HB4012 - Relating to health care and insurance fraud; creating a criminal offense; authorizing a civil penalty.

  89R25047 SCF-F     By: Paul H.B. No. 4012     Substitute the following for H.B. No. 4012:     By:  Dean C.S.H.B. No. 4012       A BILL TO BE ENTITLED   AN ACT   relating to health care and insurance fraud; creating a criminal   offense; authorizing a civil penalty.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 544.0103(e), Government Code, is amended   to read as follows:          (e)  The office of inspector general may:                (1)  assess administrative penalties otherwise   authorized by law on behalf of the commission or a health and human   services agency;                (2)  request that the attorney general obtain an   injunction to prevent a person from disposing of an asset the office   of inspector general identifies as potentially subject to recovery   by the office of inspector general due to the person's fraud or   abuse;                (3)  provide for coordination between the office of   inspector general and special investigative units formed by managed   care organizations under Subchapter H or entities with which   managed care organizations contract under that subchapter;                 (3-a) provide for coordination between the office of   inspector general and the Texas Department of Insurance, as   provided by Section 701.110, Insurance Code, to coordinate health   care fraud detection and prevention in the state;                (4)  audit the use and effectiveness of state or   federal funds, including contract and grant funds, administered by   a person or state agency receiving the funds from a health and human   services agency;                (5)  conduct investigations relating to the funds   described by Subdivision (4); and                (6)  recommend policies to:                      (A)  promote the economical and efficient   administration of the funds described by Subdivision (4); and                      (B)  prevent and detect fraud and abuse in the   administration of those funds.          SECTION 2.  Subtitle B, Title 2, Insurance Code, is amended   by adding Chapter 87 to read as follows:   CHAPTER 87.   CIVIL REMEDIES           Sec.   87.001.     CIVIL REMEDIES. (a) Except as provided by   Subsection (c), a person who violates Section 35A.02(a-1), Penal   Code, is liable to the state for:                 (1)     the amount of a payment made by or the value of a   benefit provided by a health benefit plan issuer, directly or   indirectly, as a result of the violation, including any payment   made to a third party;                 (2)     interest on the amount 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 the state recovers the amount of   the payment or value of the benefit;                 (3)  a civil penalty of:                       (A)     not less than $5,500 and not more than   $15,000 for each violation committed by the person that results in   injury to an elderly person, as defined by Section 48.002(a)(1),   Human Resources Code, a person with a disability, as defined by   Section 48.002(a)(8)(A), Human Resources Code, or a person younger   than 18 years of age; or                       (B)     not less than $5,500 and not more than   $11,000 for each violation committed by the person that does not   result in injury to a person described by Paragraph (A); and                 (4)     two times the amount of the payment or the value of   the benefit described by Subdivision (1).           (b)     In determining the amount of the civil penalty described   by Subsection (a)(3), the trier of fact shall consider:                 (1)     whether the person has previously violated Section   35A.02(a-1), Penal Code;                 (2)     the seriousness of the violation committed by the   person, including the nature, circumstances, extent, and gravity of   the violation;                 (3)     whether the health and safety of the public or an   individual was threatened by the violation;                 (4)     whether the person acted in bad faith when the   person engaged in the conduct that formed the basis of the   violation; and                 (5)  the amount necessary to deter future violations.           (c)     The trier of fact may assess a total of not more than two   times the amount of a payment or the value of a benefit described by   Subsection (a)(1) if the trier of fact finds that:                 (1)     the person reported to the insurance fraud unit of   the department all information known to the person about the   violation 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 insurance fraud unit of the department, the   insurance fraud unit of the department had not yet begun an   investigation under this chapter.          SECTION 3.  Subchapter C, Chapter 701, Insurance Code, is   amended by adding Section 701.110 to read as follows:           Sec.   701.110.     FRAUD PREVENTION PARTNERSHIP. (a)   The   department shall, in coordination with the Health and Human   Services Commission office of inspector general, establish the   fraud prevention partnership to detect and prevent health care   fraud in this state across the private and public markets.             (b)  The partnership shall include:                 (1)     a representative of one or more Medicaid managed   care organizations;                 (2)     a representative of one or more health benefit   plan issuers, as defined by Section 1222.0001; and                 (3)     any other appropriate person as determined by the   commissioner and inspector general.          SECTION 4.  The heading to Chapter 703, Insurance Code, is   amended to read as follows:   CHAPTER 703.  [ COVERED ENTITY'S ] ANTIFRAUD ACTION BY COVERED ENTITY   OR OTHER PRIVATE PERSON          SECTION 5.  Chapter 703, Insurance Code, is amended by   adding Subchapter D to read as follows:   SUBCHAPTER D. ACTION BY PRIVATE PERSON           Sec.   703.151.     ACTION BY PRIVATE PERSON AUTHORIZED. (a) A   private person may bring a civil action for a violation of Section   35A.02(a-1), Penal Code, on behalf of the person and the state. The   action must be brought in the name of the person and of the state.           (b)     In an action brought under this subchapter, a person who   violates Section 35A.02(a-1), Penal Code, is liable as provided by   Section 87.001.           Sec.   703.152.     INITIATION OF ACTION. (a) A person bringing   an action under this subchapter shall serve a copy of the petition   and a written disclosure of substantially all material evidence and   information the person possesses on the attorney general in   compliance with the Texas Rules of Civil Procedure.           (b)     A person shall file a petition for an action under this   subchapter in camera and, except as provided by Section 703.153(b)   or (c), the petition must remain under seal until the earlier of:                 (1)     the 180th day after the date the petition is served   on the attorney general; or                 (2)  the date on which the state elects to intervene.           (c)     A person bringing an action under this subchapter may   not serve process on a defendant until the court orders service of   process.           Sec.   703.153.     STATE INTERVENTION. (a)   The state may elect   to intervene and proceed with an action under this subchapter not   later than the 180th day after the date the attorney general   receives the petition and the material evidence and information   under Section 703.152(a).           (b)     At the time the state intervenes in an action under this   subchapter, the attorney general may file a motion with the court   requesting that the petition remain under seal for an extended   period.           (c)     In an action under this subchapter, the state may, for   good cause shown, move the court to extend the 180-day periods   prescribed by Subsection (a) or Section 703.152(b).     A motion under   this subsection may be supported by affidavits or other submissions   in camera.           Sec.   703.154.     CONSENT REQUIRED FOR DISMISSAL.   An action   under this subchapter may be dismissed only if the court and the   attorney general consent in writing to the dismissal and state   their reasons for consenting.           Sec.   703.155.     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 petition is unsealed and served on the defendant.           Sec.   703.156.     STATE DECISION; CONTINUATION OF ACTION. (a)   Not later than the last day of the period prescribed by Section   703.153(a) or an extension of that period as provided by Section   703.153(c), the state shall:                 (1)  proceed with the action; or                 (2)     notify the court that the state declines to take   over the action.           (b)     If the state declines to take over an action under this   subchapter, the person bringing the action may proceed without the   state's participation.   A person proceeding under this subsection   may recover for a violation for a period of up to six years before   the date the action was filed, or for a period beginning when the   violation occurred until up to three years from the date the state   knows or reasonably should have known facts material to the   violation, whichever of these two periods is longer, regardless of   whether the violation occurred more than six years before the date   the action was filed.   Notwithstanding this subsection, a person   proceeding under this subsection may not recover for a violation   that occurred more than 10 years before the date the action was   filed.           (c)     On request by the state, the state is entitled to be   served with copies of all pleadings filed in an action under this   subchapter and be provided at the state's expense with copies of all   deposition transcripts.   If the person bringing the action proceeds   without the state's participation, the court, without limiting the   status and right of that person, may permit the state to intervene   a [Text truncated for display. 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