79R3344 CLG-F
By: Janek S.B. No. 563
A BILL TO BE ENTITLED
AN ACT
relating to the prevention of Medicaid fraud; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 36.001(9), Human Resources Code, is
amended to read as follows:
(9) "Provider" means a person who participates in or
who has applied to participate in the Medicaid program as a supplier
of a product or service and includes:
(A) a management company that manages, operates,
or controls another provider;
(B) a person, including a medical vendor, that
provides a product or service to a provider or to a fiscal agent;
(C) an employee of a provider; [and]
(D) a managed care organization; and
(E) a manufacturer or distributor of a product
for which the Medicaid program provides reimbursement.
SECTION 2. Subchapter A, Chapter 36, Human Resources Code,
is amended by adding Section 36.0011 to read as follows:
Sec. 36.0011. CULPABLE MENTAL STATE. (a) For purposes of
this chapter, a person acts "knowingly" with respect to information
if the person:
(1) has knowledge of the information;
(2) acts with conscious indifference of the truth or
falsity of the information; or
(3) acts in reckless disregard of the truth or falsity
of the information.
(b) Proof of the person's specific intent to defraud is not
required in a civil or administrative proceeding to show that a
person acted "knowingly" with respect to information under this
chapter.
SECTION 3. Section 36.002, Human Resources Code, is amended
to read as follows:
Sec. 36.002. UNLAWFUL ACTS. A person commits an unlawful
act if the person:
(1) knowingly [or intentionally] makes or causes to be
made a false statement or misrepresentation of a material fact to
permit a person to receive a benefit or payment under the Medicaid
program that is not authorized or that is greater than the benefit
or payment that is authorized[:
[(A) on an application for a contract, benefit,
or payment under the Medicaid program; or
[(B) that is intended to be used to determine a
person's eligibility for a benefit or payment under the Medicaid
program];
(2) knowingly [or intentionally] conceals or fails to
disclose information that permits [an event:
[(A) that the person knows affects the initial or
continued right to a benefit or payment under the Medicaid program
of:
[(i) the person; or
[(ii) another person on whose behalf the
person has applied for a benefit or payment or is receiving a
benefit or payment; and
[(B) to permit] a person to receive a benefit or
payment under the Medicaid program that is not authorized or that is
greater than the benefit or payment [or benefit] that is
authorized;
(3) knowingly [or intentionally] applies for and
receives a benefit or payment on behalf of another person under the
Medicaid program and converts any part of the benefit or payment to
a use other than for the benefit of the person on whose behalf it was
received;
(4) knowingly [or intentionally] makes, causes to be
made, induces, or seeks to induce the making of a false statement or
misrepresentation of material fact concerning:
(A) the conditions or operation of a facility in
order that the facility may qualify for certification or
recertification required by the Medicaid program, including
certification or recertification as:
(i) a hospital;
(ii) a nursing facility or skilled nursing
facility;
(iii) a hospice;
(iv) an intermediate care facility for the
mentally retarded;
(v) an assisted living facility; or
(vi) a home health agency; or
(B) information required to be provided by a
federal or state law, rule, regulation, or provider agreement
pertaining to the Medicaid program;
(5) except as authorized under the Medicaid program,
knowingly pays, [or intentionally] charges, solicits, accepts, or
receives, in addition to an amount paid under the Medicaid program,
a gift, money, a donation, or other consideration as a condition to
the provision of a service or product or the continued provision of
a service or product [to a Medicaid recipient] if the cost of the
service or product [provided to the Medicaid recipient] is paid
for, in whole or in part, under the Medicaid program;
(6) knowingly [or intentionally] presents or causes to
be presented a claim for payment under the Medicaid program for a
product provided or a service rendered by a person who:
(A) is not licensed to provide the product or
render the service, if a license is required; or
(B) is not licensed in the manner claimed;
(7) knowingly [or intentionally] makes a claim under
the Medicaid program for:
(A) a service or product that has not been
approved or acquiesced in by a treating physician or health care
practitioner;
(B) a service or product that is substantially
inadequate or inappropriate when compared to generally recognized
standards within the particular discipline or within the health
care industry; or
(C) a product that has been adulterated, debased,
mislabeled, or that is otherwise inappropriate;
(8) makes a claim under the Medicaid program and
knowingly [or intentionally] fails to indicate the type of license
and the identification number of the licensed health care provider
who actually provided the service;
(9) knowingly [or intentionally] enters into an
agreement, combination, or conspiracy to defraud the state by
obtaining or aiding another person in obtaining an unauthorized
payment or benefit from the Medicaid program or a fiscal agent; [or]
(10) is a managed care organization that contracts
with the Health and Human Services Commission or other state agency
to provide or arrange to provide health care benefits or services to
individuals eligible under the Medicaid program and knowingly [or
intentionally]:
(A) fails to provide to an individual a health
care benefit or service that the organization is required to
provide under the contract;
(B) fails to provide to the commission or
appropriate state agency information required to be provided by
law, commission or agency rule, or contractual provision; or
(C) engages in a fraudulent activity in
connection with the enrollment of an individual eligible under the
Medicaid program in the organization's managed care plan or in
connection with marketing the organization's services to an
individual eligible under the Medicaid program; or
(11) knowingly [(D)] obstructs an investigation by
the attorney general of an alleged unlawful act under this section.
SECTION 4. Section 36.003(b), Human Resources Code, is
amended to read as follows:
(b) Except as ordered by a court for good cause shown, the
office of the attorney general may not produce for inspection or
copying or otherwise disclose the contents of documentary material
obtained under this section to a person other than:
(1) an [authorized] employee of the attorney general;
(2) an agency of this state, the United States, or
another state;
(3) a criminal district attorney, district attorney,
or county attorney of this state;
(4) the United States attorney general; [or]
(5) a state or federal grand jury;
(6) a political subdivision of this state; or
(7) a person authorized by the attorney general to
receive the information.
SECTION 5. Section 36.004, Human Resources Code, is amended
to read as follows:
Sec. 36.004. IMMUNITY. Notwithstanding any other law, a
person is not civilly or criminally liable for providing access to
documentary material under this chapter to:
(1) an [authorized] employee of the attorney general;
(2) an agency of this state, the United States, or
another state;
(3) a criminal district attorney, district attorney,
or county attorney of this state;
(4) the United States attorney general; [or]
(5) a state or federal grand jury;
(6) a political subdivision of this state; or
(7) a person authorized by the attorney general to
receive the information.
SECTION 6. Section 36.005(b), Human Resources Code, is
amended to read as follows:
(b) A provider [person] found liable under Section 36.052
for an unlawful act may not, for a period of 10 years, provide or
arrange to provide health care services under the Medicaid program
or supply or sell, directly or indirectly, a product to or under the
Medicaid program [for a period of 10 years]. The executive
commissioner of the Health and Human Services Commission [board of
a state agency that operates part of the Medicaid program] may by
rule provide for a period of ineligibility longer than 10 years.
The period of ineligibility begins on the date on which the
determination that the provider [person] is liable becomes final.
This subsection does not apply to a provider [person] who operates a
nursing facility or an ICF-MR facility.
SECTION 7. Sections 36.052(a) and (c), Human Resources
Code, are amended to read as follows:
(a) Except as provided by Subsection (c), a person who
commits an unlawful act is liable to the state for:
(1) [restitution of] the amount [value] of any payment
or the value of any monetary or in-kind benefit provided under the
Medicaid program, directly or indirectly, as a result of the
unlawful act, including any payment made to a third party;
(2) interest on the amount [value] of the payment or
the value of the benefit described by Subdivision (1) at the
prejudgment interest rate in effect on the day the payment or
benefit was received or paid, for the period from the date the
benefit was received or paid to the date that [restitution is paid
to] the state recovers the amount of the payment or value of the
benefit;
(3) a civil penalty of:
(A) not less than $5,000 or more than $15,000 for
each unlawful act committed by the person that results in injury to
an elderly person, as defined by Section 48.002(a)(1) [48.002(1)],
a disabled person, as defined by Section 48.002(a)(8)(A)
[48.002(8)(A)], or a person younger than 18 years of age; or
(B) not less than $1,000 or more than $10,000 for
each unlawful act committed by the person that does not result in
injury to a person described by Paragraph (A); and
(4) two times the amount [value] of the payment or the
value of the benefit described by Subdivision (1).
(c) The trier of fact may assess a total of not more than two
times the amount [value] of a payment or the value of a benefit
described by Subsection (a)(1) if the trier of fact finds that:
(1) the person furnished the attorney general with all
information known to the person about the unlawful act not later
than the 30th day after the date on which the person first obtained
the information; and
(2) at the time the person furnished all the
information to the attorney general, the attorney general had not
yet begun an investigation under this chapter.
SECTION 8. Section 36.053, Human Resources Code, is amended
by adding Subsections (c)-(f) to read as follows:
(c) The office of the attorney general may not release or
disclose information that is obtained under Subsection (b)(1) or
(b)(2) or any documentary material or other record derived from the
information except:
(1) by court order for good cause shown;
(2) with the consent of the person who provided the
information;
(3) to an employee of the attorney general;
(4) to an agency of this state, the United States, or
another state;
(5) to any attorney representing the state under
Section 36.055 or in a civil action brought under Subchapter C;
(6) to a political subdivision of this state; or
(7) to a person authorized by the attorney general to
receive the information.
(d) The attorney general may use documentary material
derived from information obtained under Subsection (b)(1) or
(b)(2), or copies of that material, as the attorney general
determines necessary in the enforcement of this chapter, including
presentation before a court.
(e) If a person fails to file a statement as required by
Subsection (b)(1) or fails to submit to an examination as required
by Subsection (b)(2), the attorney general may file in a district
court of Travis County a petition for an order to compel the person
to file the statement or submit to the examination within a period
stated by court order. Failure to comply with an order entered under
this subsection is punishable by contempt.
(f) An order issued by a district court under this section
is subject to appeal to the supreme court.
SECTION 9. Section 36.054, Human Resources Code, is amended
by amending Subsection (e) and adding Subsection (e-1) to read as
follows:
(e) The [Except as ordered by a court for good cause shown,
the] office of the attorney general may not produce for inspection
or copying or otherwise disclose the contents of documentary
material obtained under this section except:
(1) by court order for good cause shown;
(2) with the consent of the person who produced the
information;
(3) to an employee of the attorney general;
(4) to an agency of this state, the United States, or
another state;
(5) to any attorney representing the state under
Section 36.055 or in a civil action brought under Subchapter C;
(6) to a political subdivision of this state; or
(7) to a person authorized by the attorney general to
receive the information [to a person other than an authorized
employee of the attorney general without the consent of the person
who produced the documentary material].
(e-1) The attorney general shall prescribe reasonable terms
and conditions allowing the documentary material to be available
for inspection and copying by the person who produced the material
or by an authorized representative of that person. The attorney
general may use the documentary material or copies of it as the
attorney general determines necessary in the enforcement of this
chapter, including presentation before a court.
SECTION 10. Section 36.102, Human Resources Code, is
amended by amending Subsections (b), (c), (d), and (e) and adding
Subsection (c-1) to read as follows:
(b) The petition shall be filed in camera and, except as
provided by Subsection (c-1) or (d), shall remain under seal until
at least the 180th [60th] day after the date the petition is filed
or the date on which the state elects to intervene, whichever is
earlier. The petition may not be served on the defendant until the
court orders service on the defendant.
(c) The state may elect to intervene and proceed with the
action not later than the 180th [60th] day after the date the
attorney general receives the petition and the material evidence
and information.
(c-1) At the time the state intervenes, the attorney general
may file a motion with the court requesting that the petition remain
under seal for an extended period.
(d) The state may, for good cause shown, move the court to
extend the 180-day deadline [time during which the petition remains
under seal] under Subsection (b) or (c). A motion under this
subsection may be supported by affidavits or other submissions in
camera.
(e) An action under this subchapter may be dismissed before
the end of the period during which the petition remains under seal
[prescribed by Subsection (b), as extended as provided by
Subsection (d), if applicable,] only if the court and the attorney
general consent in writing to the dismissal and state their reasons
for consenting.
SECTION 11. Section 36.103, Human Resources Code, is
amended to read as follows:
Sec. 36.103. ANSWER BY DEFENDANT. A defendant is not
required to file in accordance with the Texas Rules of Civil
Procedure an answer to a petition filed under this subchapter until
[the 20th day after the date] the petition is unsealed and served on
the defendant [in compliance with the Texas Rules of Civil
Procedure].
SECTION 12. Section 36.104(a), Human Resources Code, is
amended to read as follows:
(a) Not later than the last day of the period prescribed by
Section 36.102(c) or an extension of that period as provided by
Section 36.102(d), the state shall:
(1) proceed with the action; or
(2) notify the court that the state declines to take
over the action.
SECTION 13. Section 36.110(c), Human Resources Code, is
amended to read as follows:
(c) A payment to a person under this section shall be made
from the proceeds of the action. A person receiving a payment under
this section is also entitled to receive from the defendant an
amount for reasonable expenses, reasonable attorney's fees, and
costs that the court finds to have been necessarily incurred. The
court's determination of expenses, fees, and costs to be awarded
under this subsection shall be made only after the defendant has
been found liable in the action[, plus reasonable attorney's fees
and costs. Expenses, fees, and costs shall be awarded against the
defendant].
SECTION 14. The heading of Subchapter D, Chapter 36, Human
Resources Code, is amended to read as follows:
SUBCHAPTER D. [CRIMINAL PENALTIES AND] REVOCATION OF CERTAIN
OCCUPATIONAL LICENSES
SECTION 15. Section 36.132(b), Human Resources Code, is
amended to read as follows:
(b) A licensing authority shall revoke a license issued by
the authority to a person if the person is convicted of a felony
under Section 35A.02, Penal Code [36.131]. In revoking the
license, the licensing authority shall comply with all procedures
generally applicable to the licensing authority in revoking
licenses.
SECTION 16. Title 7, Penal Code, is amended by adding
Chapter 35A to read as follows:
CHAPTER 35A. MEDICAID FRAUD
Sec. 35A.01. DEFINITIONS. In this chapter:
(1) "Claim" has the meaning assigned by Section
36.001, Human Resources Code.
(2) "Fiscal agent" has the meaning assigned by Section
36.001, Human Resources Code.
(3) "Health care practitioner" has the meaning
assigned by Section 36.001, Human Resources Code.
(4) "Managed care organization" has the meaning
assigned by Section 36.001, Human Resources Code.
(5) "Medicaid program" has the meaning assigned by
Section 36.001, Human Resources Code.
(6) "Medicaid recipient" has the meaning assigned by
Section 36.001, Human Resources Code.
(7) "Physician" has the meaning assigned by Section
36.001, Human Resources Code.
(8) "Provider" has the meaning assigned by Section
36.001, Human Resources Code.
(9) "Service" has the meaning assigned by Section
36.001, Human Resources Code.
Sec. 35A.02. MEDICAID FRAUD. (a) A person commits an
offense if the person:
(1) knowingly makes or causes to be made a false
statement or misrepresentation of a material fact to permit a
person to receive a benefit or payment under the Medicaid program
that is not authorized or that is greater than the benefit or
payment that is authorized;
(2) knowingly conceals or fails to disclose
information that permits a person to receive a benefit or payment
under the Medicaid program that is not authorized or that is greater
than the benefit or payment that is authorized;
(3) knowingly applies for and receives a benefit or
payment on behalf of another person under the Medicaid program and
converts any part of the benefit or payment to a use other than for
the benefit of the person on whose behalf it was received;
(4) knowingly makes, causes to be made, induces, or
seeks to induce the making of a false statement or
misrepresentation of material fact concerning:
(A) the conditions or operation of a facility in
order that the facility may qualify for certification or
recertification required by the Medicaid program, including
certification or recertification as:
(i) a hospital;
(ii) a nursing facility or skilled nursing
facility;
(iii) a hospice;
(iv) an intermediate care facility for the
mentally retarded;
(v) an assisted living facility; or
(vi) a home health agency; or
(B) information required to be provided by a
federal or state law, rule, regulation, or provider agreement
pertaining to the Medicaid program;
(5) except as authorized under the Medicaid program,
knowingly pays, charges, solicits, accepts, or receives, in
addition to an amount paid under the Medicaid program, a gift,
money, a donation, or other consideration as a condition to the
provision of a service or product or the continued provision of a
service or product if the cost of the service or product is paid
for, in whole or in part, under the Medicaid program;
(6) knowingly presents or causes to be presented a
claim for payment under the Medicaid program for a product provided
or a service rendered by a person who:
(A) is not licensed to provide the product or
render the service, if a license is required; or
(B) is not licensed in the manner claimed;
(7) knowingly makes a claim under the Medicaid program
for:
(A) a service or product that has not been
approved or acquiesced in by a treating physician or health care
practitioner;
(B) a service or product that is substantially
inadequate or inappropriate when compared to generally recognized
standards within the particular discipline or within the health
care industry; or
(C) a product that has been adulterated, debased,
mislabeled, or that is otherwise inappropriate;
(8) makes a claim under the Medicaid program and
knowingly fails to indicate the type of license and the
identification number of the licensed health care provider who
actually provided the service;
(9) knowingly enters into an agreement, combination,
or conspiracy to defraud the state by obtaining or aiding another
person in obtaining an unauthorized payment or benefit from the
Medicaid program or a fiscal agent;
(10) is a managed care organization that contracts
with the Health and Human Services Commission or other state agency
to provide or arrange to provide health care benefits or services to
individuals eligible under the Medicaid program and knowingly:
(A) fails to provide to an individual a health
care benefit or service that the organization is required to
provide under the contract;
(B) fails to provide to the commission or
appropriate state agency information required to be provided by
law, commission or agency rule, or contractual provision; or
(C) engages in a fraudulent activity in
connection with the enrollment of an individual eligible under the
Medicaid program in the organization's managed care plan or in
connection with marketing the organization's services to an
individual eligible under the Medicaid program; or
(11) knowingly obstructs an investigation by the
attorney general of an alleged unlawful act under Section 36.002,
Human Resources Code.
(b) An offense under this section is:
(1) a Class C misdemeanor if the amount of any payment
or the value of any monetary or in-kind benefit provided under the
Medicaid program, directly or indirectly, as a result of the
conduct is less than $50;
(2) a Class B misdemeanor if the amount of any payment
or the value of any monetary or in-kind benefit provided under the
Medicaid program, directly or indirectly, as a result of the
conduct is $50 or more but less than $500;
(3) a Class A misdemeanor if the amount of any payment
or the value of any monetary or in-kind benefit provided under the
Medicaid program, directly or indirectly, as a result of the
conduct is $500 or more but less than $1,500;
(4) a state jail felony if the amount of any payment or
the value of any monetary or in-kind benefit provided under the
Medicaid program, directly or indirectly, as a result of the
conduct is $1,500 or more but less than $20,000;
(5) a felony of the third degree if the amount of any
payment or the value of any monetary or in-kind benefit provided
under the Medicaid program, directly or indirectly, as a result of
the conduct is $20,000 or more but less than $100,000;
(6) a felony of the second degree if the amount of any
payment or the value of any monetary or in-kind benefit provided
under the Medicaid program, directly or indirectly, as a result of
the conduct is $100,000 or more but less than $200,000; or
(7) a felony of the first degree if the amount of any
payment or the value of any monetary or in-kind benefit provided
under the Medicaid program, directly or indirectly, as a result of
the conduct is $200,000 or more.
(c) If conduct constituting an offense under this section
also constitutes an offense under another section of this code or
another provision of law, the actor may be prosecuted under either
this section or the other section or provision.
(d) When multiple payments or monetary or in-kind benefits
are provided under the Medicaid program as a result of one scheme or
continuing course of conduct, the conduct may be considered as one
offense and the amounts of the payments or monetary or in-kind
benefits aggregated in determining the grade of the offense.
SECTION 17. Section 41.002(d), Civil Practice and Remedies
Code, is amended to read as follows:
(d) Notwithstanding any provision to the contrary, this
chapter does not apply to:
(1) Section 15.21, Business & Commerce Code (Texas
Free Enterprise and Antitrust Act of 1983);
(2) [,] an action brought under the Deceptive Trade
Practices-Consumer Protection Act (Subchapter E, Chapter 17,
Business & Commerce Code) except as specifically provided in
Section 17.50 of that Act;
(3) an action brought under Chapter 36, Human
Resources Code;[,] or
(4) an action brought under Chapter 21, Insurance
Code.
SECTION 18. Section 36.131, Human Resources Code, is
repealed.
SECTION 19. (a) This Act applies only to conduct that
occurs on or after the effective date of this Act. Conduct that
occurs before the effective date of this Act is governed by the law
in effect at the time the conduct occurred, and that law is
continued in effect for that purpose.
(b) For purposes of this section, conduct constituting an
offense under the penal law of this state occurred before the
effective date of this Act if any element of the offense occurred
before that date.
SECTION 20. This Act takes effect September 1, 2005.