By Maxey H.B. No. 2315
76R8487 PB/KLA-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the investigation and prosecution of fraud in certain
1-3 benefit programs operated by the state; providing administrative
1-4 penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 ARTICLE 1. POWERS AND DUTIES OF THE EMPLOYEES
1-7 RETIREMENT SYSTEM OF TEXAS
1-8 SECTION 1.01. The Texas Employees Uniform Group Insurance
1-9 Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code) is
1-10 amended by amending Section 4B and by adding Sections 4D, 4E, 4F,
1-11 and 4G to read as follows:
1-12 Sec. 4B. ADJUDICATION OF CLAIMS; FRAUDULENT CLAIMS. (a)
1-13 The executive director of the Employees Retirement System of Texas
1-14 has exclusive authority to determine all questions relating to
1-15 enrollment in or payment of claims arising from programs or
1-16 coverages provided under authority of this Act, other than
1-17 questions relating to payment of claims by a health maintenance
1-18 organization.
1-19 (b) [(a-1)] If the executive director determines that a
1-20 participant has obtained coverage under any program provided under
1-21 the authority of this Act through the use of any material
1-22 misrepresentation or fraud or has fraudulently induced the
1-23 extension of coverage by making a material misrepresentation or by
1-24 supplying false information on any application for coverage or
2-1 related documentation or in any communication, the executive
2-2 director may rescind the coverage to the date of the inception of
2-3 the coverage or to the date of the fraudulent act or material
2-4 misrepresentation, deny any claim arising out of the fraudulently
2-5 induced coverage, or both. Remedies available to the executive
2-6 director under this subsection are in addition to and independent
2-7 of any expulsion action that may be instituted under Section 13A of
2-8 this Act.
2-9 (c) If the executive director determines that a health care
2-10 provider has obtained payments under any program provided under the
2-11 authority of this Act through a fraudulent insurance act, the
2-12 executive director shall take action against the provider as
2-13 provided by Section 4D of this Act.
2-14 (d) A decision of the executive director under Subsection
2-15 (b) or (c) of this section [subsection] may be appealed to the
2-16 trustee as provided by Subsection (f) [(c)] of this section.
2-17 (e) [(b)] The authority of the executive director to
2-18 determine questions includes the authority to determine that a
2-19 claim arising under any program administered by the trustee may
2-20 expose the program to double or multiple liability. The executive
2-21 director may cause suit concerning the claim to be filed in a
2-22 district court in Travis County on behalf of the Employees
2-23 Retirement System of Texas to protect the program from double or
2-24 multiple liability.
2-25 (f) [(c)] A decision by the executive director under
2-26 Subsection (a), (b), or (c) [(a-1)] of this section may be appealed
2-27 only to the trustee. An appeal to the trustee is a contested case
3-1 under the administrative procedure law, Chapter 2001, Government
3-2 Code. Standing to pursue an administrative appeal under this
3-3 section is limited to employees, annuitants, and covered dependents
3-4 participating in the Texas employees uniform group insurance
3-5 program and to health care providers providing services under that
3-6 program or, after the death of a participant or an affected
3-7 provider, to that person's [the participant's] estate, personal
3-8 representative, heirs at law, or designated beneficiary.
3-9 (g) [(d)] On appeal of a decision made by the trustee under
3-10 Subsection (f) [(c)] of this section, the standard of review is by
3-11 substantial evidence.
3-12 (h) [(e)] The trustee may delegate its duties to hear
3-13 appeals to the executive director.
3-14 (i) [(f)] The executive director may delegate the duties of
3-15 the executive director under this section to another person who is
3-16 employed by the Employees Retirement System of Texas.
3-17 (j) The trustee shall maintain a toll-free telephone number
3-18 for the receipt of complaints regarding fraudulent insurance acts
3-19 by participants or health care providers. The trustee shall
3-20 provide participants with information regarding the telephone
3-21 number during each annual enrollment period and periodically shall
3-22 notify employees of the telephone number by including information
3-23 with employee pay statements.
3-24 (k) The executive director shall implement annual training
3-25 classes for appropriate members of the staff of the trustee and
3-26 contractors or administering firms who process medical claims under
3-27 this Act to assist those persons in identifying potential
4-1 misrepresentation or fraud in the operation of the uniform group
4-2 insurance program established by this Act. The executive director
4-3 may contract with the Health and Human Services Commission or with
4-4 a private entity for the operation of the training classes.
4-5 (l) Each carrier and health care provider who participates
4-6 in the uniform group insurance program shall, as a condition of
4-7 that participation, cooperate fully in any investigation of a
4-8 fraudulent insurance act that is conducted by the executive
4-9 director or the Texas Department of Insurance, including providing
4-10 to the trustee timely access to patient medical records determined
4-11 by the trustee to be necessary to conduct an investigation.
4-12 Notwithstanding any other law regarding the confidentiality of
4-13 patient records, the trustee is entitled to access to patient
4-14 medical records for the limited purpose provided by this subsection
4-15 and is a "governmental agency" for purposes of Section 5.08,
4-16 Medical Practice Act (Article 4495b, Vernon's Texas Civil
4-17 Statutes). A medical record submitted to the trustee under this
4-18 subsection is confidential and is not subject to disclosure under
4-19 Chapter 552, Government Code.
4-20 Sec. 4D. FRAUDULENT INSURANCE ACTS BY PROVIDERS. (a) The
4-21 executive director shall investigate each complaint alleging a
4-22 fraudulent insurance act made by an annuitant, an employee, a
4-23 health care provider, or a carrier regarding a health care provider
4-24 participating in a health benefit plan operated under the uniform
4-25 group insurance program.
4-26 (b) If, after initial investigation, the executive director
4-27 determines that the complaint is unfounded, the executive director
5-1 shall terminate the investigation. If the executive director
5-2 determines that further action is warranted, the executive director
5-3 shall refer the complaint to the trustee for appropriate sanctions
5-4 or administrative action and shall provide information regarding
5-5 the complaint and the action taken to the Texas Department of
5-6 Insurance and the affected carrier.
5-7 (c) Sanctions against a health care provider may include:
5-8 (1) exclusion from participation as a provider in the
5-9 program;
5-10 (2) withholding during the pendency of an
5-11 investigation, payments to be made to the provider;
5-12 (3) recoupment of unauthorized payments from future
5-13 payments made to the provider; and
5-14 (4) restrictions on provider reimbursement.
5-15 (d) Administrative actions against a health care provider
5-16 may include:
5-17 (1) peer review of claims;
5-18 (2) required participation by the provider in
5-19 educational programs conducted by the trustee or the Texas
5-20 Department of Insurance regarding insurance fraud;
5-21 (3) required prior authorization for claims;
5-22 (4) review of payments made to the provider, both
5-23 before and after health care services are provided; and
5-24 (5) referral to the appropriate licensing agency for
5-25 further disciplinary action.
5-26 (e) The executive director shall use fraud detection
5-27 software to identify suspicious provider billing patterns in the
6-1 claims history files of the system. The executive director shall
6-2 report the results of the use of the software to the trustee and
6-3 the commissioner of insurance at least monthly.
6-4 Sec. 4E. CLAIMS AUDIT. (a) The executive director shall
6-5 conduct a quarterly audit of health care claims as provided by this
6-6 section.
6-7 (b) The executive director shall randomly select claims
6-8 submitted under the uniform group insurance program, in a
6-9 percentage set by the trustee of total claims made during the
6-10 preceding quarter, to audit the claims to determine the validity of
6-11 the claims. In performing the audit, the executive director shall
6-12 interview employees, annuitants, and dependents in person or by
6-13 telephone to ensure that the services were received. The audit
6-14 must also include a review of contextual patient information and
6-15 the patient's medical records.
6-16 (c) If the executive director determines on the basis of the
6-17 audit that a claim is fraudulent, the executive director shall
6-18 refer the claim to the trustee and the Texas Department of
6-19 Insurance for further investigation.
6-20 (d) The executive director may contract with a private
6-21 entity for the operation of the audit.
6-22 Sec. 4F. COOPERATION WITH INSURANCE DEPARTMENT; MEMORANDUM
6-23 OF UNDERSTANDING. (a) The trustee and the commissioner of
6-24 insurance by rule shall adopt guidelines and priorities for
6-25 referring cases of alleged fraudulent insurance acts by health care
6-26 providers participating in the program.
6-27 (b) The executive director shall maintain a detailed record
7-1 of those cases, including:
7-2 (1) the total number of cases referred to the Texas
7-3 Department of Insurance each fiscal year; and
7-4 (2) for each specific case:
7-5 (A) the type of fraudulent insurance act
7-6 alleged; and
7-7 (B) the date of the referral to the Texas
7-8 Department of Insurance.
7-9 (c) The trustee and the Texas Department of Insurance shall
7-10 enter into a memorandum of understanding regarding the processing
7-11 of referrals of suspected fraudulent insurance acts in the uniform
7-12 group insurance program and the payment of the costs of prosecution
7-13 of fraud cases.
7-14 Sec. 4G. ADMINISTRATIVE PENALTY. (a) The trustee may
7-15 impose an administrative penalty on a participant or health care
7-16 provider who commits a fraudulent insurance act in obtaining a
7-17 benefit or a payment under this Act.
7-18 (b) The amount of the penalty may not exceed $10,000, and
7-19 each day a violation continues or occurs is a separate violation
7-20 for the purpose of imposing a penalty. The amount shall be based
7-21 on:
7-22 (1) the seriousness of the violation, including the
7-23 nature, circumstances, extent, and gravity of the violation;
7-24 (2) the history of previous violations;
7-25 (3) the amount necessary to deter a future violation;
7-26 (4) efforts to correct the violation; and
7-27 (5) any other matter that justice may require.
8-1 (c) The enforcement of the penalty may be stayed during the
8-2 time the order is under judicial review if the person pays the
8-3 penalty to the clerk of the court or files a supersedeas bond with
8-4 the court in the amount of the penalty. A person who cannot afford
8-5 to pay the penalty or file the bond may stay the enforcement by
8-6 filing an affidavit in the manner required by the Texas Rules of
8-7 Civil Procedure for a party who cannot afford to file security for
8-8 costs, subject to the right of the board to contest the affidavit
8-9 as provided by those rules.
8-10 (d) The attorney general may sue to collect the penalty.
8-11 (e) Fifty percent of an administrative penalty collected
8-12 under this section shall be deposited in the employees life,
8-13 accident, and health insurance and benefits fund established under
8-14 Section 16 of this Act and may be spent by the trustee in
8-15 investigating and prosecuting fraudulent insurance acts committed
8-16 against the state employees uniform group benefits program. The
8-17 remainder of the administrative penalty shall be remitted to the
8-18 comptroller for deposit in the general revenue fund.
8-19 (f) A proceeding to impose the penalty is considered to be a
8-20 contested case under Chapter 2001, Government Code.
8-21 SECTION 1.02. Section 815.510, Government Code, is amended
8-22 to read as follows:
8-23 Sec. 815.510. ANNUAL REPORT. (a) The Employees Retirement
8-24 System of Texas shall submit a report not later than the 25th day
8-25 of the month following the end of each fiscal year to the governor,
8-26 the lieutenant governor, the speaker of the house of
8-27 representatives, the executive director of the State Pension Review
9-1 Board, the appropriate oversight committees of the house and
9-2 senate, and the Legislative Budget Board. The report shall
9-3 include:
9-4 (1) the following information regarding the
9-5 investments made by the retirement system:
9-6 (A) [(1)] the current end-of-fiscal-year market
9-7 value of the trust fund;
9-8 (B) [(2)] the asset allocations of the trust
9-9 fund expressed in percentages of stocks, fixed income, cash, or
9-10 other financial investments; and
9-11 (C) [(3)] the investment performance of the
9-12 trust fund utilizing accepted industry measurement standards; and
9-13 (2) a description of the activities conducted during
9-14 the preceding fiscal year by the retirement system and the Texas
9-15 Department of Insurance under Sections 4B, 4D, 4E, and 4F, Texas
9-16 Employees Uniform Group Insurance Benefits Act (Article 3.50-2,
9-17 Vernon's Texas Insurance Code), to combat fraudulent insurance acts
9-18 by health care providers in the operation of the state employees
9-19 health benefits program.
9-20 (b) The report required by this section is the only periodic
9-21 report of investments required to be made by the retirement system
9-22 other than a report required by [Section 815.108 or] the General
9-23 Appropriations Act.
9-24 ARTICLE 2. POWERS AND DUTIES OF
9-25 TEXAS DEPARTMENT OF INSURANCE
9-26 SECTION 2.01. Chapter 1, Insurance Code, is amended by
9-27 adding Article 1.64 to read as follows:
10-1 Art. 1.64. ADMINISTRATIVE ACTIONS AGAINST INSURANCE FRAUD IN
10-2 GROUP INSURANCE PROGRAM FOR STATE EMPLOYEES. (a) The department,
10-3 through the insurance fraud division and in cooperation with the
10-4 Employees Retirement System of Texas, shall bring an administrative
10-5 action under this article against a health care provider who
10-6 commits a fraudulent insurance act regarding the group insurance
10-7 program for state employees administered under the Texas Employees
10-8 Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
10-9 Texas Insurance Code) that results in payments to the provider that
10-10 are not authorized under that program.
10-11 (b) On determination that a health care provider has
10-12 committed a fraudulent insurance act subject to Subsection (a) of
10-13 this article, the commissioner may impose an administrative penalty
10-14 under Article 1.10E of this code in an amount not to exceed $10,000
10-15 plus twice the amount of the inappropriate payment.
10-16 (c) Notwithstanding Section 6, Article 1.10E of this code,
10-17 50 percent of an administrative penalty collected under this
10-18 article shall be deposited in the Texas Department of Insurance
10-19 operating fund established under Article 1.31A of this code and may
10-20 be spent by the department in investigating and prosecuting
10-21 fraudulent insurance acts committed against state-funded health
10-22 care programs. The remainder of the administrative penalty shall be
10-23 remitted to the comptroller for deposit in the general revenue
10-24 fund.
10-25 ARTICLE 3. QUI TAM ACTION
10-26 SECTION 3.01. Chapter 1, Insurance Code, is amended by
10-27 adding Article 1.65 to read as follows:
11-1 Art. 1.65. ACTION BY PRIVATE PERSON
11-2 Sec. 1. ACTION BY PRIVATE PERSON AUTHORIZED. (a) A person
11-3 may bring a civil action for a fraudulent insurance act committed
11-4 in violation of Section 4B, Texas Employees Uniform Group Insurance
11-5 Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code), for
11-6 the person and for the state. The action shall be brought in the
11-7 name of the state.
11-8 (b) In an action brought under this article, a person who
11-9 commits a fraudulent insurance act with respect to a claim under
11-10 the Texas Employees Uniform Group Insurance Benefits Act (Article
11-11 3.50-2, Vernon's Texas Insurance Code) is liable for the amount of
11-12 loss incurred by the uniform group insurance program or a carrier
11-13 who participates in the program as a result of the loss, plus an
11-14 amount equivalent to the amount of the administrative penalty that
11-15 may be assessed under that Act.
11-16 Sec. 2. INITIATION OF ACTION. (a) A person bringing an
11-17 action under this article shall serve a copy of the petition and a
11-18 written disclosure of substantially all material evidence and
11-19 information the person possesses on the attorney general in
11-20 compliance with the Texas Rules of Civil Procedure.
11-21 (b) The petition shall be filed in camera and shall remain
11-22 under seal until at least the 60th day after the date the petition
11-23 is filed. The petition may not be served on the defendant until
11-24 the court orders service on the defendant.
11-25 (c) The state may elect to intervene and proceed with the
11-26 action not later than the 60th day after the date the attorney
11-27 general receives the petition and the material evidence and
12-1 information.
12-2 (d) The state may, for good cause shown, move the court to
12-3 extend the time during which the petition remains under seal under
12-4 Subsection (b) of this section. A motion under this subsection may
12-5 be supported by affidavits or other submissions in camera.
12-6 (e) An action under this article may be dismissed before the
12-7 end of the period prescribed by Subsection (b) of this section, as
12-8 extended as provided by Subsection (d) of this section, if
12-9 applicable, only if the court and the attorney general consent in
12-10 writing to the dismissal and state their reasons for consenting.
12-11 Sec. 3. ANSWER BY DEFENDANT. A defendant is not required to
12-12 file an answer to a petition filed under this article until the
12-13 20th day after the date the petition is unsealed and served on the
12-14 defendant in compliance with the Texas Rules of Civil Procedure.
12-15 Sec. 4. STATE'S DECISION TO CONTINUE ACTION. Not later than
12-16 the last day of the period prescribed by Section 2(b) of this
12-17 article, as extended as provided by Section 2(d) of this article,
12-18 if applicable, the state shall notify the court that the state:
12-19 (1) will intervene and proceed with the action; or
12-20 (2) declines to intervene and proceed with the action.
12-21 Sec. 5. INTERVENTION BY OTHER PARTIES PROHIBITED. A person
12-22 other than the state may not intervene or bring a related action
12-23 based on the facts underlying a pending action brought under this
12-24 article.
12-25 Sec. 6. RIGHTS OF PARTIES IF STATE INTERVENES AND PROCEEDS
12-26 WITH ACTION. (a) If the state proceeds with the action, the state
12-27 has the primary responsibility for prosecuting the action and is
13-1 not bound by an act of the person bringing the action. The person
13-2 bringing the action has the right to continue as a party to the
13-3 action subject to the limitations set forth by this section.
13-4 (b) The state may dismiss the action notwithstanding the
13-5 objections of the person bringing the action if:
13-6 (1) the attorney general notifies the person that the
13-7 state has filed a motion to dismiss; and
13-8 (2) the court provides the person with an opportunity
13-9 for a hearing on the motion.
13-10 (c) The state may settle the action with the defendant
13-11 notwithstanding the objections of the person bringing the action if
13-12 the court determines, after a hearing, that the proposed settlement
13-13 is fair, adequate, and reasonable under all the circumstances. On
13-14 a showing of good cause, the hearing may be held in camera.
13-15 (d) On a showing by the state that unrestricted
13-16 participation during the course of the litigation by the person
13-17 bringing the action would interfere with or unduly delay the
13-18 state's prosecution of the case, or would be repetitious,
13-19 irrelevant, or for purposes of harassment, the court may impose
13-20 limitations on the person's participation, including:
13-21 (1) limiting the number of witnesses the person may
13-22 call;
13-23 (2) limiting the length of the testimony of witnesses
13-24 called by the person;
13-25 (3) limiting the person's cross-examination of
13-26 witnesses; or
13-27 (4) otherwise limiting the participation by the person
14-1 in the litigation.
14-2 (e) On a showing by the defendant that unrestricted
14-3 participation during the course of the litigation by the person
14-4 bringing the action would be for purposes of harassment or would
14-5 cause the defendant undue burden or unnecessary expense, the court
14-6 may limit the participation by the person in the litigation.
14-7 Sec. 7. RIGHTS OF PARTIES IF STATE DOES NOT INTERVENE AND
14-8 PROCEED WITH ACTION. (a) If the state elects not to proceed with
14-9 the action, the person bringing the action may conduct the action.
14-10 (b) If the state requests pleadings and deposition
14-11 transcripts, the parties shall serve the attorney general with
14-12 copies of all pleadings filed in the action and shall send the
14-13 attorney general copies of all deposition transcripts at the
14-14 state's expense.
14-15 (c) The court, without limiting the status and rights of the
14-16 person bringing the action, may permit the state to intervene at a
14-17 later date on a showing of good cause.
14-18 Sec. 8. STAY OF CERTAIN DISCOVERY. (a) Regardless of
14-19 whether the state proceeds with the action, on a showing by the
14-20 state that discovery by the person bringing the action would
14-21 interfere with the state's investigation or prosecution of a
14-22 criminal or civil matter arising out of the same facts, the court
14-23 may stay the discovery for a period not to exceed 60 days.
14-24 (b) The court shall hear a motion to stay discovery under
14-25 this section in camera.
14-26 (c) The court may extend the period prescribed by Subsection
14-27 (a) on a further showing in camera that the state has pursued the
15-1 criminal or civil investigation or proceedings with reasonable
15-2 diligence and that discovery in the civil action will interfere
15-3 with the ongoing criminal or civil investigation or proceedings.
15-4 Sec. 9. PURSUIT OF ALTERNATE REMEDY BY STATE.
15-5 Notwithstanding Section 1 of this article, the state may elect to
15-6 pursue the state's claim through any alternate remedy available to
15-7 the state, including any administrative proceeding to determine an
15-8 administrative penalty.
15-9 Sec. 10. AWARD TO PRIVATE PLAINTIFF. (a) If the state
15-10 proceeds with an action under this article, the person bringing the
15-11 action is entitled, except as provided by Subsection (b) of this
15-12 section, to receive at least 10 percent but not more than 25
15-13 percent of the proceeds of the action, depending on the extent to
15-14 which the person substantially contributed to the prosecution of
15-15 the action.
15-16 (b) If the court finds that the action is based primarily on
15-17 disclosures of specific information, other than information
15-18 provided by the person bringing the action, relating to allegations
15-19 or transactions in a criminal or civil proceeding, in a legislative
15-20 or administrative report, hearing, audit, or investigation, or from
15-21 the news media, the court may award to the person bringing the
15-22 action the amount the court considers appropriate but not more than
15-23 seven percent of the proceeds of the action. The court shall
15-24 consider the significance of the information and the role of the
15-25 person bringing the action in advancing the case to litigation.
15-26 (c) If the state does not proceed with an action under this
15-27 article, the person bringing the action or settling the claim is
16-1 entitled to receive an amount that the court decides is reasonable
16-2 for collecting the civil penalty and damages. The amount may not
16-3 be less than 25 percent or more than 30 percent of the proceeds of
16-4 the action.
16-5 (d) A payment to a person under this section shall be made
16-6 from the proceeds of the action. A person receiving a payment
16-7 under this section is also entitled to receive an amount for
16-8 reasonable expenses that the court finds to have been necessarily
16-9 incurred, plus reasonable attorney's fees and costs. Expenses,
16-10 fees, and costs shall be awarded against the defendant.
16-11 (e) In this section, "proceeds of the action" includes
16-12 proceeds of a settlement of the action.
16-13 Sec. 11. REDUCTION OF AWARD. (a) Regardless of whether the
16-14 state proceeds with the action, if the court finds that the action
16-15 was brought by a person who planned and initiated the violation on
16-16 which the action was brought, the court may, to the extent the
16-17 court considers appropriate, reduce the share of the proceeds of
16-18 the action the person would otherwise receive under Section 10 of
16-19 this article, taking into account the person's role in advancing
16-20 the case to litigation and any relevant circumstances pertaining to
16-21 the violation.
16-22 (b) If the person bringing the action is convicted of
16-23 criminal conduct arising from the person's fraudulent insurance
16-24 act, the court shall dismiss the person from the civil action and
16-25 the person may not receive any share of the proceeds of the action.
16-26 A dismissal under this subsection does not prejudice the right of
16-27 the state to continue the action.
17-1 Sec. 12. AWARD TO DEFENDANT FOR FRIVOLOUS ACTION. (a)
17-2 Chapter 10, Civil Practice and Remedies Code, applies in an action
17-3 under this article in which the state does not proceed with the
17-4 action and the person originally bringing the action conducts the
17-5 action.
17-6 (b) Chapter 105, Civil Practice and Remedies Code, applies
17-7 in an action under this article in which the state conducts the
17-8 action.
17-9 Sec. 13. CERTAIN ACTIONS BARRED. (a) A person may not
17-10 bring an action under this article that is based on allegations or
17-11 transactions that are the subject of a pending civil suit or an
17-12 administrative penalty proceeding in which the state is a party.
17-13 (b) A person may not bring an action under this article that
17-14 is based on the public disclosure of allegations or transactions in
17-15 a criminal or civil hearing, in a legislative or administrative
17-16 report, hearing, audit, or investigation, or from the news media,
17-17 unless the person bringing the action is an original source of the
17-18 information. In this subsection, "original source" means an
17-19 individual who has direct and independent knowledge of the
17-20 information on which the allegations are based and has voluntarily
17-21 provided the information to the state before filing an action under
17-22 this article that is based on the information.
17-23 Sec. 14. STATE NOT LIABLE FOR CERTAIN EXPENSES. The state
17-24 is not liable for expenses that a person incurs in bringing an
17-25 action under this section.
17-26 Sec. 15. RETALIATION BY EMPLOYER AGAINST PERSON BRINGING
17-27 SUIT PROHIBITED. (a) A person who is discharged, demoted,
18-1 suspended, threatened, harassed, or in any other manner
18-2 discriminated against in the terms of employment by the person's
18-3 employer because of a lawful act taken by the person in furtherance
18-4 of an action under this article, including investigation for,
18-5 initiation of, testimony for, or assistance in an action filed or
18-6 to be filed under this article, is entitled to:
18-7 (1) reinstatement with the same seniority status the
18-8 person would have had but for the discrimination; and
18-9 (2) an amount equal to not less than:
18-10 (A) two times the amount of back pay;
18-11 (B) interest on the back pay; and
18-12 (C) compensation for any special damages
18-13 sustained as a result of the discrimination, including litigation
18-14 costs and reasonable attorney's fees.
18-15 (b) A person may bring an action in a district court for the
18-16 relief provided in this section.
18-17 ARTICLE 4. POWERS AND DUTIES OF THE STATE OFFICE OF
18-18 RISK MANAGEMENT
18-19 SECTION 4.01. Chapter 412, Labor Code, is amended by adding
18-20 Subchapter G to read as follows:
18-21 SUBCHAPTER G. FRAUD INVESTIGATION AND PREVENTION
18-22 REGARDING MEDICAL BENEFITS
18-23 Sec. 412.061. DEFINITIONS. In this subchapter:
18-24 (1) "Fraudulent act" means any act that violates a
18-25 penal law and is committed or attempted to be committed to obtain
18-26 or deny a workers' compensation medical benefit or payment for a
18-27 service provided in conjunction with a medical benefit.
19-1 (2) "Program" means the workers' compensation program
19-2 for state employees administered under Chapter 501.
19-3 Sec. 412.062. CLAIM REVIEW BY OFFICE. (a) The office shall
19-4 conduct periodic reviews of claims for medical benefits as
19-5 necessary to determine the medical necessity and appropriateness of
19-6 the provided services.
19-7 (b) In addition to the periodic reviews under Subsection
19-8 (a), the office shall conduct a claim review on each claim:
19-9 (1) that involves the receipt of psychiatric services;
19-10 or
19-11 (2) in which the use of prescription drugs appears
19-12 inappropriate.
19-13 (c) The office may withhold payments to be made to a health
19-14 care provider who does not provide, in the manner prescribed by
19-15 the risk management board, documentation requested by the office
19-16 necessary to verify a medical service related to a claim.
19-17 Sec. 412.063. CLAIMS AUDIT. (a) The director shall conduct
19-18 an annual audit of claims for medical benefits as provided by this
19-19 section.
19-20 (b) The director shall randomly select claims submitted
19-21 under the program for medical benefits, in a percentage of total
19-22 claims made during the year set by the board as necessary to obtain
19-23 a statistically significant sample, and shall audit the claims to
19-24 determine the validity of the claims. In performing the audit, the
19-25 director shall interview the claimant in person or by telephone to
19-26 ensure that the health care services were received. The audit must
19-27 also include a review of the claimant's medical history and medical
20-1 records.
20-2 (c) The director may contract with a private entity for
20-3 performance of the audit.
20-4 Sec. 412.064. PREPAYMENT AUDIT. The board by rule shall
20-5 require each person who processes claims for the office to
20-6 implement a prepayment audit procedure that:
20-7 (1) compares the diagnosis code submitted on the bill
20-8 for health care services to the code for the injured body part; and
20-9 (2) verifies the appropriateness of the diagnosis code
20-10 for the health care services provided.
20-11 Sec. 412.065. TOLL-FREE TELEPHONE NUMBER. (a) The office
20-12 shall maintain a toll-free telephone number for the receipt of
20-13 complaints regarding fraudulent acts by claimants or health care
20-14 providers.
20-15 (b) The director shall provide claimants with information
20-16 regarding the telephone number when a workers' compensation claim
20-17 is submitted and periodically shall notify state employees of the
20-18 telephone number in a manner determined to be appropriate by the
20-19 office.
20-20 Sec. 412.066. TRAINING CLASSES IN FRAUD PREVENTION.
20-21 (a) The director shall implement annual training classes for
20-22 appropriate members of the staff of state agencies and contractors
20-23 or administering firms who process workers' compensation claims
20-24 submitted under the program for medical benefits to assist those
20-25 persons in identifying potential misrepresentation or fraud in the
20-26 operation of the program.
20-27 (b) The director may contract with the Health and Human
21-1 Services Commission or with a private entity for the operation of
21-2 the training classes.
21-3 Sec. 412.067. ACTION BY OFFICE; COOPERATION REQUIRED.
21-4 (a) If the office determines that a health care provider has
21-5 obtained payments under the program through a fraudulent act, the
21-6 office shall take action against the provider as provided by this
21-7 subchapter. The office shall report any action taken in writing to
21-8 the commission.
21-9 (b) Each state agency and health care provider who
21-10 participates in the program shall, as a condition of that
21-11 participation, cooperate fully in any investigation of a fraudulent
21-12 act that is conducted by the director, including providing to the
21-13 director timely access to patient medical records determined by the
21-14 director to be necessary to conduct an investigation.
21-15 (c) Notwithstanding any other law regarding the
21-16 confidentiality of patient records, the director is entitled to
21-17 access to patient medical records for the limited purpose provided
21-18 by this subchapter and is a "governmental agency" for purposes of
21-19 Section 5.08, Medical Practice Act (Article 4495b, Vernon's Texas
21-20 Civil Statutes). A medical record submitted to the director under
21-21 this subsection is confidential and is not subject to disclosure
21-22 under Chapter 552, Government Code.
21-23 Sec. 412.068. FRAUDULENT ACTS BY PROVIDERS. (a) The
21-24 director shall investigate each complaint alleging a fraudulent act
21-25 made by a claimant, a health care provider, or a state agency
21-26 regarding a health care provider who is participating in the
21-27 program.
22-1 (b) If, after initial investigation, the director determines
22-2 that the complaint is unfounded, the director shall terminate the
22-3 investigation. If the director determines that further action is
22-4 warranted, the director shall refer the complaint to the risk
22-5 management board for appropriate sanctions or administrative action
22-6 and shall provide information regarding the complaint and the
22-7 action taken to the commission.
22-8 (c) Sanctions against a health care provider may include:
22-9 (1) exclusion from participation as a provider in the
22-10 program;
22-11 (2) withholding during the pendency of an
22-12 investigation payments to be made to the provider;
22-13 (3) recoupment of unauthorized payments from future
22-14 payments made to the provider; and
22-15 (4) restrictions on provider reimbursement.
22-16 Sec. 412.069. ADMINISTRATIVE PENALTY. (a) The risk
22-17 management board may impose an administrative penalty on a health
22-18 care provider or claimant who commits a fraudulent act in obtaining
22-19 a payment or a medical benefit under Chapter 501.
22-20 (b) The amount of the penalty may not exceed $10,000, and
22-21 each day a violation continues or occurs is a separate violation
22-22 for the purpose of imposing a penalty. The amount shall be based
22-23 on:
22-24 (1) the seriousness of the violation, including the
22-25 nature, circumstances, extent, and gravity of the violation;
22-26 (2) the history of previous violations;
22-27 (3) the amount necessary to deter a future violation;
23-1 (4) efforts to correct the violation; and
23-2 (5) any other matter that justice may require.
23-3 (c) The enforcement of the penalty may be stayed during the
23-4 time the order is under judicial review if the person pays the
23-5 penalty to the clerk of the court or files a supersedeas bond with
23-6 the court in the amount of the penalty. A person who cannot afford
23-7 to pay the penalty or file the bond may stay the enforcement by
23-8 filing an affidavit in the manner required by the Texas Rules of
23-9 Civil Procedure for a party who cannot afford to file security for
23-10 costs, subject to the right of the board to contest the affidavit
23-11 as provided by those rules.
23-12 (d) The attorney general may sue to collect the penalty.
23-13 (e) Except as otherwise provided by this subsection, an
23-14 administrative penalty collected under this section shall be
23-15 transmitted by the office to the comptroller for deposit in the
23-16 general revenue fund. The comptroller shall deposit an amount not
23-17 to exceed $200,000 per state fiscal biennium in the state workers'
23-18 compensation account in the general revenue fund to be used for the
23-19 detection and prosecution of fraud under this subchapter.
23-20 (f) A proceeding to impose the penalty is considered to be a
23-21 contested case under Chapter 2001, Government Code.
23-22 ARTICLE 5. POWERS AND DUTIES OF THE TEXAS DEPARTMENT OF
23-23 HUMAN SERVICES AND THE HEALTH AND HUMAN SERVICES COMMISSION
23-24 SECTION 5.01. Subchapter B, Chapter 32, Human Resources
23-25 Code, is amended by adding Sections 32.0242 and 32.0243 to read as
23-26 follows:
23-27 Sec. 32.0242. VERIFICATION OF CERTAIN INFORMATION. (a) The
24-1 department shall verify the applicant's residential address on
24-2 determination that an applicant is eligible for medical assistance.
24-3 (b) The department may not accept a post office box number
24-4 in lieu of a residential address for an applicant unless the
24-5 applicant provides an alternative physical address at which the
24-6 applicant can be contacted and that can be verified by the
24-7 department.
24-8 Sec. 32.0243. PERIODIC REVIEW OF ELIGIBILITY FOR CERTAIN
24-9 RECIPIENTS. (a) The department, in cooperation with the United
24-10 States Social Security Administration, shall periodically review
24-11 the eligibility of a recipient of medical assistance who is
24-12 eligible on the basis of the recipient's eligibility for
24-13 Supplemental Security Income (SSI) benefits under 42 U.S.C.
24-14 Section 1381 et seq., as amended.
24-15 (b) In reviewing the eligibility of a recipient as required
24-16 by Subsection (a), the department shall ensure that only recipients
24-17 who reside in this state and who continue to be eligible for
24-18 Supplemental Security Income (SSI) benefits under 42 U.S.C.
24-19 Section 1381 et seq., as amended, remain eligible for medical
24-20 assistance.
24-21 SECTION 5.02. Section 403.026(a), Government Code, as added
24-22 by Chapter 1153, Acts of the 75th Legislature, Regular Session,
24-23 1997, is amended to read as follows:
24-24 (a) The comptroller shall conduct a study each biennium to
24-25 determine:
24-26 (1) the number and type of fraudulent claims for
24-27 medical or health care benefits submitted:
25-1 (A) [(1)] under the state Medicaid program;
25-2 (B) [(2)] under group health insurance programs
25-3 administered through the Employees Retirement System of Texas for
25-4 active and retired state employees; or
25-5 (C) [(3)] by or on behalf of a state employee
25-6 and administered by the attorney general under Chapter 501, Labor
25-7 Code; and
25-8 (2) the need for changes to the eligibility system
25-9 used under the state Medicaid program.
25-10 SECTION 5.03. Section 531.102, Government Code, is amended
25-11 by adding Subsections (e) and (f) to read as follows:
25-12 (e) In setting the priorities for the office as required by
25-13 Subsection (b), the commission shall assign the highest priority
25-14 for investigation of potential fraud to claims submitted for
25-15 reimbursement for:
25-16 (1) outpatient hospital services;
25-17 (2) ancillary services;
25-18 (3) emergency room services; and
25-19 (4) home health care services.
25-20 (f) The commission by rule shall set specific claims
25-21 criteria that, when met, require the office to begin an
25-22 investigation. The claims criteria must be based on a total
25-23 dollar amount or a total number of claims submitted for services to
25-24 a particular recipient during a specified amount of time that
25-25 indicates a high potential for fraud.
25-26 SECTION 5.04. Subchapter C, Chapter 531, Government Code, is
25-27 amended by adding Sections 531.109, 531.110, and 531.111 to read as
26-1 follows:
26-2 Sec. 531.109. SELECTION AND REVIEW OF CLAIMS. (a) The
26-3 commission shall annually select and review a random, statistically
26-4 valid sample of all claims for reimbursement under the state
26-5 Medicaid program, including the vendor drug program, for potential
26-6 cases of fraud, waste, or abuse.
26-7 (b) In conducting the annual review of claims under
26-8 Subsection (a), the commission must directly contact a recipient by
26-9 telephone or in person, or both, to verify that the services for
26-10 which a claim for reimbursement was submitted by a provider were
26-11 actually provided to the recipient.
26-12 (c) Based on the results of the annual review of claims, the
26-13 commission shall determine the types of claims at which commission
26-14 resources for fraud and abuse detection should be primarily
26-15 directed.
26-16 Sec. 531.110. ELECTRONIC DATA MATCHING PROGRAM. (a) The
26-17 commission shall conduct electronic data matches for a recipient of
26-18 assistance under the state Medicaid program at least quarterly to
26-19 verify the identity, income, employment status, and other factors
26-20 that affect the eligibility of the recipient.
26-21 (b) To verify eligibility of a recipient for assistance
26-22 under the state Medicaid program, the electronic data matching must
26-23 match information provided by the recipient with information
26-24 contained in databases maintained by:
26-25 (1) the Texas Workers' Compensation Commission;
26-26 (2) the Texas Workforce Commission;
26-27 (3) the Texas Department of Criminal Justice;
27-1 (4) the Internal Revenue Service;
27-2 (5) the United States Social Security Administration;
27-3 and
27-4 (6) states that border this state.
27-5 (c) The Texas Department of Human Services shall cooperate
27-6 with the commission by providing data or any other assistance
27-7 necessary to conduct the electronic data matches required by this
27-8 section.
27-9 (d) The commission may contract with a public or private
27-10 entity to conduct the electronic data matches required by this
27-11 section.
27-12 (e) The commission by rule shall establish procedures to
27-13 verify the electronic data matches conducted under this section.
27-14 Not later than the 20th day after the date the electronic data
27-15 match is verified, the Texas Department of Human Services shall
27-16 remove from eligibility a recipient who is determined to be
27-17 ineligible for assistance under the state Medicaid program.
27-18 (f) The commission shall report biennially to the
27-19 legislature the results of the electronic data matching program.
27-20 The report must include a summary of the number of applicants who
27-21 were removed from eligibility for assistance under the state
27-22 Medicaid program as a result of an electronic data match conducted
27-23 under this section.
27-24 Sec. 531.111. FRAUD DETECTION TECHNOLOGY. The commission
27-25 may contract with a contractor who specializes in developing
27-26 technology capable of identifying patterns of fraud exhibited by
27-27 Medicaid recipients to:
28-1 (1) develop and implement the fraud detection
28-2 technology; and
28-3 (2) determine if a pattern of fraud by Medicaid
28-4 recipients is present in the recipients' eligibility files
28-5 maintained by the Texas Department of Human Services.
28-6 ARTICLE 6. TRANSITION
28-7 SECTION 6.01. The Employees Retirement System of Texas shall
28-8 implement the toll-free telephone number required under Section
28-9 4B(j), Texas Employees Uniform Group Insurance Benefits Act
28-10 (Article 3.50-2, Vernon's Texas Insurance Code), as added by this
28-11 Act, not later than January 1, 2000.
28-12 SECTION 6.02. The Employees Retirement System of Texas shall
28-13 implement the training classes required under Section 4B(k), Texas
28-14 Employees Uniform Group Insurance Benefits Act (Article 3.50-2,
28-15 Vernon's Texas Insurance Code), as added by this Act, not later
28-16 than January 1, 2000.
28-17 SECTION 6.03. (a) The executive director of the Employees
28-18 Retirement System of Texas shall use fraud detection software as
28-19 required under Section 4D(e), Texas Employees Uniform Group
28-20 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
28-21 Code), as added by this Act, not later than September 1, 2000.
28-22 (b) Not later than March 1, 2000, the Employees Retirement
28-23 System of Texas shall analyze the fraud detection program used by
28-24 the Health and Human Services Commission under Chapter 22, Human
28-25 Resources Code, for the detection of fraud in the Medicaid program.
28-26 If the retirement system determines that participation in that
28-27 program would result in compliance with the requirement adopted
29-1 under Section 4D(e), Texas Employees Uniform Group Insurance
29-2 Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code), as
29-3 added by this Act, with greater efficiency and less cost than
29-4 implementation of an independent program, the retirement system
29-5 shall enter into a memorandum of understanding with the Health and
29-6 Human Services Commission regarding that participation not later
29-7 than July 1, 2000, and shall pay a proportionate share of the
29-8 operation of the fraud detection program.
29-9 SECTION 6.04. The Employees Retirement System of Texas and
29-10 the Texas Department of Insurance shall enter into the memorandum
29-11 of understanding required under Section 4F, Texas Employees Uniform
29-12 Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas
29-13 Insurance Code), as added by this Act, not later than January 1,
29-14 2000.
29-15 SECTION 6.05. The State Office of Risk Management shall
29-16 implement the toll-free telephone number required under Section
29-17 412.065, Labor Code, as added by this Act, not later than January
29-18 1, 2000.
29-19 SECTION 6.06. The State Office of Risk Management shall
29-20 implement the training classes required under Section 412.066,
29-21 Labor Code, as added by this Act, not later than January 1, 2000.
29-22 SECTION 6.07. The risk management board of the State Office
29-23 of Risk Management shall conduct a study regarding the use of fraud
29-24 detection software. The study may include an analysis of the fraud
29-25 detection program used by the Health and Human Services Commission
29-26 under Chapter 22, Human Resources Code, for the detection of fraud
29-27 in the Medicaid program. The risk management board shall report
30-1 the results of its study to the 77th Legislature not later than
30-2 February 1, 2001.
30-3 SECTION 6.08. The Health and Human Services Commission, in
30-4 cooperation with the office of inspector general of the Texas
30-5 Department of Human Services, shall study and consider for
30-6 implementation fraud detection technology or any other technology
30-7 that can identify information in the eligibility file of a Medicaid
30-8 recipient that indicates potential fraud and the need for further
30-9 investigation.
30-10 SECTION 6.09. (a) Not later than December 31, 1999, the
30-11 Texas Department of Health shall contract with a contractor who
30-12 specializes in Medicaid claims payment systems to perform tests on
30-13 a Medicaid claims payment system considered for implementation by
30-14 the department to:
30-15 (1) ensure the smooth and timely payment of claims;
30-16 (2) ensure accuracy of claims payments; and
30-17 (3) reveal inconsistencies in the payment system.
30-18 (b) The contract under Subsection (a) must require the
30-19 contractor to perform initial tests on a new Medicaid claims
30-20 payment system before implementation and to perform subsequent
30-21 tests on the system before implementation of any future change to
30-22 the operation of the system.
30-23 SECTION 6.10. (a) Not later than January 1, 2000, the Texas
30-24 Department of Human Services shall develop a Medicaid eligibility
30-25 confirmation letter that is not easily duplicated. The department
30-26 shall begin using the confirmation letter in place of the Medicaid
30-27 eligibility confirmation letter used on the effective date of this
31-1 Act to reduce fraudulent use of duplicate letters to receive
31-2 assistance under the state Medicaid program. The confirmation
31-3 letter developed under this subsection must be used until a
31-4 permanent system for eligibility confirmation is implemented as
31-5 required by this section.
31-6 (b) The Texas Department of Human Services shall identify
31-7 and consider for implementation alternative methods, including
31-8 electronic methods, to the method used by a recipient to prove
31-9 eligibility under the state Medicaid program to a provider on the
31-10 effective date of this Act. In identifying alternative methods,
31-11 the department shall consider the methods for proving eligibility
31-12 implemented by other states.
31-13 (c) Not later than September 1, 2000, the Texas Department
31-14 of Human Services shall implement a permanent system for Medicaid
31-15 eligibility confirmation for use by a recipient to prove
31-16 eligibility under the state Medicaid program to a provider. The
31-17 system must be designed to reduce the potential for fraudulent
31-18 claims of eligibility.
31-19 SECTION 6.11. If before implementing any provision of this
31-20 Act a state agency determines that a waiver or authorization from a
31-21 federal agency is necessary for implementation of that provision,
31-22 the agency affected by the provision shall request the waiver or
31-23 authorization and may delay implementing that provision until the
31-24 waiver or authorization is granted.
31-25 SECTION 6.12. This Act applies only to an administrative
31-26 penalty assessed for conduct that occurs on or after the effective
31-27 date of this Act. An administrative penalty assessed for conduct
32-1 that occurred before the effective date of this Act is governed by
32-2 the law as it existed immediately before the effective date of this
32-3 Act, and that law is continued in effect for that purpose.
32-4 SECTION 6.13. Article 1.65, Insurance Code, as added by this
32-5 Act, applies only to a cause of action that accrues on or after the
32-6 effective date of this Act. A cause of action that accrues before
32-7 that date is governed by the law as it existed immediately before
32-8 the effective date of this Act, and that law is continued in effect
32-9 for that purpose.
32-10 ARTICLE 7. EFFECTIVE DATE; EMERGENCY
32-11 SECTION 7.01. This Act takes effect September 1, 1999.
32-12 SECTION 7.02. The importance of this legislation and the
32-13 crowded condition of the calendars in both houses create an
32-14 emergency and an imperative public necessity that the
32-15 constitutional rule requiring bills to be read on three several
32-16 days in each house be suspended, and this rule is hereby suspended.