By Eiland H.B. No. 3361
76R1418 DB-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the control of health insurance fraud; providing
1-3 administrative penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 1.10D, Insurance Code, is amended by
1-6 adding Section 3A to read as follows:
1-7 Sec. 3A. INSURER ANTI-FRAUD INVESTIGATIVE REPORTS. (a) The
1-8 insurance fraud unit shall receive, review, and investigate in a
1-9 timely manner insurer anti-fraud reports submitted under Subchapter
1-10 K, Chapter 3, of this code.
1-11 (b) The insurance fraud unit shall report annually in
1-12 writing to the commissioner the number of cases completed and any
1-13 recommendations for new regulatory and statutory responses to the
1-14 types of fraudulent activities encountered by the insurance fraud
1-15 unit.
1-16 SECTION 2. Chapter 3, Insurance Code, is amended by adding
1-17 Subchapter K to read as follows:
1-18 SUBCHAPTER K. INSURER ANTI-FRAUD PROGRAMS
1-19 Art. 3.97-1. DEFINITIONS. In this subchapter:
1-20 (1) "Health care provider" means a person who
1-21 furnishes services under a license, certificate, registration, or
1-22 other authority issued by this state or another state to diagnose,
1-23 prevent, alleviate, or cure a human illness or injury.
1-24 (2) "Insurance fraud unit" means the unit described in
2-1 Article 1.10D of this code.
2-2 (3) "Insurer" means:
2-3 (A) a health insurer, including a life, health,
2-4 and accident insurer, or a health and accident insurer, a health
2-5 maintenance organization, or any other person operating under
2-6 Chapter 3, 10, 20, 20A, 22, or 26 of this code who is authorized to
2-7 issue, issue for delivery, or deliver policies, certificates, or
2-8 contracts of insurance in this state;
2-9 (B) an approved nonprofit health corporation
2-10 that:
2-11 (i) is certified under Section 5.01(a),
2-12 Medical Practice Act (Article 4495b, Vernon's Texas Civil
2-13 Statutes); and
2-14 (ii) holds a certificate of authority
2-15 issued by the commissioner under Article 21.52F of this code;
2-16 (C) a person that direct contracts with
2-17 employers, employees, labor unions, trade associations, or other
2-18 groups to provide health benefit coverage; or
2-19 (D) an insurer authorized by the department to
2-20 write workers' compensation insurance in this state.
2-21 Art. 3.97-2. NOTICE OF PENALTY FOR FALSE OR FRAUDULENT
2-22 CLAIMS; DISPLAY ON FORMS. (a) If an insurer provides a form for a
2-23 person to use to make a claim against a policy issued by the
2-24 insurer or to give notice of a person's intent to make a claim
2-25 against a policy issued by the insurer, the insurer shall provide
2-26 on that form, in comparative prominence with the other content on
2-27 the form, a statement as follows: "Any person who knowingly
3-1 presents a false or fraudulent claim for the payment of a loss is
3-2 guilty of a crime and may be subject to fines and confinement in
3-3 state prison."
3-4 (b) The statement required in Subsection (a) of this article
3-5 must be preceded by the words: "For your protection, Texas law
3-6 requires the following to appear on this form."
3-7 Art. 3.97-3. ADMINISTRATIVE ACTION FOR FRAUD. (a) The
3-8 insurance fraud unit or an insurer may request that the
3-9 commissioner conduct a hearing under Chapter 2001, Government Code,
3-10 to determine whether a health care provider has committed fraud in
3-11 relation to that insurer.
3-12 (b) If the commissioner determines in a hearing conducted
3-13 under Subsection (a) of this article that a health care provider
3-14 has committed fraud, the commissioner may assess an administrative
3-15 penalty against the health care provider under the criteria and
3-16 procedures adopted under Article 1.10E of this code except the
3-17 amount collected shall be remitted to the comptroller for deposit
3-18 into the health insurance fraud recovery account.
3-19 (c) An administrative penalty under this article is in
3-20 addition to other penalties and remedies provided by law.
3-21 (d) If the commissioner determines in a hearing conducted
3-22 under Subsection (a) of this article that an insurer has been
3-23 defrauded by the action of the health care provider, the
3-24 commissioner, in addition to an administrative penalty imposed
3-25 under Subsection (b) of this article, may order:
3-26 (1) the defrauded insurer to retain the amounts that
3-27 would otherwise be owed to the health care provider under the
4-1 policy if the claim had been valid; and
4-2 (2) the health insurance provider to return any
4-3 amounts obtained under a policy as a result of the fraudulent
4-4 claim.
4-5 (e) The commissioner and the insurance fraud unit, on the
4-6 detection of fraud committed by a health care provider, shall
4-7 notify the agency that regulates the health care provider for
4-8 practice in this state and the attorney general of the fraud
4-9 committed by the health care provider.
4-10 Art. 3.97-4. HEALTH INSURANCE FRAUD RECOVERY ACCOUNT. (a)
4-11 The health insurance fraud recovery account is an account in the
4-12 general revenue fund.
4-13 (b) The health insurance fraud recovery account consists of
4-14 legislative appropriations, gifts and grants received under
4-15 Subsection (c) of this article, and other money required by law to
4-16 be deposited in the account.
4-17 (c) The department may solicit and accept gifts in kind and
4-18 grants of money from the federal government, local governments,
4-19 private corporations, or other persons to be used for the purposes
4-20 of this subchapter.
4-21 (d) The account is exempt from the application of Section
4-22 403.095, Government Code.
4-23 (e) Income from the account remains in the account.
4-24 Art. 3.97-5. USE OF MONEY IN HEALTH INSURANCE FRAUD RECOVERY
4-25 ACCOUNT. (a) Money deposited to the credit of the health
4-26 insurance fraud recovery account may be used only by the
4-27 commissioner to defray the expenses of the insurance fraud unit.
5-1 (b) The commissioner shall report annually to the governor,
5-2 the lieutenant governor, the speaker of the house of
5-3 representatives, and the legislative budget board regarding amounts
5-4 deposited to and expended from the account.
5-5 Art. 3.97-6. INSURER ANTI-FRAUD INVESTIGATIVE UNITS. (a)
5-6 In this article, "division" means one or more employees whose
5-7 principal responsibilities are the investigation and disposition of
5-8 fraudulent claims.
5-9 (b) An insurer that writes $10 million or more in direct
5-10 premiums in a calendar year shall, for the following calendar year:
5-11 (1) establish and maintain a division within the
5-12 insurer to investigate fraudulent claims by insureds or by persons
5-13 making claims against policies held by insureds; or
5-14 (2) contract for the investigation of fraudulent
5-15 claims by insureds or by persons making claims against policies
5-16 held by insureds.
5-17 (c) An insurer to whom Subsection (b) of this article
5-18 applies shall adopt an anti-fraud plan and annually file that plan
5-19 with the insurance fraud unit. The plan must include:
5-20 (1) a description of the insurer's procedures for
5-21 detecting and investigating possible fraudulent insurance acts;
5-22 (2) a description of the insurer's procedures for the
5-23 mandatory reporting of possible fraudulent insurance acts to the
5-24 insurance fraud unit;
5-25 (3) a description of the insurer's plan for anti-fraud
5-26 education and training of its claims adjusters or other personnel;
5-27 (4) the names, addresses, telephone numbers, and fax
6-1 numbers of the persons assigned by the insurer to staff the
6-2 insurer's anti-fraud division;
6-3 (5) a written description or chart outlining the
6-4 organizational arrangement of the insurer's anti-fraud personnel
6-5 who are responsible for the investigation and reporting of possible
6-6 fraudulent insurance acts; and
6-7 (6) if a fraud division is established under this
6-8 article, a detailed description of the division and the results of
6-9 its investigations.
6-10 (d) If an insurer elects to contract for the investigation
6-11 of fraudulent claims against policies held by insureds under
6-12 Subsection (b)(2) of this article, the insurer shall file with the
6-13 insurance fraud unit:
6-14 (1) a copy of the written contract;
6-15 (2) the names, addresses, telephone numbers, and fax
6-16 numbers of the principals of the entity with which the insurer has
6-17 contracted; and
6-18 (3) the qualifications of the principals of the entity
6-19 with which the insurer has contracted.
6-20 (e) The commissioner shall determine by rule the terms of
6-21 the contracts between insurers and contracting entities and the
6-22 qualifications of entities with which insurers may contract under
6-23 this subchapter.
6-24 (f) An insurer to whom Subsection (b) of this article does
6-25 not apply shall adopt an anti-fraud plan and annually file that
6-26 plan with the insurance fraud unit. The plan must include:
6-27 (1) a description of the insurer's procedures for
7-1 detecting and investigating possible fraudulent insurance acts; and
7-2 (2) a description of the insurer's procedures for the
7-3 mandatory reporting of possible fraudulent insurance acts to the
7-4 insurance fraud unit.
7-5 (g) If an insurer hires additional employees or contracts
7-6 with another entity to fulfill the requirements of this section,
7-7 the additional cost incurred shall be included as an administrative
7-8 expense for ratemaking purposes.
7-9 (h) An insurer who obtains a certificate of authority after
7-10 January 1, 2000, to issue an insurance policy in this state shall
7-11 comply with the requirements of this article within 18 months after
7-12 the date the certificate of authority is issued.
7-13 Art. 3.97-7. IMMUNITY FOR INSURER-TO-INSURER INFORMATION
7-14 SHARING. (a) In the course of investigating insurance fraud
7-15 claims, an insurer or its contracting entity may share information
7-16 with other insurers or entities that have contracted with insurers
7-17 to provide anti-fraud investigative services.
7-18 (b) An insurer and its contracting entities who share
7-19 information under this subchapter are not subject to suit by a
7-20 health care provider if:
7-21 (1) the purpose of the information is solely for the
7-22 purpose of reporting or preventing the commission of a fraudulent
7-23 insurance act; and
7-24 (2) the provision of the information is made without
7-25 malice, fraudulent intent, or bad faith.
7-26 (c) This article does not affect or modify common law or a
7-27 statutory privilege or immunity.
8-1 SECTION 3. Title 1, Health and Safety Code, is amended by
8-2 adding Chapter 2 to read as follows:
8-3 CHAPTER 2. UNPROFESSIONAL CONDUCT BY HEALTH CARE PROVIDER
8-4 Sec. 2.001. DEFINITION. In this chapter, "health care
8-5 provider" means a person who furnishes services under a license,
8-6 certificate, registration, or other authority issued by this state
8-7 or another state to diagnose, prevent, alleviate, or cure a human
8-8 illness or injury.
8-9 Sec. 2.002. UNPROFESSIONAL CONDUCT. (a) A health care
8-10 provider commits unprofessional conduct if the health care
8-11 provider, in connection with the provider's professional
8-12 activities:
8-13 (1) knowingly presents or causes to be presented a
8-14 false or fraudulent claim for the payment of a loss under an
8-15 insurance policy; or
8-16 (2) knowingly prepares, makes, or subscribes to any
8-17 writing, with intent to present or use the writing, or to allow it
8-18 to be presented or used, in support of a false or fraudulent claim
8-19 under an insurance policy.
8-20 (b) In addition to other provisions of civil or criminal
8-21 law, commission of unprofessional conduct under Subsection (a)
8-22 constitutes cause for the revocation or suspension of a provider's
8-23 license, permit, registration, certificate, or other authority or
8-24 other disciplinary action.
8-25 SECTION 4. (a) This Act takes effect September 1, 1999.
8-26 (b) The insurance fraud unit shall make the initial report
8-27 to the commissioner of insurance required under Section 3A(b),
9-1 Article 1.10D, Insurance Code, as added by this Act, not later than
9-2 January 1, 2001.
9-3 (c) The initial filing with the commissioner of insurance
9-4 required under Article 3.97-6, Insurance Code, as added by this
9-5 Act, shall be made not later than July 1, 2001.
9-6 SECTION 5. The importance of this legislation and the
9-7 crowded condition of the calendars in both houses create an
9-8 emergency and an imperative public necessity that the
9-9 constitutional rule requiring bills to be read on three several
9-10 days in each house be suspended, and this rule is hereby suspended.