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A BILL TO BE ENTITLED
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AN ACT
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relating to the collection of delinquent obligations owed to the |
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state. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 403.019(c), Government Code, is amended |
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to read as follows: |
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(c) A contract under this section is not valid unless |
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approved by the attorney general. The attorney general shall |
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approve a contract if the attorney general determines that the |
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contract complies with the requirements of this section, that the |
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contract does not conflict with any contract formed under Section |
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2107.003(b), and that the contract [and] is in the best interest of |
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the state. No judicial action by any person on behalf of the state |
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under a contract authorized and approved by this section may be |
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brought unless approved by the attorney general. |
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SECTION 2. Section 2107.003, Government Code, is amended to |
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read as follows: |
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Sec. 2107.003. COLLECTION BY ATTORNEY GENERAL, |
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COMPTROLLER, OR OUTSIDE AGENT. (a) Except as provided by |
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Subsection (c), a state agency shall report an uncollected and |
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delinquent obligation to [request] the attorney general for |
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collection. The state agency must report the obligation on or |
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before the 90th day after the date the obligation becomes past due |
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or delinquent [to collect an obligation before the agency may
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employ, retain, or contract with a person other than a full-time
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employee of the state agency to collect the obligation]. |
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(b) The attorney general: |
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(1) shall provide legal services for collection of the |
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obligation; |
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(2) may authorize the requesting state agency to |
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employ, retain, or contract, subject to approval by the attorney |
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general, with a person to collect the obligation; or |
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(3) if the attorney general determines it to be |
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economical and in the best interest of the state, may contract with |
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one or more persons [a person other than a full-time employee of the
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agency] to collect the [an] obligation [that the attorney general
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cannot collect]. |
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(c) The comptroller may employ, retain, or contract with a |
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person other than a full-time state employee to collect delinquent |
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obligations that are owed the comptroller in the comptroller's |
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official capacity, are not collected through normal collection |
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procedures, and do not meet the guidelines adopted for collection |
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by the attorney general. A proposed contract under this subsection |
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shall be reviewed by the attorney general and may include a |
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collection fee computed on the amounts collected under the |
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contract. |
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(d) The agency contracting under Subsection (b) is entitled |
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to recover from the obligor, in addition to the amount of the |
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obligation, the costs incurred in undertaking the collection, |
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including the costs of a contract under this section. The obligor |
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is liable for costs of recovery under this section in an amount not |
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to exceed 30 percent of the sum of the amount of the obligation and |
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any interest due on the obligation. |
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(e) A contract formed under Subsection (b) must provide for |
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the compensation due to the contractor. The amount of the |
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compensation may not exceed 30 percent of the sum of the collected |
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amount of: |
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(1) the obligation; |
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(2) any penalty; and |
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(3) any interest. |
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(f) A contract formed under Subsection (b) or (c) may permit |
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or require the contractor to pursue in the name of this state a |
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judicial action to collect the amount of the obligation in a proper |
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court in or outside of this state. |
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(g) In a suit in a Texas state court to collect an obligation |
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under this section, the state is not: |
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(1) required to post security for costs; |
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(2) liable for costs; or |
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(3) liable for fees for: |
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(A) service of process; |
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(B) attorneys ad litem; |
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(C) arbitration; or |
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(D) mediation. |
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(h) An amount collected under a contract formed under |
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Subsection (b), including the costs of recovery and court costs or |
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other costs, shall be deposited in the fund or account to which the |
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obligation was required to be deposited. The contracting agency |
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shall pay the compensation due under the contract to the contractor |
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and shall pay to the applicable court any court costs collected. |
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(i) The contracting agency shall require a person |
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contracting under Subsection (b) to post a bond or other security in |
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an amount the contracting agency determines is sufficient to cover |
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all revenue or other property of the state that is expected to come |
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into the possession or control of the contractor in the course of |
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providing contract services. |
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(j) A person who contracts under Subsection (b) is an agent |
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of this state for purposes of determining priority of a claim to be |
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collected under the contract with respect to claims of other |
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creditors. The contractor does not exercise any sovereign power of |
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the state. |
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(k) The contracting state agency may provide a person |
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contracting under Subsection (b) any information, including |
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confidential information, that the agency is not prohibited from |
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sharing under an agreement with another state or with the United |
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States and that is: |
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(1) in the custody of the agency holding the claim; and |
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(2) necessary to the collection of the obligation. |
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(l) A person acting under a contract formed under Subsection |
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(b) or (c) and each employee or agent of that person is subject to |
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all prohibitions against the disclosure of confidential |
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information obtained from the contracting agency, the reporting |
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state agency, or their employees. A contractor or the contractor's |
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employee or agent who discloses confidential information in |
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violation of the prohibition is subject to the same penalties for |
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that disclosure as would apply to the contracting agency or its |
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employees. |
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(m) The contracting agency shall require a person who |
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contracts under Subsection (b) to obtain and maintain insurance |
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adequate to provide reasonable coverage for damages negligently, |
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recklessly, or intentionally caused by the contractor or the |
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contractor's employee or agent in the course of collecting an |
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obligation under the contract and to protect this state from |
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liability for those damages. The state is not liable for and may |
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not indemnify a person acting under a contract under Subsection (b) |
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for damages negligently, recklessly, or intentionally caused by the |
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contractor or the contractor's employee or agent in the course of |
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collecting an obligation under the contract. |
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(n) In addition to grounds for termination provided by the |
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contract terms, the attorney general or the contracting agency, as |
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applicable, may terminate a contract formed under Subsection (b) if |
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the contractor or the contractor's employee or agent: |
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(1) violates the federal Fair Debt Collection |
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Practices Act (15 U.S.C. Section 1692 et seq.); |
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(2) discloses confidential information to a person not |
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authorized to receive the information; or |
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(3) performs any act that results in a final judgment |
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for damages against this state. |
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SECTION 3. Section 2254.102(c), Government Code, is amended |
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to read as follows: |
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(c) This subchapter does not apply to a contract: |
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(1) with an agency to collect an obligation under |
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Section 2107.003(b); or |
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(2) for legal services entered into by an institution |
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of higher education under Section 153.006, Education Code. |
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SECTION 4. Section 2107.004, Government Code, is repealed. |
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SECTION 5. The changes in law made by this Act to Sections |
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2107.003 and 2254.102, Government Code, apply only in relation to a |
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contract for the collection of delinquent taxes or obligations that |
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is entered into on or after the effective date of this Act. A |
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contract for the collection of delinquent taxes or obligations |
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entered into before the effective date of this Act is governed by |
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the law in effect on the date the contract was entered into, and the |
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former law is continued in effect for that purpose. |
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SECTION 6. This Act takes effect September 1, 2007. |