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By: Solomons (Senate Sponsor - Duncan) H.B. No. 1496
(In the Senate - Received from the House May 5, 2003;
May 7, 2003, read first time and referred to Committee on Business
and Commerce; May 19, 2003, reported favorably by the following
vote: Yeas 9, Nays 0; May 19, 2003, sent to printer.)
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) In developing the review required under this section,
the Office of the State Auditor shall consider studies performed by
the U.S. Department of Labor and other state employment security
agencies concerning the misclassification of workers resulting in
underpayments to the UI Trust Fund, and shall specifically evaluate
the use of targeted audits to reduce misclassification.
(d) 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.
(e) The state auditor shall complete the review not later
than August 31, 2004.
(f) 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 workforce
commission federal account.
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.
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