78R3370 PB-D

By:  Duncan                                                       S.B. No. 956



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 fully cooperate with the state 
auditor in the performance of the review and shall pay the costs of 
the review with available resources from the unemployment 
compensation administration fund.
	Sec. 213.092.  IMPLEMENTATION BY COMMISSION.  (a)  The 
commission shall  implement all viable unemployment compensation 
insurance overpayment collection and fraud detection strategies 
recommended by the state auditor.
	(b)  If feasible, the commission shall begin implementing 
the state auditor recommendations as they are developed.  The 
commission shall complete implementation of the recommendations  
not later than August 31, 2005.
	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  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 in aggressively 
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 actions taken by the commission 
to reduce the rate of exhaustion of benefits by claimants to ensure 
that claimants achieve employment more quickly; and
		(4)  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.