By Goodman                                            H.B. No. 2429
         77R4201 CLG-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the regulation of private child support enforcement
 1-3     agencies; providing a civil penalty.
 1-5           SECTION 1.  Title 5, Finance Code, is amended by adding
 1-6     Chapter 396 to read as follows:
 1-8                      SUBCHAPTER A.  GENERAL PROVISIONS
 1-9           Sec. 396.001.  DEFINITIONS.  In this chapter:
1-10                 (1)  "Child support enforcement" means an action,
1-11     conduct, or practice in enforcing, or in soliciting for
1-12     enforcement, a child support obligation, including the collection
1-13     of an amount owed under a child support obligation.
1-14                 (2)  "Child support obligation" means an obligation for
1-15     the payment of financial support for a child under an order or writ
1-16     issued by a court or other tribunal.
1-17                 (3)  "Commission" means the Finance Commission of
1-18     Texas.
1-19                 (4)  "Foreign agency" means a private child support
1-20     enforcement agency that engages in business in this state solely by
1-21     use of telephone, mail, the Internet, facsimile transmission, or
1-22     any other means of interstate communication.
1-23                 (5)  "Obligee" means the person identified in an order
1-24     for child support issued by a court or other tribunal as the payee
 2-1     to whom an obligor's amounts of ordered child support are due.
 2-2                 (6)  "Obligor" means the person identified in an order
 2-3     for child support issued by a court or other tribunal as the
 2-4     individual required to make payment under the terms of a support
 2-5     order for a child.
 2-6                 (7)  "Private child support enforcement agency" means
 2-7     an individual or nongovernmental entity who engages in the
 2-8     enforcement of child support ordered by a court or other tribunal
 2-9     for a fee or other consideration.  The term does not include:
2-10                       (A)  an attorney enforcing a child support
2-11     obligation on behalf of, and in the name of, a client unless the
2-12     attorney has an employee who is not an attorney and who on behalf
2-13     of the attorney:
2-14                             (i)  regularly solicits for child support
2-15     enforcement; or
2-16                             (ii)  regularly contacts child support
2-17     obligees or obligors for the purpose of child support enforcement;
2-18                       (B)  a state agency designated to serve as the
2-19     state's Title IV-D agency in accordance with Part D, Subchapter IV,
2-20     Social Security Act (42 U.S.C. Section 651 et seq.), as amended; or
2-21                       (C)  a contractor awarded a contract to engage in
2-22     child support enforcement on behalf of a governmental agency,
2-23     including a contractor awarded a contract:
2-24                             (i)  under Chapter 236, Family Code; or
2-25                             (ii)  by a political subdivision of this or
2-26     another state that is authorized by law to enforce a child support
2-27     obligation.
 3-1                 (8)  "Registered agency" means a private child support
 3-2     agency, including a foreign agency, that is registered under this
 3-3     chapter.
 3-4              (Sections 396.002-396.050 reserved for expansion
 3-6           Sec. 396.051.  ADMINISTRATIVE AND RULEMAKING AUTHORITY.  (a)
 3-7     The commission shall administer this chapter.
 3-8           (b)  The commission shall adopt rules as necessary for the
 3-9     administration of this chapter.
3-10           Sec. 396.052.  FILING FEE.  (a)  The commission shall charge
3-11     each applicant for a certificate of registration, or renewal of a
3-12     certificate, a nonrefundable fee of $500 for each certificate.
3-13           (b)  The application fee is due on the date the applicant
3-14     submits an application for registration.  The renewal fee is due on
3-15     the date that a certificate holder submits an application to renew
3-16     a registration.
3-17           Sec. 396.053.  COST OF REGULATION.  The commission may charge
3-18     each registered private child support enforcement agency an annual
3-19     fee not to exceed $500 to cover the cost of enforcing this chapter.
3-20              (Sections 396.054-396.100 reserved for expansion
3-21                         SUBCHAPTER C. REGISTRATION
3-22           Sec. 396.101.  REGISTRATION REQUIRED.  Except as otherwise
3-23     provided by this chapter, a private child support enforcement
3-24     agency must register with the commission to engage in child support
3-25     enforcement in this state.
3-27     STATE.  (a)  The commission may waive any prerequisite to obtaining
 4-1     a registration for a foreign agency:
 4-2                 (1)  after reviewing the applicant's credentials and
 4-3     determining that the applicant holds a valid registration or other
 4-4     authorization from another state whose requirements are
 4-5     substantially equivalent to those imposed under this chapter; or
 4-6                 (2)  after determining the applicant has a valid
 4-7     registration or other authorization from another state with which
 4-8     this state has a reciprocity agreement.
 4-9           (b)  The commission may enter into an agreement with another
4-10     state to permit registration by reciprocity.
4-11           Sec. 396.103.  APPLICATION REQUIREMENTS.  (a)  An applicant
4-12     for registration as a private child support enforcement agency must
4-13     file with the commission an application on a form and in the manner
4-14     prescribed by the commission.
4-15           (b)  The application must state:
4-16                 (1)  the name of the applicant;
4-17                 (2)  the name under which the applicant is doing or
4-18     intends to do business in this state, if different from the
4-19     applicant's name;
4-20                 (3)  the address of the applicant's principal business
4-21     office, including the state, municipality, and numeric street
4-22     address; and
4-23                 (4)  any Internet or other electronic mail address and
4-24     business telephone number of the applicant.
4-25           (c)  The chief executive officer of the applicant agency
4-26     shall state in a notarized statement that the application is
4-27     accurate and truthful in all respects.
 5-1           Sec. 396.104.  FINANCIAL AND OTHER DISCLOSURES.  The
 5-2     commission may require an applicant for registration or renewal of
 5-3     registration as a private child support enforcement agency to
 5-4     provide:
 5-5                 (1)  a certified financial statement demonstrating the
 5-6     financial solvency of the agency for which registration or renewal
 5-7     of registration is sought; and
 5-8                 (2)  any other information the commission may
 5-9     reasonably require the applicant to provide to establish that the
5-10     requirements and qualifications for registration or renewal of
5-11     registration have been fulfilled by the applicant.
5-12           Sec. 396.105.  SURETY BOND OR OTHER DEPOSIT REQUIRED.  (a)
5-13     An application for registration must be accompanied by a surety
5-14     bond approved by the commission.
5-15           (b)  The surety bond must be:
5-16                 (1)  issued by a surety authorized to do business in
5-17     this state;
5-18                 (2)  in the amount of $50,000;
5-19                 (3)  in favor of the state for the benefit of a person
5-20     damaged by a violation of this chapter; and
5-21                 (4)  conditioned on the private child support
5-22     enforcement's agency compliance with this chapter and the faithful
5-23     performance of the obligations under the agency's agreements with
5-24     its clients.
5-25           (c)  The surety bond must be filed with and held by the
5-26     commission.
5-27           (d)  Instead of a surety bond, the commission may accept a
 6-1     deposit of money in an amount determined by the commission not to
 6-2     exceed $50,000.  The commission shall deposit any amounts received
 6-3     under this subsection in an insured depository account designated
 6-4     for that purpose.
 6-5           Sec. 396.106.  ISSUANCE OF CERTIFICATE OF REGISTRATION.  (a)
 6-6     The commission shall issue a certificate of registration and mail
 6-7     the certificate to the applicant on receipt of:
 6-8                 (1)  a completed application;
 6-9                 (2)  the surety bond or deposit of money required by
6-10     Section 396.105; and
6-11                 (3)  the required registration fee.
6-12           (b)  If a single application is used to register more than
6-13     one registered location, the commission shall:
6-14                 (1)  issue a certificate of registration for each
6-15     registered location; and
6-16                 (2)  mail all of the certificates to the principal
6-17     business location stated in the application.
6-18           Sec. 396.107.  DUTY TO UPDATE APPLICATION INFORMATION.  A
6-19     certificate holder shall notify the commission of any material
6-20     change in the information provided in an application for
6-21     registration not later than the 60th day after the date on which
6-22     the information changes.
6-23           Sec. 396.108.  TERM OF REGISTRATION; RENEWAL.  (a)  A private
6-24     child support enforcement agency's certificate of registration
6-25     expires on the third anniversary of the date of issuance.
6-26           (b)  A certificate of registration may be renewed for another
6-27     three-year period as provided by commission rule.
 7-1              (Sections 396.109-396.150 reserved for expansion)
 7-3                           BUSINESS IN THIS STATE
 7-4           Sec. 396.151.  APPLICATION TO OPERATE UNDER OTHER
 7-5     AUTHORIZATION INSTEAD OF REGISTRATION.  (a)  To engage in business
 7-6     in this state, a foreign agency that is exempt from registration as
 7-7     prescribed by Section 396.102 may file an application with the
 7-8     commission to operate under that authorization by filing:
 7-9                 (1)  the information required for an application for
7-10     registration under Section 396.103;
7-11                 (2)  a surety bond or deposit of money that meets the
7-12     requirements of Section 396.105 unless the agency provides proof to
7-13     the satisfaction of the commission that the agency maintains in the
7-14     state in which that agency has its principal office an adequate
7-15     bond or similar instrument for purposes similar to the purposes
7-16     required for the filing of a surety bond under Section 396.105; and
7-17                 (3)  a copy of the license or other authorization
7-18     issued by the state in which that agency is authorized to operate.
7-19           (b)  The commission may charge a single administrative fee in
7-20     a reasonable amount that is sufficient to cover the costs of the
7-21     commission in processing and acting on the application.
7-23     REGISTRATION.  The commission shall issue a certificate to operate
7-24     under another state's authorization in  this state to a foreign
7-25     agency that files an application with the commission under Section
7-26     396.151 if:
7-27                 (1)  the agency submits all of the information required
 8-1     by Section 396.151(a)(1);
 8-2                 (2)  the commissioner determines that the agency has
 8-3     met the requirements of Section 396.151(a)(2);
 8-4                 (3)  the agency remits any required administrative fee
 8-5     under Section 396.151(b); and
 8-6                 (4)  the commission verifies that the registration or
 8-7     other authorization issued by another state is active and in good
 8-8     standing.
8-10     IN STATUS OF OTHER AUTHORIZATION.  Not later than the 30th day
8-11     after the date on which the change occurs, a foreign private child
8-12     support enforcement agency that is issued a certificate to operate
8-13     in this state under this subchapter shall notify the commission of
8-14     any change in:
8-15                 (1)  the information provided in an application
8-16     submitted under Section 396.152; or
8-17                 (2)  the status of the agency's authorization in the
8-18     other state.
8-20     AUTHORIZATION.  A holder of a certificate issued under this
8-21     subchapter may not engage in business in this state as a private
8-22     child support enforcement agency if another state has revoked or
8-23     withdrawn the person's authority to operate as a private child
8-24     support enforcement agency in that state unless the commission
8-25     grants the agency a registration under this chapter.
8-26              (Sections 396.155-396.200 reserved for expansion)
 9-1           Sec. 396.201.  REGISTRATION PREREQUISITE TO SUIT.  A private
 9-2     child support enforcement agency may not bring an action to enforce
 9-3     a child support obligation in this state unless the agency is
 9-4     registered or otherwise authorized to engage in business in this
 9-5     state as provided by this chapter.
 9-6           Sec. 396.202.  RECORDS.  (a)  A registered agency shall
 9-7     maintain records of all child support collections made on behalf
 9-8     of, and disbursed to, a client who is an obligee, including:
 9-9                 (1)  the name of any obligor who made child support
9-10     payments collected by the agency;
9-11                 (2)  the amount of support collected by the agency for
9-12     each client, including:
9-13                       (A)  the date on which the amount was collected;
9-14     and
9-15                       (B)  if available, the date on which each amount
9-16     due the client by the obligor was paid to the client;
9-17                 (3)  a copy of the order establishing the child support
9-18     obligation under which a collection was made by the agency; and
9-19                 (4)  any other pertinent information relating to the
9-20     child support obligation, including any case, cause, or docket
9-21     number of the court having jurisdiction over the matter.
9-22           (b)  The records required under this section must be updated
9-23     at least monthly and must be maintained by the registered agency
9-24     for a period of four years from the date of the last support
9-25     payment collected by the agency on behalf of an obligee.
9-26           Sec. 396.203.  CONTRACT FOR SERVICES.  (a)  A registered
9-27     agency and foreign agency authorized to engage in business under
 10-1    this chapter shall execute a written contract for the enforcement
 10-2    of child support for each client of the agency that is residing in
 10-3    this state.
 10-4          (b)  The contract required under this section must:
 10-5                (1)  be in writing, dated, and signed by both parties
 10-6    to the contract; and
 10-7                (2)  specify its terms in clear language.
 10-8             (Sections 396.204-396.250 reserved for expansion
 10-9                    SUBCHAPTER F.  PROHIBITED PRACTICES
10-10          Sec. 396.251.  THREATS OR COERCION.  (a)  In enforcing a
10-11    child support obligation, a registered agency may not use threats,
10-12    coercion, or attempts to coerce that employ any of the following
10-13    practices:
10-14                (1)  using or threatening to use violence or other
10-15    criminal means to cause harm to an obligor or property of the
10-16    obligor;
10-17                (2)  accusing falsely or threatening to accuse falsely
10-18    an obligor of a violation of state or federal child support laws;
10-19                (3)  taking or threatening to take an enforcement
10-20    action against an obligor that is not authorized by law; or
10-21                (4)  intentionally representing to a person that the
10-22    agency is a governmental agency authorized to enforce a child
10-23    support obligation.
10-24          (b)  Subsection (a) does not prevent a registered agency
10-25    from:
10-26                (1)  informing an obligor that the obligor may be
10-27    subject to penalties prescribed by law for failure to pay a child
 11-1    support obligation; or
 11-2                (2)  taking, or threatening to take, an action
 11-3    authorized by law for the enforcement of a child support obligation
 11-4    by the agency.
 11-5          Sec. 396.252.  FRAUDULENT, DECEPTIVE, OR MISLEADING
 11-6    REPRESENTATIONS.  In enforcing a child support obligation, a
 11-7    registered agency or employee of the agency may not:
 11-8                (1)  identify the registered agency by any other name
 11-9    other than one by which the agency is registered with the
11-10    commission;
11-11                (2)  falsely represent the nature of the child support
11-12    enforcement activities in which the agency is authorized by law to
11-13    engage; or
11-14                (3)  falsely represent that an oral or written
11-15    communication is the communication of an attorney.
11-16             (Sections 396.253-396.300 reserved for expansion
11-18          Sec. 396.301.  REVOCATION OF REGISTRATION.  (a)  After notice
11-19    and hearing, the commission may revoke the registration of a
11-20    registered agency that:
11-21                (1)  fails to comply with this chapter or a rule
11-22    adopted under this chapter;
11-23                (2)  does not pay a fee or other charge imposed by the
11-24    commission under this chapter; and
11-25                (3)  fails to maintain and produce at the request of
11-26    the commission records attesting to the financial solvency of the
11-27    registered agency or other business records concerning client
 12-1    accounts.
 12-2          (b)  The commission may permit a registered agency to take an
 12-3    appropriate action to correct a failure to comply with this chapter
 12-4    and not revoke the registration of the agency.
 12-6    OR REVOCATION OF REGISTRATION.  (a)  The commission may not deny or
 12-7    suspend the registration of a private child support enforcement
 12-8    agency under this chapter without first conducting an
 12-9    administrative hearing.
12-10          (b)  A hearing under this section or Section 396.301 is
12-11    subject to Chapter 2001, Government Code.
12-12          Sec. 396.303.  BONA FIDE ERROR.  A registered agency does not
12-13    violate this chapter if the action complained of resulted from a
12-14    bona fide error that occurred notwithstanding the use of reasonable
12-15    procedures to avoid the error.
12-17    (a) A person may file with the commission a written complaint
12-18    against a registered agency for a violation of this chapter.
12-19          (b)  Not later than the 30th day after the date on which the
12-20    commission receives a complaint under this section, the commission
12-21    shall initiate an investigation into the merits of the complaint.
12-22          (c)  The commission may appoint a hearings officer to conduct
12-23    the investigation.
12-24          (d)  A hearings officer appointed by the commission to
12-25    investigate a complaint may arrange for the services of a qualified
12-26    mediator and attempt to:
12-27                (1)  resolve the complaint and any differences between
 13-1    the parties; and
 13-2                (2)  reach a settlement, without the requirement of
 13-3    further investigation.
 13-4          (e)  The commission may delegate to a hearings officer
 13-5    appointed to investigate a complaint under this section the
 13-6    authority to dismiss the complaint, after an initial investigation
 13-7    and after notice to each affected party and an opportunity for
 13-8    hearing, for lack of sufficient evidentiary basis.
 13-9          (f)  An individual aggrieved by a decision of the commission
13-10    or hearings officer under this section may appeal the decision to a
13-11    district court in Travis County.
13-12          (g)  The commission shall provide for an annual public
13-13    inspection of an investigation report of a complaint filed under
13-14    this section.
13-15             (Sections 396.305-396.350 reserved for expansion
13-16                       SUBCHAPTER H.  CIVIL REMEDIES
13-17          Sec. 396.351.  CIVIL ACTION.  (a)  In addition to any other
13-18    remedy provided by this chapter, a person may bring an action for:
13-19                (1)  injunctive relief to enjoin or restrain a
13-20    violation of this chapter; and
13-21                (2)  actual damages incurred as a result of a violation
13-22    of this chapter.
13-23          (b)  A person who prevails in an action brought under this
13-24    section is entitled to recover court costs and reasonable
13-25    attorney's fees.
13-26          (c)  On a finding by a court that an action under this
13-27    section was brought in bad faith or for purposes of harassment, the
 14-1    court shall award the defendant attorney's fees reasonably related
 14-2    to the work performed and costs.
 14-3          Sec. 396.352.  SERVICE OF PROCESS OUTSIDE STATE.  (a)  A
 14-4    registered agency that is located in another state or a private
 14-5    child support enforcement agency that engages in the business of
 14-6    child support enforcement in this state in violation of this
 14-7    chapter is considered to have submitted to the jurisdiction of the
 14-8    courts of this state with respect to an action brought under this
 14-9    chapter.
14-10          (b)  A foreign agency engaging in business in this state in
14-11    violation of this chapter is considered to have appointed the
14-12    commission as the agency's agent for service of process in any
14-13    action, suit, or proceeding arising from a violation of this
14-14    chapter.
14-15          Sec. 396.353.  REMEDIES UNDER OTHER LAW.  (a)  A violation of
14-16    this chapter is a deceptive trade practice under Subchapter E,
14-17    Chapter 17, Business & Commerce Code, and is actionable under that
14-18    subchapter.
14-19          (b)  This chapter does not affect or alter a remedy at law or
14-20    in equity otherwise available to an obligor, obligee, governmental
14-21    entity, or other legal entity.
14-22          SECTION 2.  This Act takes effect September 1, 2001, except
14-23    that the requirement of Chapter 396, Finance Code, as added by this
14-24    Act, that a private child support enforcement agency be registered
14-25    applies only on and after January 1, 2002.
14-26                         COMMITTEE AMENDMENT NO. 1
14-27          Amend H.B. 2429 as follows:
 15-1          (1)  on page 1, line 17, by striking "'Commission' means the
 15-2    Finance Commission of Texas." and inserting "'Department'" means
 15-3    the Texas Banking Department." and thereafter throughout the bill
 15-4    wherever "commission" appears by striking it and and inserting in
 15-5    its place "department".
 15-6          (2)  on page 3, line 8, after the word "The" and before the
 15-7    word "shall" by striking "commission" and inserting "Finance
 15-8    Commission of Texas".
 15-9          (3)  on page 5, line 2, after the word "commission" and
15-10    before the word "require" by striking the word "may" and inserting
15-11    "shall".
15-12          (4)  on page 6, after line 8, by inserting the following:
15-13    "(2) evidence of financial solvency;" and renumbering subsequent
15-14    subsections accordingly.
15-15                                                         Reyna of Bexar