By Brimer H.B. No. 1397 77R1893 JMM-D A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to a study by the Texas Workforce Commission of fraud in 1-3 the unemployment insurance system. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subchapter A, Chapter 213, Labor Code, is amended 1-6 by adding Section 213.010 to read as follows: 1-7 Sec. 213.010. STUDY OF BENEFIT OVERPAYMENTS AND FRAUD. (a) 1-8 The commission shall conduct a study to determine, to the fullest 1-9 extent possible, the number of fraudulent claims filed and paid 1-10 under this subtitle. The commission shall use the study to 1-11 establish the most effective fraud detection system. 1-12 (b) The fraud detection system established as a result of 1-13 the study conducted under this section shall incorporate the 1-14 commission's automated system for filing and paying claims. 1-15 (c) In developing the study required under this section, the 1-16 commission shall use as a model analogous studies performed by 1-17 other governmental entities that administer benefit programs, 1-18 including the medical assistance program under Chapter 32, Human 1-19 Resources Code. The commission's study must include thorough 1-20 research on fraudulent schemes and methods of fraud detection used 1-21 in other states and an analysis of businesses and industries most 1-22 affected by fraud under this subtitle. 1-23 (d) The commission shall report the results of the study to 1-24 the presiding officer of each house of the legislature not later 2-1 than January 1, 2003. 2-2 SECTION 2. This Act takes effect immediately if it receives 2-3 a vote of two-thirds of all the members elected to each house, as 2-4 provided by Section 39, Article III, Texas Constitution. If this 2-5 Act does not receive the vote necessary for immediate effect, this 2-6 Act takes effect September 1, 2001. 2-7 COMMITTEE AMENDMENT NO. 1 2-8 Amend H.B. No. 1397 as follows: 2-9 (1) On Page 1, line 8, strike "commission" and insert 2-10 "Office of the State Auditor." 2-11 (2) On Page 1, line 10, after "subtitle" insert "as well as 2-12 the number and amount of fraudulent premium underpayments by 2-13 employers." 2-14 (3) On Page 1, between lines 11 and 12, insert the following 2-15 new subsection: 2-16 "(b) If the Office of the State Auditor determines that such 2-17 study should be conducted in whole or in part by another entity, 2-18 the Office of the State Auditor may contract with one or more 2-19 independent, non-governmental entities to conduct part or all of 2-20 the study. Notwithstanding its degree of participation in the 2-21 study, the Office of the State Auditor shall be responsible for 2-22 overseeing the study and for submitting the results as provided in 2-23 subsection (e)." 2-24 (4) On Page 1, line 12, renumber subsection (b) to read 2-25 subsection (c). 2-26 (5) On Page 1, line 15, renumber subsection (c) to read 2-27 subsection (d). 3-1 (6) On Page 1, line 16, strike "commission" and insert 3-2 "Office of the State Auditor". 3-3 (7) On Page 1, line 19, after "Code.", insert "In developing 3-4 the study required under this section, the Office of the State 3-5 Auditor shall consider studies performed by the U.S. Department of 3-6 Labor and other State Employment Security Agencies concerning the 3-7 misclassification of workers resulting in underpayments to the UI 3-8 Trust Fund, and shall specifically evaluate the use of targeted 3-9 audits to reduce misclassification." 3-10 (8) On Page 1, line 19, strike "commission's" and insert 3-11 "Office of the State Auditor's." 3-12 (9) On Page 1, line 23, renumber subsection (d) to read 3-13 subsection (e). 3-14 (10) On Page 1, line 23, strike "commission" and insert 3-15 "Office of the State Auditor". 3-16 Seaman