By Thompson, Davis of Harris H.B. No. 3603
Substitute the following for H.B. No. 3603:
By Seaman C.S.H.B. No. 3603
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the control of insurance fraud.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Texas Insurance Code, Article 1.10D, is amended
1-5 to add a new Section 1A, as follows:
1-6 Section 1A. STATEMENT OF PUBLIC POLICY. The legislature
1-7 finds 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. Texas Insurance Code, Article 1.10D, is amended
1-19 by adding a new Subsection 2A, as follows:
1-20 Sec. 2A. INSURER ANTI-FRAUD INVESTIGATIVE REPORTS. (a) The
1-21 insurance fraud unit shall receive, review, and investigate in a
1-22 timely manner all insurer anti-fraud reports submitted pursuant to
1-23 the provisions of Texas Insurance Code, Article 3.101.
1-24 (b) The insurance fraud unit shall report in writing
2-1 annually to the commissioner the number of cases completed and
2-2 shall report recommendations for new regulatory and statutory
2-3 responses to the types of fraudulent activities being encountered
2-4 by the insurance fraud unit.
2-5 Section 3. Texas Insurance Code, Article 1.10D, Section 6,
2-6 is amended by amending Subsection (a) and adding a new Subsection
2-7 (e) to read as follows:
2-8 (a) A person acting without malice, fraudulent intent, or
2-9 bad faith is not subject to liability based on filing reports or
2-10 furnishing, orally or in writing, other information concerning
2-11 suspected, anticipated, or completed fraudulent insurance acts if
2-12 the reports or information are provided to:
2-13 (1) a law enforcement officer or agent or employee of
2-14 a law enforcement officer;
2-15 (2) the National Association of Insurance
2-16 Commissioners, a state or federal governmental agency established
2-17 to detect and prevent fraudulent insurance acts or to regulate the
2-18 business of insurance, or an employee of that association or
2-19 governmental agency; [or]
2-20 (3) an authorized governmental agency or the
2-21 department; or
2-22 (4) a special investigative unit of an insurer,
2-23 including a person contracting to provide special investigative
2-24 unit services, or an employee of an insurer who is responsible for
2-25 the investigation of suspected fraudulent insurance acts.
2-26 (e) Information provided herein by an insurer to the
2-27 insurance fraud unit and/or an authorized governmental agency shall
3-1 not be subject to public disclosure. The information may be used
3-2 by the insurance fraud unit and/or governmental agency only for the
3-3 performance of its duties as described herein. An insurer must
3-4 exercise reasonable care concerning the accuracy of the information
3-5 conveyed.
3-6 SECTION 4. Texas Insurance Code, Article 1.10D, is amended
3-7 to add a new Section 8, as follows:
3-8 Section 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, 20A, 22, or 26 of this code who is authorized to
3-24 issue, issue for delivery, or deliver policies, certificates, or
3-25 contracts of insurance in this state;
3-26 (B) an approved nonprofit health corporation
3-27 that:
4-1 (i) is certified under Section 5.01(a),
4-2 Medical Practice Act (Article 4495b, Vernon's Texas Civil
4-3 Statutes); and
4-4 (ii) holds a certificate of authority
4-5 issued by the commissioner under Article 21.52F of this code; or
4-6 (C) an insurer authorized by the department to
4-7 write workers' compensation insurance in this state.
4-8 Art. 3.97-2. NOTICE OF PENALTY FOR FALSE OR FRAUDULENT
4-9 CLAIMS; DISPLAY ON FORMS. (a) Any insurer who, in connection with
4-10 any insurance contract or provision of contract prints, reproduces,
4-11 or furnishes a form (including in electronic form) to any person
4-12 upon which that person makes a claim against a policy issued by the
4-13 insurer or gives notice of a person's intent to make a claim
4-14 against a policy issued by the insurer, the insurer shall provide
4-15 on that form, in comparative prominence with the other content on
4-16 the form, a statement as follows: "A person commits insurance
4-17 fraud, if, with the intent to defraud or deceive an insurer, the
4-18 person presents a claim for payment to an insurer which the person
4-19 knows contains false or misleading information concerning a matter
4-20 that is material to the claim and the matter affects a person's
4-21 right to payment of the amount of payment. Persons that commit
4-22 insurance fraud may be subject to criminal penalties, including
4-23 fine and imprisonment." The absence of such a notice on a policy,
4-24 rider, claim form, or other insurance document shall not constitute
4-25 grounds for a defense against a criminal indictment for or charge
4-26 of insurance fraud.
4-27 (b) This section shall not apply to reinsurance contacts,
5-1 reinsurance agreements, or reinsurance claims transactions.
5-2 Art. 3.97-3. INSURER ANTIFRAUD PLANS. Every insurer
5-3 admitted to do business in this state shall adopt an antifraud plan
5-4 and file it for approval with the insurance fraud unit of the
5-5 department beginning on or before July 1, 2001. The insurer shall
5-6 file annually thereafter any material changes in its antifraud
5-7 plan. The plan must include:
5-8 (1) a description of the insurer's procedures for
5-9 detecting and investigating possible fraudulent insurance acts;
5-10 (2) a description of the insurer's procedures for
5-11 reporting possible fraudulent insurance acts to the insurance fraud
5-12 unit; and
5-13 (3) a description of the insurer's procedures to
5-14 maintain patient confidentiality, including medical records of the
5-15 patient.
5-16 SECTION 6. Texas Health & Safety Code, Title 1, is amended
5-17 by adding Section 2.001, as part of a new chapter 2, Health Care
5-18 Fraud Programs 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. Texas Health & Safety Code, Title 1, is amended
5-24 by adding Section 2.002. as part of a new chapter 2, Health Care
5-25 Fraud Programs as follows:
5-26 Sec. 2.002. DEFINITIONS. (a) "Insurer" means
5-27 (1) any life, health, & accident insurer; health &
6-1 accident insurer; or health insurer; health maintenance
6-2 organization; or any other company operating pursuant to Chapter 3,
6-3 10, 20, 20A, 22, or 26 of the Code and that is authorized to issue,
6-4 deliver, or issue for delivery in this state policies,
6-5 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 Article 20A.02 of the Insurance Code.
6-18 (c) "Health care provider" means any person or entity that
6-19 holds a license, certificate, or other form of authorization issued
6-20 by an agency, board, commission, or other governmental unit of this
6-21 state by which the holder is authorized to deliver, render, or
6-22 otherwise provide health care or medical services to the public;
6-23 this definition shall include but not be limited to all such
6-24 persons who hold such licenses, certificates, or other
6-25 authorizations issued pursuant to the provisions of Title 71 of the
6-26 Texas Revised Civil Statutes and Title 4 of the Texas Health &
6-27 Safety Code.
7-1 SECTION 8. Texas Health & Safety Code, Title 1, is amended
7-2 by adding Section 2.003. as part of a new chapter 2, Health Care
7-3 Fraud Programs as follows:
7-4 Sec. 2.003. UNPROFESSIONAL CONDUCT. (a) It shall
7-5 constitute unprofessional conduct and grounds for disciplinary
7-6 action for a provider to do any of the following in connection with
7-7 his or her professional activities:
7-8 (1) Present a claim for payment to an insurer with
7-9 intent to defraud or deceive an insurer which the health care
7-10 provider knows contains false or fraudulent information concerning
7-11 a matter that is material to the claim and the matter affects a
7-12 provider's right to payment or the amount of payment.
7-13 (b)(1) In addition to such other provisions of civil or
7-14 criminal law, a violation of this provision shall constitute case
7-15 for the suspension of the provider's license for one year upon a
7-16 first conviction for a felony offense of fraud in any jurisdiction
7-17 and revocation of a provider's license for a second conviction for
7-18 a felony offense of fraud in any jurisdiction. The first and
7-19 second convictions need not occur in the same jurisdiction for the
7-20 revocation to be imposed.
7-21 (2) An agency, commission, or board that regulates a
7-22 health care provider may probate a suspension or revocation imposed
7-23 under this subsection upon an express determination that such
7-24 action would be in the best interests of the public. Any
7-25 determination must provide the reasons for probation and must set
7-26 out in clear terms the conditions of probation.
7-27 SECTION 9. This Act takes effect September 1, 1999.
8-1 SECTION 10. The importance of this legislation and the
8-2 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.