By: Fraser S.B. No. 444 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to a study of fraud in the unemployment insurance system. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Subchapter A, Chapter 213, Labor Code, is amended 1-5 by adding Section 213.010 to read as follows: 1-6 Sec. 213.010. STUDY OF BENEFIT OVERPAYMENTS AND FRAUD. 1-7 (a) The state auditor shall conduct a study to determine, to the 1-8 fullest extent possible, the number of fraudulent claims filed and 1-9 paid under this subtitle and the number and dollar amount of 1-10 fraudulent premium underpayments by employers. The commission 1-11 shall use the study to establish the most effective fraud detection 1-12 system. 1-13 (b) If the state auditor determines that the study should be 1-14 conducted, in whole or in part, by another entity, the state 1-15 auditor may contract with one or more independent, nongovernmental 1-16 entities to conduct all or part of the study. Notwithstanding the 1-17 degree to which the state auditor participates in the study, the 1-18 state auditor is responsible for supervising the study and for 1-19 reporting the results of the study as provided by Subsection (e). 1-20 (c) The fraud detection system established as a result of 1-21 the study conducted under this section shall incorporate the 1-22 commission's automated system for filing and paying claims. 1-23 (d) In developing the study required under this section, the 1-24 state auditor shall use as a model analogous studies performed by 1-25 other governmental entities that administer benefit programs, 2-1 including the medical assistance program under Chapter 32, Human 2-2 Resources Code. In developing the study required by this section, 2-3 the state auditor shall consider studies performed by the United 2-4 States Department of Labor and other state employment security 2-5 agencies concerning the misclassification of workers and resulting 2-6 underpayments to the unemployment insurance trust fund, and shall 2-7 evaluate the use of targeted audits to reduce misclassification. 2-8 The study must include thorough research on fraudulent schemes and 2-9 methods of fraud detection used in other states and an analysis of 2-10 businesses and industries most affected by fraud under this 2-11 subtitle. 2-12 (e) The state auditor shall report the results of the study 2-13 to the presiding officer of each house of the legislature not later 2-14 than January 1, 2003. 2-15 SECTION 2. This Act takes effect immediately if it receives 2-16 a vote of two-thirds of all the members elected to each house, as 2-17 provided by Section 39, Article III, Texas Constitution. If this 2-18 Act does not receive the vote necessary for immediate effect, this 2-19 Act takes effect September 1, 2001.