78R8858 T
By: Davis of Harris H.B. No. 2556
A BILL TO BE ENTITLED
AN ACT
relating to the control of health insurance fraud.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Texas Insurance Code, Part I, Chapter 3, Life,
Accident and Health Insurance, is amended to add a new Article 3.101
of a new Subchapter L, Insurer Anti-fraud Programs, as follows:
Art. 3.101. STATEMENT OF PUBLIC POLICY. The Legislature
finds and declares that the business of health insurance involves
many transactions which have potential for abuse and illegal
activities. There are numerous law enforcement agencies on the
state and local levels charged with the responsibility for
investigating and prosecuting fraudulent activity. This chapter is
intended to permit the full utilization of the expertise of the
commissioner and the department so that they may more effectively
investigate and discover insurance frauds, halt fraudulent
activities, and assist and receive assistance from federal, state,
local, and administrative law enforcement agencies in prosecution
of persons who are parties in insurance frauds.
SECTION 2. Texas Insurance Code, Part I, Chapter 3, Life,
Accident and Health Insurance, is amended to add a new Article
3.101-1 of a new Subchapter L, Insurer Anti-fraud Programs, as
follows:
Art. 3.101-1. NOTICE OF PENALTY FOR FALSE OR FRAUDULENT
CLAIMS; DISPLAY ON FORMS. Any insurer who, in connection with any
insurance contract or provision of contract described in this
subsection, prints, reproduces, or furnishes a form to any person
upon which that person gives notice to the insurer or makes claim
against it by reason of accident, injury, or other noticed or
claimed loss, or on a rider attached thereto, shall cause to be
printed or displayed in comparative prominence with other content
the statement or a statement substantially similar to the following
in terms of intent and language: "Any person who knowingly presents
false or fraudulent claim for the payment of a loss is guilty of a
crime and may be subject to fines and confinement in state prison."
This statement shall be preceded by the words: "For your
protection, Texas law requires the following to appear on this
form" or other explanatory words of similar meaning.
SECTION 3. Texas Insurance Code, Part I, Chapter 3, Life,
Accident and Health Insurance, is amended to add a new Article
3.101-2 of a new Subchapter L, Insurer Anti-fraud Programs, as
follows:
Art. 3.101-2. ADMINISTRATIVE ACTION FOR FRAUD. If the
commissioner of insurance determines that an insurer has been
defrauded by the action of a health care provider, including a
hospital, physician, dentist, chiropractor, nurse, or other
practitioner of the health care or healing arts, the commissioner
may order that the insurer retain such amounts that otherwise would
be owed to that health care provider.
SECTION 4. Texas Insurance Code, Part I, Chapter 3, Life,
Accident and Health Insurance, is amended to add a new Article
3.101-3 of a new Subchapter L, Insurer Anti-fraud Programs, as
follows:
Art. 3.101-3. INSURER ANTI-FRAUD INVESTIGATIVE UNITS. (a)
Every insurer admitted to do business in this state that at any time
in the previous calendar year had $10 million or more in direct
premiums written shall:
(1) Establish and maintain a division within the
company to investigate possible fraudulent claims by insureds or by
persons making claims against policies held by insureds; or
(2) Contract with others to investigate possible
fraudulent claims against policies held by insureds.
(b) An insurer subject to this chapter shall file annually
for approval with the insurance fraud unit of the department (Texas
Insurance Code Article 1.10D) beginning on or before July 1, 2001, a
detailed description of the division established pursuant to this
statute and the results of its investigations.
(c) Every insurer admitted to do business in this state,
that in the previous calendar year had less than $10 million in
direct premiums written, must adopt annually an anti-fraud plan and
file it for approval with the insurance fraud unit of the department
beginning on or before July 1, 2001. After the insurer's
satisfaction of its first filing requirement under this statute,
the insurer shall thereafter comply with the filing dates as
established by the commissioner.
(d) In discharge of its obligation to establish and maintain
an anti-fraud division, an insurer may contract with others to
investigate possible fraudulent claims against policies held by
insureds.
(e) If an insurer establishes and maintains an anti-fraud
division, then insurer's anti-fraud plan shall include:
(1) A description of the insurer's procedures for
detecting and investigating possible fraudulent insurance acts;
(2) A description of the insurer's procedures for the
mandatory reporting of possible fraudulent insurance acts to the
Insurance fraud unit of the department;
(3) A description of the insurer's plan for anti-fraud
education and training of its claims adjusters or other personnel;
(4) The names, addresses, telephone numbers, and fax
numbers of the persons assigned by the insurer to staff the
insurer's anti-fraud division; and
(5) A written description or chart outlining the
organizational arrangement of the insurer's anti-fraud personnel
who are responsible for the investigation and reporting of possible
fraudulent insurance acts.
(f) If an insurer elects to contract with others to
investigate possible fraudulent claims against policies held by
insureds, then the insurer shall file for approval with the
insurance fraud unit of the department:
(1) A copy of the written contract between the insurer
and the entity with which the insurer has entered into an agreement
to investigate possible fraudulent insurance claims;
(2) The names, addresses, telephone numbers, and fax
numbers of the principals of the entity with which the insurer has
entered into an agreement to investigate possible fraudulent
claims; and
(3) The qualifications of the principals of the entity
with which the insurer has entered into an agreement to investigate
possible fraudulent claims.
(g) Any insurer who obtains a certificate of authority after
January 1, 2000, shall have 18 months in which to comply with the
requirements of this section. After the insurer's satisfaction of
its first filing requirement under this statute, the insurer shall
thereafter comply with the filing dates as established by the
commissioner.
(h) For purposes of this section, the term "division"
includes the assignment of fraud investigation to employees whose
principal responsibilities are the investigation and disposition
of claims.
(i) If an insurer hires additional employees or contracts
with another entity to fulfill the requirements of this section,
the additional cost incurred must be included as an administrative
expense for ratemaking purposes.
SECTION 5. Texas Insurance Code, Part I, Chapter 3, Life,
Accident and Health Insurance, is amended to add a new Article
3.101-4 of a new Subchapter L, Insurer Anti-fraud Programs, as
follows:
Art. 3.101-4. IMMUNITY FOR INSURER-TO INSURER INFORMATION
SHARING. (a) In the course of investigating possible insurance
fraud claims, an insurer or its contracting entity may share
information with other insurers or entities that have contracted
with insurers to provide anti-fraud investigative services.
(b) The sharing of this information between insurers and
their contracting entities under this statute will not subject the
parties that are sharing the information to liability for
defamation by the health care provider if the purpose of the
provision of information is for the purpose of reporting,
detecting, or preventing the commission of fraudulent insurance
acts and is made without malice, fraudulent intent, or bad faith.
(c) This section does not affect or modify any common law or
statutory privilege or immunity.
SECTION 6. Texas Health & Safety Code, Title 1, is amended
by adding Section 2.001, as part of a new chapter 2, Health Care
Fraud Programs as follows:
Sec. 2.001. PUBLIC POLICY. It shall be the policy of this
state to confront aggressively the problem of health care fraud in
Texas by facilitating the detection and prevention of fraud at its
source.
SECTION 7. Texas Health & Safety Code, Title 1, is amended
by adding Section 2.002. as part of a new chapter 2, Health Care
Fraud Programs as follows:
Sec. 2.002. DEFINITIONS. (a) "Insurer" means
(1) any life, health, & accident insurer; health &
accident insurer; or health insurer; health maintenance
organization; or any other company operating pursuant to Chapter 3,
10, 20, 20A, 22, or 26 of the Code and that is authorized to issue,
deliver, or issue for delivery in this state policies,
certificates, or contracts;
(2) any approved nonprofit health corporation that is
certified under Section 5.01(a), Medical Practice Act (Article
4495b, Vernon's Texas Civil Statutes), and that holds a certificate
of authority issued by the commissioner of insurance under Article
21.52F, Insurance Code;
(3) any entity that direct contracts with employers,
employees, labor unions, trade associations, or other groups to
provide health benefit coverage; or
(4) any insurer authorized by the Texas Department of
Insurance to write workers' compensation insurance in this state.
(b) "Health maintenance organization" means an organization
as defined in Article 20A.02 of the Code.
(c) "Health care provider" means any person or entity that
holds a license, certificate, or other form of authorization issued
by an agency, board, commission, or other governmental unit of this
state by which the holder is authorized to deliver, render, or
otherwise provide health care or medical services to the public;
this definition shall include but not be limited to all such persons
who hold such licenses, certificates, or other authorizations
issued pursuant to the provisions of Title 71 of the Texas Revised
Civil Statutes and Title 4 of the Texas Health & Safety Code.
SECTION 8. Texas Health & Safety Code, Title 1, is amended
by adding Section 2.003. as part of a new chapter 2, Health Care
Fraud Programs as follows:
Sec. 2.003. UNPROFESSIONAL CONDUCT. (a) It shall
constitute unprofessional conduct and grounds for disciplinary
action for a provider to do any of the following in connection with
his or her professional activities:
(1) Knowingly present or cause to be presented any
false or fraudulent claim for the payment of a loss under a contract
of insurance
(2) Knowingly prepare, make, or subscribe any writing,
with intent to present or use the same, or to allow it to be
presented or used in support of any false or fraudulent claim
(3) Commit an offense that is a violation of Chapter 35
of the Texas Penal Code or is a violation of any similar statute
under the laws of other jurisdictions.
(b) In addition to such other provisions of civil or
criminal law, a violation of this provision shall constitute cause
for the suspension of the provider's license for one year upon a
first conviction for fraud in any jurisdiction and revocation of a
provider's license for a second conviction in any jurisdiction.
The first and second convictions need not occur in the same
jurisdiction for the revocation to be imposed.
SECTION 9. Texas Health & Safety Code, Title 1, is amended
by adding Section 2.004 as part of a new chapter 2, Health Care
Fraud Programs, as follows:
Sec. 2.004. NON-APPLICATION TO ERISA PLANS. No portion of
this chapter shall be construed to apply to those self-funded
health care plans that may be governed by the provisions of Employee
Retirement Income Security Act of 1974, as amended.
SECTION 10. Texas Insurance Code, Article 1.10D, is
amended by adding a new Section 3A, as follows:
Sec. 3A. INSURER ANTI-FRAUD INVESTIGATIVE REPORTS. (a)
The insurance fraud unit shall receive, review, and investigate in
a timely manner all insurer anti-fraud reports submitted pursuant
to the provisions of Texas Insurance Code, Article 3.101.
(b) The insurance fraud unit shall report in writing
annually to the commissioner the number of cases completed and
recommendations for new regulatory and statutory responses to the
types of fraudulent activities being encountered by the insurance
fraud unit.
SECTION 11. Texas Insurance Code, Article 1.10D, is
amended by adding a new Subsection 2(h), as follows:
(h) The insurance fraud unit shall be funded by an
anti-fraud assessment levied against insurers calculated as a
percentage of the total premium written during the previous
calendar year. The percentage and dates of payment shall be set by
the commissioner upon notice and hearing. The anti-fraud
assessment may not exceed 0.50 percent of gross premiums written by
the insurer. The insurer may take as a credit against any premium
tax obligations under the provisions of Article 4.11 of this code
the amount paid on the anti-fraud assessment. The anti-fraud
assessment shall be paid to the office of the comptroller of public
accounts.
SECTION 12. This Act takes effect January 1, 2004.