By Thompson, Davis of Harris, Eiland, Dukes, H.B. No. 3603
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to insurance claims and the control of insurance fraud.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 1.10D, Insurance Code, is amended by
1-5 adding Section 1A to read as follows:
1-6 Sec. 1A. STATEMENT OF PUBLIC POLICY. The legislature finds
1-7 and declares that the business of insurance involves many
1-8 transactions that have potential for abuse and illegal activities.
1-9 There are numerous law enforcement agencies on the state and local
1-10 levels charged with the responsibility for investigating and
1-11 prosecuting fraudulent activity. This article is intended to
1-12 permit the full utilization of the expertise of the commissioner
1-13 and the department so that they may more effectively investigate
1-14 and discover insurance fraud, halt fraudulent activities, and
1-15 assist and receive assistance from federal, state, local, and
1-16 administrative law enforcement agencies in prosecution of persons
1-17 who are parties in insurance frauds.
1-18 SECTION 2. Article 1.10D, Insurance Code, is amended by
1-19 adding Section 2A to read as follows:
1-20 Sec. 2A. INSURER ANTIFRAUD INVESTIGATIVE REPORTS. (a) The
1-21 insurance fraud unit shall receive, review, and investigate in a
1-22 timely manner all insurer antifraud reports submitted pursuant to
1-23 the provisions of this Article.
1-24 (b) The insurance fraud unit shall report in writing
1-25 annually to the commissioner the number of cases completed and
2-1 shall report recommendations for new regulatory and statutory
2-2 responses to the types of fraudulent activities being encountered
2-3 by the insurance fraud unit.
2-4 SECTION 3. Section 6, Article 1.10D, Insurance Code, is
2-5 amended by amending Subsection (a) and adding Subsection (e) to
2-6 read as follows:
2-7 (a) A person acting without malice, fraudulent intent, or
2-8 bad faith is not subject to liability based on filing reports or
2-9 furnishing, orally or in writing, other information concerning
2-10 suspected, anticipated, or completed fraudulent insurance acts if
2-11 the reports or information are provided to:
2-12 (1) a law enforcement officer or agent or employee of
2-13 a law enforcement officer;
2-14 (2) the National Association of Insurance
2-15 Commissioners, a state or federal governmental agency established
2-16 to detect and prevent fraudulent insurance acts or to regulate the
2-17 business of insurance, or an employee of that association or
2-18 governmental agency; [or]
2-19 (3) an authorized governmental agency or the
2-20 department; or
2-21 (4) a special investigative unit of an insurer,
2-22 including a person contracting to provide special investigative
2-23 unit services, or an employee of an insurer who is responsible for
2-24 the investigation of suspected fraudulent insurance acts.
2-25 (e) Information provided herein by an insurer to the
2-26 insurance fraud unit and/or an authorized governmental agency shall
2-27 not be subject to public disclosure. The information may be used
3-1 by the insurance fraud unit and/or governmental agency only for the
3-2 performance of its duties as described herein. An insurer must
3-3 exercise reasonable care concerning the accuracy of the information
3-4 conveyed either to the insurance fraud unit, an authorized
3-5 governmental agency, other insurers, or other persons or entities.
3-6 SECTION 4. Article 1.10D, Insurance Code, is amended by
3-7 adding Section 8 to read as follows:
3-8 Sec. 8. NOTICE OF COMPLAINT TO HEALTH CARE PROVIDER
3-9 REGULATORY BODY. The insurance fraud unit shall forward to the
3-10 agency, board, or commission any information concerning the
3-11 complaint upon the entry of a final civil judgment or criminal
3-12 conviction involving fraud.
3-13 SECTION 5. Chapter 3, Insurance Code, is amended by adding
3-14 Subchapter K to read as follows:
3-15 SUBCHAPTER K. INSURER ANTIFRAUD PROGRAMS
3-16 Art. 3.97-1. DEFINITIONS. In this subchapter:
3-17 (1) "Health care provider" has the meaning assigned by
3-18 Section 35.01, Penal Code.
3-19 (2) "Insurer" means:
3-20 (A) a health insurer, including a life, health,
3-21 and accident insurer, or a health and accident insurer, a health
3-22 maintenance organization, or any other person operating under
3-23 Chapter 3, 10, 20, 22, or 26 of this code or the Texas Health
3-24 Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance
3-25 Code) who is authorized to issue, issue for delivery, or deliver
3-26 policies, certificates, or contracts of insurance in this state;
3-27 (B) an approved nonprofit health corporation
4-1 that:
4-2 (i) is certified under Section 5.01(a),
4-3 Medical Practice Act (Article 4495b, Vernon's Texas Civil
4-4 Statutes); and
4-5 (ii) holds a certificate of authority
4-6 issued by the commissioner under Article 21.52F of this code; or
4-7 (C) an insurer authorized by the department to
4-8 write workers' compensation insurance in this state.
4-9 Art. 3.97-2. NOTICE OF PENALTY FOR FALSE OR FRAUDULENT
4-10 CLAIMS; DISPLAY ON FORMS. (a) Any insurer who, in connection with
4-11 any insurance contract or provision of contract prints, reproduces,
4-12 or furnishes a form (including in electronic form) to any person
4-13 upon which that person makes a claim against a policy issued by the
4-14 insurer or gives notice of a person's intent to make a claim
4-15 against a policy issued by the insurer, the insurer shall provide
4-16 on that form, in comparative prominence with the other content on
4-17 the form, a statement as follows: "A person commits insurance
4-18 fraud, if, with the intent to defraud or deceive an insurer, the
4-19 person presents a claim for payment to an insurer which the person
4-20 knows contains false or misleading information concerning a matter
4-21 that is material to the claim and the matter affects a person's
4-22 right to payment of the amount of payment. Persons that commit
4-23 insurance fraud may be subject to criminal penalties, including
4-24 fine and imprisonment." The absence of such a notice on a policy,
4-25 rider, claim form, or other insurance document shall not constitute
4-26 grounds for a defense against a criminal indictment for or charge
4-27 of insurance fraud.
5-1 (b) This section shall not apply to reinsurance contracts,
5-2 reinsurance agreements, or reinsurance claims transactions.
5-3 Art. 3.97-3. INSURER ANTIFRAUD PLANS. Every insurer
5-4 admitted to do business in this state shall adopt an antifraud plan
5-5 and file it for approval with the insurance fraud unit of the
5-6 department beginning on or before July 1, 2001. The insurer shall
5-7 file annually thereafter any material changes in its antifraud
5-8 plan. The plan must include:
5-9 (1) a description of the insurer's procedures for
5-10 detecting and investigating possible fraudulent insurance acts;
5-11 (2) a description of the insurer's procedures for
5-12 reporting possible fraudulent insurance acts to the insurance fraud
5-13 unit; and
5-14 (3) a description of the insurer's procedures to
5-15 maintain patient confidentiality, including medical records of the
5-16 patient.
5-17 SECTION 6. Title 1, Health and Safety Code, is amended by
5-18 adding Section 2.001 to read as follows:
5-19 Sec. 2.001. PUBLIC POLICY. It shall be the policy of this
5-20 state to confront aggressively the problem of health care fraud in
5-21 Texas by facilitating the detection and prevention of fraud at its
5-22 source.
5-23 SECTION 7. Title 1, Health and Safety Code, is amended by
5-24 adding Section 2.002 to read as follows:
5-25 Sec. 2.002. DEFINITIONS. (a) "Insurer" means:
5-26 (1) any life, health, and accident insurer; health and
5-27 accident insurer; or health insurer; health maintenance
6-1 organization; or any other company that is operating pursuant to
6-2 Chapter 3, 10, 20, 22, or 26 of the code or the Texas Health
6-3 Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance
6-4 Code) and that is authorized to issue, deliver, or issue for
6-5 delivery in this state policies, certificates, or contracts;
6-6 (2) any approved nonprofit health corporation that is
6-7 certified under Section 5.01(a), Medical Practice Act (Article
6-8 4495b, Vernon's Texas Civil Statutes), and that holds a certificate
6-9 of authority issued by the commissioner of insurance under Article
6-10 21.52F, Insurance Code;
6-11 (3) any entity that direct contracts with employers,
6-12 employees, labor unions, trade associations, or other groups to
6-13 provide health benefit coverage; or
6-14 (4) any insurer authorized by the Texas Department of
6-15 Insurance to write workers' compensation insurance in this state.
6-16 (b) "Health maintenance organization" means an organization
6-17 as defined in Section 2, the Texas Health Maintenance Organization
6-18 Act (Article 20A.02, Vernon's Texas Insurance Code).
6-19 (c) "Health care provider" means any person or entity that
6-20 holds a license, certificate, or other form of authorization issued
6-21 by an agency, board, commission, or other governmental unit of this
6-22 state by which the holder is authorized to deliver, render, or
6-23 otherwise provide health care or medical services to the public;
6-24 this definition shall include but not be limited to all such
6-25 persons who hold such licenses, certificates, or other
6-26 authorizations issued pursuant to the provisions of Title 71 of the
6-27 Revised Statutes and Title 4 of the Health and Safety Code.
7-1 SECTION 8. Title 1, Health and Safety Code, is amended by
7-2 adding Section 2.003 to read as follows:
7-3 Sec. 2.003. UNPROFESSIONAL CONDUCT. (a) It shall
7-4 constitute unprofessional conduct and grounds for disciplinary
7-5 action for a provider to do any of the following in connection with
7-6 his or her professional activities: present a claim for payment to
7-7 an insurer with intent to defraud or deceive an insurer which the
7-8 health care provider knows contains false or fraudulent information
7-9 concerning a matter that is material to the claim and the matter
7-10 affects a provider's right to payment or the amount of payment.
7-11 (b)(1) In addition to such other provisions of civil or
7-12 criminal law, a violation of this provision shall constitute cause
7-13 for the suspension of the provider's license for one year upon a
7-14 first conviction for a felony offense of fraud in any jurisdiction
7-15 and revocation of a provider's license for a second conviction for
7-16 a felony offense of fraud in any jurisdiction. The first and
7-17 second convictions need not occur in the same jurisdiction for the
7-18 revocation to be imposed.
7-19 (2) An agency, commission, or board that regulates a
7-20 health care provider may probate a suspension or revocation imposed
7-21 under this subsection upon an express determination that such
7-22 action would be in the best interests of the public. Any
7-23 determination must provide the reasons for probation and must set
7-24 out in clear terms the conditions of probation.
7-25 SECTION 9. Subchapter A, Chapter 5, Insurance Code, is
7-26 amended by adding Article 5.06-7 to read as follows:
7-27 Art. 5.06-7. SETTLEMENT OF CLAIM; REQUIRED STATEMENT OF
8-1 FACTS. (a) In this article, "insurer" means an insurance company,
8-2 interinsurance exchange, mutual, capital stock company, fraternal
8-3 benefit society, local mutual aid association, county mutual,
8-4 reciprocal, association, Lloyd's plan, or other entity writing
8-5 motor vehicle insurance in this state. The term includes an
8-6 affiliate, as defined by Section 2, Article 21.49-1, of this code.
8-7 (b) An insurer may not require a third party claimant to
8-8 give a statement of the facts relating to a motor vehicle insurance
8-9 claim as a condition of determining whether to pay or settle the
8-10 claim unless the third party claimant is given an opportunity to
8-11 obtain a statement in a similar format from the insurer's insured.
8-12 This article does not apply if the insured is unable to give a
8-13 statement for a reason outside the insurer's control.
8-14 SECTION 10. Article 5.06-7, Insurance Code, as added by this
8-15 Act, applies only to a motor vehicle insurance claim that accrues
8-16 on or after September 1, 1999. A claim that accrues before
8-17 September 1, 1999, is governed by the law as it existed immediately
8-18 before that date, and that law is continued in effect for that
8-19 purpose.
8-20 SECTION 11. This Act takes effect September 1, 1999.
8-21 SECTION 12. The importance of this legislation and the
8-22 crowded condition of the calendars in both houses create an
8-23 emergency and an imperative public necessity that the
8-24 constitutional rule requiring bills to be read on three several
8-25 days in each house be suspended, and this rule is hereby suspended.