78R6223 PB-D

By:  Solomons                                                     H.B. No. 1496



A BILL TO BE ENTITLED

AN ACT

relating to reduction in benefit fraud and claim overpayments in 
unemployment compensation.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Chapter 213, Labor Code, is amended by adding 
Subchapter F to read as follows:
		SUBCHAPTER F.  INITIATIVE FOR REDUCTION IN BENEFIT

FRAUD AND OVERPAYMENTS
	Sec. 213.091.  STATE AUDITOR REVIEW.  (a)  The state auditor 
shall conduct a review to identify:
		(1)  trends in benefit fraud and claim overpayments in 
the state unemployment compensation insurance program; and
		(2)  the possible causes of those trends, including:                   
			(A)  ineffective state policies;                                      
			(B)  management and operational practices;                            
			(C)  weaknesses in existing computer 
cross-matching systems applicable to benefit recipients; and
			(D)  other factors considered appropriate by the 
state auditor.     
	(b)  To the extent possible, the state auditor shall model 
the review on analogous fraud reviews conducted regarding other 
government benefit programs, such as the Medicaid program, and 
shall target those industries identified as most affected by fraud.
	(c)  The review must:                                                   
		(1)  research fraudulent schemes identified by other 
states and how those schemes were detected;
		(2)  identify cost-effective strategies designed to 
reduce fraud, reduce claim overpayments, and increase collections 
of claim overpayments and leading to outcomes that the commission 
can measure, track, and report; and
		(3)  include recommendations to the commission 
regarding improvements to unemployment compensation claimant job 
search and placement strategies designed to reduce the percentage 
of claimants who exhaust their unemployment compensation benefits.
	(d)  The state auditor shall complete the review not later 
than August 31, 2004.
	(e)  The commission shall cooperate with the state auditor in 
the performance of the review and pay the reasonable and necessary 
costs of the review with available resources from the unemployment 
compensation administration fund.
	Sec. 213.092.  IMPLEMENTATION BY COMMISSION.  (a)  The 
commission shall implement the unemployment compensation insurance 
overpayment collection and fraud detection strategies recommended 
by the state auditor that the commission is able to perform with 
existing staff and within its existing budget.
	(b)  If feasible with existing staff and within its existing 
budget, the commission shall implement the state auditor 
recommendations as they are developed.  The commission shall 
complete implementation of the recommendations not later than 
August 31, 2005.
	(c)  Any strategies that the commission is unable to 
implement during the 2004-2005 state fiscal biennium due to fiscal 
constraints shall be implemented on receipt by the commission of 
necessary funds and staff resources.
	Sec. 213.093.  PROPOSED LEGISLATION REGARDING USE OF PRIVATE 
COLLECTION AGENCIES BY COMMISSION.  (a)  In cooperation with the 
state auditor, the commission shall develop proposed legislation 
under which the commission is authorized to enter into reasonable 
and prudent contingency fee contracts with private collection 
agencies to assist the commission in implementing the recommended 
strategies identified by the state auditor under Section 213.091 
and pursuing uncollected overpayments of unemployment compensation 
benefits.
	(b)  The proposed legislation must:                                     
		(1)  establish a penalty for claimants whose 
overpayments remain delinquent; and
		(2)  authorize the commission to use the amounts 
received as penalties to pay the fees charged by the private 
collection agencies.
	Sec. 213.094.  JOINT REPORT.  (a)  Not later than March 1, 
2005, the state auditor and the commission shall submit a joint 
report to the 79th Legislature that includes:
		(1)  all recommendations made to the commission in the 
review conducted under Section 213.091;
		(2)  a description of the actions taken by the 
commission as of the date of the joint report to implement those 
recommendations and the impact of those actions on overpayment 
rates and fraud identification;
		(3)  a description of all recommendations made to the 
commission in the review conducted under Section 213.091 that the 
commission has been unable to implement as of the date of the joint 
report due to fiscal constraints;
		(4)  a description of actions taken by the commission 
to reduce the rate of exhaustion of benefits by claimants to ensure 
that claimants achieve employment more quickly; and
		(5)  any legislation proposed to improve the ongoing 
future integrity of the unemployment compensation trust fund.
	(b)  The commission shall include in the joint report:                  
		(1)  a description of all activities that result in 
measurable improvements to the unemployment compensation insurance 
overpayment collection and fraud detection processes at the 
commission; and
		(2)  the proposed legislation developed under Section 
213.093.       
	Sec. 213.095.  EXPIRATION.  This subchapter expires 
September 1, 2007.
	SECTION 2.  This Act takes effect immediately if it receives 
a vote of two-thirds of all the members elected to each house, as 
provided by Section 39, Article III, Texas Constitution.  If this 
Act does not receive the vote necessary for immediate effect, this 
Act takes effect September 1, 2003.