1-1 By: Fraser S.B. No. 444 1-2 (In the Senate - Filed January 29, 2001; January 30 2001, 1-3 read first time and referred to Committee on Business and Commerce; 1-4 May 11, 2001, reported adversely, with favorable Committee 1-5 Substitute by the following vote: Yeas 6, Nays 0; May 11, 2001, 1-6 sent to printer.) 1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 444 By: Fraser 1-8 A BILL TO BE ENTITLED 1-9 AN ACT 1-10 relating to a study of fraud in the unemployment insurance system. 1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-12 SECTION 1. Subchapter A, Chapter 213, Labor Code, is amended 1-13 by adding Section 213.010 to read as follows: 1-14 Sec. 213.010. STUDY OF BENEFIT OVERPAYMENTS AND FRAUD. 1-15 (a) The state auditor shall conduct a study to determine, to the 1-16 fullest extent possible, the number of fraudulent claims filed and 1-17 paid under this subtitle and the number and dollar amount of 1-18 fraudulent premium underpayments by employers. The commission 1-19 shall use the study to establish the most effective fraud detection 1-20 system. 1-21 (b) If the state auditor determines that the study should be 1-22 conducted, in whole or in part, by another entity, the state 1-23 auditor may contract with one or more independent, nongovernmental 1-24 entities to conduct all or part of the study. Notwithstanding the 1-25 degree to which the state auditor participates in the study, the 1-26 state auditor is responsible for supervising the study and for 1-27 reporting the results of the study as provided by Subsection (e). 1-28 (c) The fraud detection system established as a result of 1-29 the study conducted under this section shall incorporate the 1-30 commission's automated system for filing and paying claims. 1-31 (d) In developing the study required under this section, the 1-32 state auditor shall use as a model analogous studies performed by 1-33 other governmental entities that administer benefit programs, 1-34 including the medical assistance program under Chapter 32, Human 1-35 Resources Code. In developing the study required by this section, 1-36 the state auditor shall consider studies performed by the United 1-37 States Department of Labor and other state employment security 1-38 agencies concerning the misclassification of workers and resulting 1-39 underpayments to the unemployment insurance trust fund, and shall 1-40 evaluate the use of targeted audits to reduce misclassification. 1-41 The study must include thorough research on fraudulent schemes and 1-42 methods of fraud detection used in other states and an analysis of 1-43 businesses and industries most affected by fraud under this 1-44 subtitle. 1-45 (e) The state auditor shall report the results of the study 1-46 to the presiding officer of each house of the legislature not later 1-47 than January 1, 2003. 1-48 SECTION 2. This Act takes effect immediately if it receives 1-49 a vote of two-thirds of all the members elected to each house, as 1-50 provided by Section 39, Article III, Texas Constitution. If this 1-51 Act does not receive the vote necessary for immediate effect, this 1-52 Act takes effect September 1, 2001. 1-53 * * * * *