action for a provider to do any of the following in connection with
8-1 his or her professional activities:
8-2 (1) Knowingly present or cause to be presented any
8-3 false or fraudulent claim for the payment of a loss under a
8-4 contract of insurance
8-5 (2) Knowingly prepare, make, or subscribe any writing,
8-6 with intent to present or use the same, or to allow it to be
8-7 presented or used in support of any false or fraudulent claim
8-8 (3) Commit an offense that is a violation of Chapter
8-9 35 of the Texas Penal Code or is a violation of any similar statute
8-10 under the laws of other jurisdictions.
8-11 (b) In addition to such other provisions of civil or
8-12 criminal law, a violation of this provision shall constitute cause
8-13 for the suspension of the provider's license for one year upon a
8-14 first conviction for fraud in any jurisdiction and revocation of a
8-15 provider's license for a second conviction in any jurisdiction.
8-16 The first and second convictions need not occur in the same
8-17 jurisdiction for the revocation to be imposed.
8-18 SECTION 9. Texas Health & Safety Code, Title 1, is amended
8-19 by adding Section 2.004 as part of a new chapter 2, Health Care
8-20 Fraud Programs, as follows:
8-21 Sec. 2.004. NON-APPLICATION TO ERISA PLANS. No portion of
8-22 this chapter shall be construed to apply to those self-funded
8-23 health care plans that may be governed by the provisions of
8-24 Employee Retirement Income Security Act of 1974, as amended.
8-25 SECTION 10. Texas Insurance Code, Article 1.10D, is amended
8-26 by adding a new Section 3A, as follows:
8-27 Sec. 3A. INSURER ANTI-FRAUD INVESTIGATIVE REPORTS. (a) The
9-1 insurance fraud unit shall receive, review, and investigate in a
9-2 timely manner all insurer anti-fraud reports submitted pursuant to
9-3 the provisions of Texas Insurance Code, Article 3.101.
9-4 (b) The insurance fraud unit shall report in writing
9-5 annually to the commissioner the number of cases completed and
9-6 recommendations for new regulatory and statutory responses to the
9-7 types of fraudulent activities being encountered by the insurance
9-8 fraud unit.
9-9 SECTION 11. Texas Insurance Code, Article 1.10D, is amended
9-10 by adding a new Subsection 2(h), as follows:
9-11 (h) The insurance fraud unit shall be funded by an
9-12 anti-fraud assessment levied against insurers calculated as a
9-13 percentage of the total premium written during the previous
9-14 calendar year. The percentage and dates of payment shall be set by
9-15 the commissioner upon notice and hearing. The anti-fraud
9-16 assessment may not exceed 0.50 percent of gross premiums written by
9-17 the insurer. The insurer may take as a credit against any premium
9-18 tax obligations under the provisions of Article 4.11 of this code
9-19 the amount paid on the anti-fraud assessment. The anti-fraud
9-20 assessment shall be paid to the office of the comptroller of public
9-21 accounts.
9-22 SECTION 12. This Act takes effect January 1, 2000.
9-23 SECTION 13. The importance of this legislation and the
9-24 crowded condition of the calendars in both houses create an
9-25 emergency and an imperative public necessity that the
9-26 constitutional rule requiring bills to be read on three several
9-27 days in each house be suspended, and this rule is hereby suspended.