2007S0667-1 03/07/07

By: Fraser S.B. No. 1539

A BILL TO BE ENTITLED

AN ACT

relating to the regulation by the Texas Department of Licensing and Regulation of certain chiropractic clinics; providing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 201, Occupations Code, is amended by adding Subchapter N to read as follows: SUBCHAPTER N. CLINIC NOT OWNED BY CHIROPRACTOR

Sec. 201.651. DEFINITIONS. In this subchapter:

(1) "Applicant" means a person or business seeking to be licensed under this subchapter or seeking the renewal of a license under this subchapter.

(2) "Chiropractic clinic owned by a non-chiropractor" means a chiropractic facility subject to licensing under this subchapter and registered under Section 201.312.

(3) "Commission" means the Texas Commission of Licensing and Regulation.

(4) "Contracted chiropractor" means a chiropractor who holds a current active license to practice chiropractic and who has entered into a contractual agreement with a chiropractic clinic owner to provide chiropractic care.

(5) "Controlling person" means:

(A) an officer or director of a corporation seeking a license under this subchapter, a shareholder holding 10 percent or more of the voting stock of a corporation seeking to own or operate a chiropractic clinic owned by a non-chiropractor, or a partner of a partnership seeking to own or operate a chiropractic clinic owned by a non-chiropractor; or

(B) an individual who possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of a company that owns and operates a chiropractic clinic owned by a non-chiropractor through the ownership of voting securities, by contract, or otherwise.

(6) "Department" means the Texas Department of Licensing and Regulation.

(7) "Executive director" means the executive director of the Texas Department of Licensing and Regulation.

(8) "Licensee" means a person or entity licensed under this subchapter who owns or operates a chiropractic clinic but who is not a chiropractor.

Sec. 201.652. RULES; INTERAGENCY COOPERATION. (a) The executive director shall adopt rules as necessary to administer this subchapter.

(b) The rules shall be adopted in compliance with Chapter 2001, Government Code.

(c) Each licensee is governed and controlled by this subchapter and the rules adopted by the executive director.

(d) Notwithstanding any other provision of this subchapter, nothing in this subchapter preempts the existing statutory or rulemaking authority of any other state agency or entity to regulate chiropractic clinics owned by a non-chiropractor.

(e) Each state agency that, in performing duties under other law, affects the regulation of chiropractic clinics owned by a non-chiropractor shall cooperate with the department, the executive director, and other state agencies as necessary to fully implement and enforce this subchapter. The board, the Texas Department of Insurance, including the division of workers' compensation, and the attorney general's office shall assist in the implementation of this subchapter and shall provide information to the department on request.

Sec. 201.653. LICENSE REQUIRED; APPLICATION. (a) A chiropractic clinic owned by a non-chiropractor may not allow a contracted chiropractor to engage in or offer chiropractic services or care in this state unless the clinic holds a license under this subchapter.

(b) A chiropractic clinic owned by a non-chiropractor that seeks an original or renewal license under this subchapter shall file with the department a written application accompanied by the application fee.

(c) The department may require an applicant to provide information and certifications necessary to determine that the applicant meets the licensing requirements of this subchapter. The department may also require the applicant to provide information and certifications necessary to determine whether individuals affiliated with the applicant are qualified to serve as controlling persons.

(d) Except as provided by Subsection (e) and Section 201.661(f), an applicant or licensee, a spouse of an applicant or licensee, a partner of a limited liability partnership that is or was an applicant or licensee, or any stockholder of a corporation that is or was an applicant or licensee is ineligible for a license for two years after the date of final departmental action on the denial or revocation of a license applied for or issued under this subchapter. This restriction does not apply to a denial or revocation of a license if the basis of the action was:

(1) an inadvertent error or omission in the application if that error or omission is promptly corrected;

(2) a determination by the department that the documented experience level was insufficient at the time of the previous application; or

(3) the inability of the department to complete the criminal background investigation required under Section 201.654 because of insufficient information received from a local, state, or federal law enforcement agency.

(e) An applicant or licensee, a spouse of an applicant or licensee, a partner of a limited liability partnership that is or was an applicant or licensee, or any stockholder of a corporation that is or was an applicant or licensee is eligible for a license one year after the date of final departmental action on the denial or revocation of a license applied for or issued under this subchapter if:

(1) the basis of the denial or revocation was that a controlling person affiliated with the applicant or licensee was determined by the department to be unsuitable; and

(2) the unsuitable controlling person has in fact ceased to be a controlling person of the applicant or licensee.

Sec. 201.654. LICENSE REQUIREMENTS. (a) To be qualified to serve as a controlling person of a licensee under this subchapter, a person must be at least 18 years of age, be of good moral character, and have educational, managerial, or business experience relevant to:

(1) the operation of a business entity offering chiropractic care; or

(2) service as a controlling person of a chiropractic care facility.

(b) For the purposes of this section, "good moral character" means a personal history of honesty, trustworthiness, fairness, and respect for the rights of others and for the laws of this state and nation, and a good reputation for fair dealing.

(c) The department shall conduct a thorough background investigation of each individual applicant and of each controlling person of each applicant to determine whether the applicant or controlling person is qualified under this subchapter. The department may deny an application for the issuance or renewal of a license if it finds that a controlling person is not qualified. The investigation must include:

(1) the submission of fingerprints for processing through appropriate local, state, and federal law enforcement agencies; and

(2) examination by the department of police or other law enforcement records maintained by local, state, or federal law enforcement agencies.

(d) Background investigations by the department are governed by this subchapter and Chapter 53. Conviction of a crime does not automatically disqualify a controlling person, require the revocation of a license, or require the denial of an application for a new or renewed license. The department shall consider criminal convictions as provided by Section 53.022.

(e) A licensee shall maintain a registered agent for the service of process in this state.

(f) An applicant for an original or renewal license must demonstrate a net worth as follows:

(1) $50,000 if the applicant employs fewer than five assigned employees;

(2) $75,000 if the applicant employs at least five but not more than eight assigned employees;

(3) $100,000 if the applicant employs more than eight assigned employees.

(g) For purposes of Subsection (f), "assigned employee" means a full-time employee whose normal work week is at least 25 hours per week and whose work is performed in this state. The term does not include an employee hired to support or supplement the client's workforce in special work situations, such as employee absences.

(h) The applicant shall demonstrate the applicant's net worth to the department by providing the department with the applicant's financial statement or a copy of the applicant's most recent federal tax return. The net worth requirement may also be satisfied through guarantees, letters of credit, or other security acceptable to the department. A guaranty is not acceptable to satisfy this subsection unless the applicant submits sufficient evidence to satisfy the department that the guarantor has adequate resources to satisfy the obligations of the guaranty.

(i) In calculating net worth, an applicant shall include adequate reserves for all taxes and insurance, including reserves for claims incurred but not paid and for claims incurred but not reported under plans of self-insurance for health benefits. The calculation of net worth by an applicant shall be made according to Section 448, Internal Revenue Code of 1986.

(j) A document submitted to establish net worth must reflect the net worth as of a date not earlier than six months before the date on which the application is submitted. A document submitted to establish net worth must be prepared or certified by an independent certified public accountant. Information supplied regarding net worth, including copies of federal tax returns, is proprietary and confidential and is exempt from disclosure to third parties, other than to other governmental agencies with a reasonable legitimate purpose for obtaining the information.

Sec. 201.655. FEES. (a) Each applicant for an original or renewal license shall pay to the department on the issuance of the license or license renewal a fee set by the commission by rule, in an amount not to exceed $3,000.

(b) The commission is authorized to charge reasonable fees for license applications and renewals, investigations, inspections, and any other administrative or enforcement responsibilities under this subchapter.

Sec. 201.656. WORKERS' COMPENSATION INSURANCE. A licensee may elect to obtain workers' compensation insurance coverage for its assigned employees through an insurance company as defined under Section 401.011, Labor Code, or through self-insurance as provided under Chapter 407, Labor Code.

Sec. 201.657. UNEMPLOYMENT TAXES; PAYROLL. A licensee is the employer of an assigned employee for purposes of Chapters 61 and 207, Labor Code. In addition to any other reports required to be filed by law, a licensee shall report quarterly to the Texas Workforce Commission the name, address, telephone number, federal income tax identification number, and classification code as described in the "Standard Industrial Classification Manual," as published by the United States Office of Management and Budget, of each client company on a form prescribed by the Texas Workforce Commission.

Sec. 201.658. POSTING OF LICENSES. (a) The executive director by rule shall determine the form and content of:

(1) the licenses issued under this subchapter; and

(2) notices required to be posted under this section.

(b) A license issued under this subchapter must be posted in a conspicuous place in the principal place of business of the licensee in this state. Each licensee shall display, in a place that is in clear and unobstructed public view, a notice stating that the business operated at the location is licensed and regulated by the department and that any questions or complaints should be directed to the department.

(c) A person who is issued a license under this subchapter must provide a copy of the license to the board and to any chiropractors who are contracted with the licensee upon receipt of the initial license and annually upon renewal.

Sec. 201.659. LICENSE NOT ASSIGNABLE; CHANGES OF NAME OR LOCATION. (a) A licensee may not conduct business under any name other than the name specified in the license. A license issued under this subchapter is not assignable. A licensee may not conduct business under any fictitious or assumed name without written authorization from the department. The department may not authorize the use of a name that is so similar to that of a public office or agency, or to that of another licensee, that the public may be confused or misled by its use. A licensee may not conduct business under more than one name unless it has obtained a separate license for each name.

(b) A licensee may change its licensed name at any time by notifying the department and paying a fee for each change. The commission by rule shall set the fee for a name change in an amount not to exceed $50. A licensee may change its name on renewal of the license without the payment of the fee.

(c) A licensee must notify the department in writing not later than 30 days after the date of:

(1) any change in the location of its primary business office;

(2) the addition of more business offices; or

(3) a change in the location of business records maintained by the licensee.

Sec. 201.660. PROHIBITED ACTS; CRIMINAL PENALTY. (a) A person may not:

(1) offer chiropractic services as a chiropractic clinic owned by a non-chiropractor without holding a license under this subchapter;

(2) use the name or title "chiropractic clinic," "chiropractic offices," or any derivation of the term "chiropractic," or otherwise represent that it is licensed under this subchapter, unless the person holds a license under this subchapter;

(3) represent as its own the license of a clinic at another location or represent that a facility is licensed if the person does not hold a license for that facility;

(4) give materially false or forged evidence to the department in connection with obtaining or renewing a license or in connection with disciplinary proceedings under this subchapter; or

(5) use or attempt to use a license that has expired or been revoked.

(b) A person who violates Subsection (a) commits an offense. An offense under this section is a Class A misdemeanor.

(c) The executive director may notify the attorney general of a violation, and the attorney general may apply to a district court in Travis County for permission to file suit in the nature of quo warranto or for injunctive relief, or both. The attorney general may not be required to post a bond for injunctive relief.

Sec. 201.661. DISCIPLINARY ACTIONS. (a) For purposes of this section, "conviction" includes a plea of nolo contendere or a finding of guilt, regardless of adjudication.

(b) Disciplinary action may be taken against a licensee, an applicant, or a former licensee by the department on any of the following grounds:

(1) the conviction of a licensee or any controlling person of a licensee of bribery, fraud, or intentional or material misrepresentation in obtaining, attempting to obtain, or renewing a license;

(2) the conviction of a licensee or any controlling person of a licensee of a crime that relates to the operation of a chiropractic clinic owned by a non-chiropractor or the ability of the licensee or any controlling person of a licensee to operate the clinic;

(3) the conviction of a licensee or any controlling person of a licensee of a crime that relates to the classification, misclassification, or under-reporting of employees under Chapter 401, Labor Code;

(4) the conviction of a licensee or any controlling person of a licensee of a crime that relates to the establishment or maintenance of a self-insurance program, whether health insurance, workers' compensation insurance, or other insurance;

(5) the conviction of a licensee or any controlling person of a licensee of a crime that relates to fraud, deceit, or misconduct in the operation of a staff leasing service;

(6) engaging in services, without a license, of a chiropractic clinic owned by a non-chiropractor;

(7) transferring or attempting to transfer a license issued under this subchapter;

(8) violating this subchapter or any order or rule issued by the department or executive director under this subchapter;

(9) failing to notify the department, in writing, of the felony conviction of any controlling person not later than the 30th day after the date on which that conviction is final;

(10) failing to cooperate with an investigation, examination, or audit of the licensee's records conducted by the licensee's insurance company or the insurance company's designee, as allowed by the insurance contract or as authorized by law by the board;

(11) failing to notify the department and the board not later than the 30th day after the effective date of the change of any change in ownership, principal business address, or the address of accounts and records;

(12) failing to correct any tax filings or payment deficiencies within a reasonable time as determined by the executive director;

(13) refusing, after reasonable notice, to meet reasonable health and safety requirements within the licensee's control and made known to the licensee by a federal or state agency;

(14) a delinquency in the payment of any taxes or debts owed to the state other than those subject to a legitimate dispute;

(15) knowingly making a material misrepresentation to an insurance company or to the department or other governmental agency; or

(16) failing to maintain the net worth requirements required under Section 201.654.

(c) On a finding that a licensee or applicant has violated one or more provisions of Subsection (b), the department may:

(1) deny an application for a license;

(2) revoke, restrict, or refuse to renew a license;

(3) impose an administrative penalty in an amount of not less than $1,000 per violation, but not more than $50,000;

(4) issue a reprimand; or

(5) place the licensee on probation for a period and subject to conditions specified by the department.

(d) On revocation of a license, the licensee shall immediately return the revoked license to the department and notify all employees and patients and the board that the clinic may no longer provide chiropractic care and services.

(e) Disciplinary action may be taken, an application for a new or renewal license may be denied or a license revoked, or a determination that a controlling person is unqualified may be made by the department only as provided by Chapter 2001, Government Code, with notice to, and an opportunity for a hearing by, the affected applicant, licensee, or controlling person.

(f) If a license is revoked or renewal is denied, the affected person may request a reinstatement hearing after a minimum of one year. The department may reinstate or renew the license only if the cause of the nonrenewal or revocation has been corrected.

Sec. 201.662. FEES USED FOR ADMINISTRATION. All fees collected by the department under this subchapter shall be used to implement this subchapter.

Sec. 201.663. EFFECT OF OTHER LAW. This subchapter does not exempt any assigned employee of a licensee from any other license requirements imposed under local, state, or federal law.

SECTION 2. (a) A person is not required to hold a license under Subchapter N, Chapter 201, Occupations Code, as added by this Act, to operate a chiropractic clinic before January 1, 2008.

(b) A person who applies for a license under Subchapter N, Chapter 201, Occupations Code, as added by this Act, on or before January 1, 2008, and whose application is granted is not liable for any act, omission, or representation that would be lawful under its license had the license been in effect at the time of the act, omission, or representation.

(c) The Texas Department of Licensing and Regulation shall adopt rules to implement Subchapter N, Chapter 201, Occupations Code, as added by this Act, not later than December 1, 2007.

SECTION 3. This Act takes effect September 1, 2007.