False Claims Act-TEXAS

<body bgcolor="white"> <div align="left"><table border="0" cellpadding="0" cellspacing="0" width="500"> <tr> <td colspan="2" valign="top"><p align="center"><a href="AF_frm.htm" target="_top">About the Firm</a> | <a href="fca_f.htm" target="_top">The False Claims Act</a> | <a href="wr_f.htm" target="_top">Whistleblower's reward</a> | <a href="caintr_f.htm" target="_top">Have a case?</a><a href="story_f.htm" target="_top"><br> Whistleblowers' stories</a> | <a href="resman_f.htm" target="_top">Resources</a> | <a href="what_f.htm" target="_top">What's new</a> </td> </tr> <tr> <td><font SIZE="4" COLOR="#333366">Texas</font></td> <td valign="top"><img src="../../GIF/PC_url.GIF" width="143" height="14" align="right"></td> </tr> <tr> <td colspan="2"><p align="center"><b> </b> </p> <p align="center"><b>TEXAS</b></p> <p align="center"> </p> <p align="center"><b>AN ACT<br> relating to fraud and improper payments under the state Medicaid program and other welfare programs and to the creation of a criminal offense; providing penalties.</b></p> <p align="center">Be it enacted by the Legislature of the State of Texas:</p> <p align="center"><b>ARTICLE 1. GENERAL PROVISIONS RELATING TO WELFARE AGENCIES</b></p> <p> </p> <p><b>SECTION 1.01. COLLECTION OF FOOD STAMP AND FINANCIAL ASSISTANCE PAYMENTS MADE IN ERROR.</b> (a) Chapter 22, Human Resources Code, is amended by adding Sections 22.0251 through 22.0254 to read as follows:</p> <p><b>Sec. 22.0251. TIMELY DETERMINATION OF OVERPAYMENTS.</b> (a) Subject to the approval of the commissioner of health and human services, the department shall:</p> <p>(1) determine and record the time taken by the department to establish an overpayment claim in the food stamp program or the program of financial assistance under Chapter 31;</p> <p>(2) set progressive goals for reducing the time described by Subdivision (1); and</p> <p>(3) adopt a schedule to meet the goals set under Subdivision (2).</p> <p>(b) The department shall submit to the governor, the Legislative Budget Board, and the Health and Human Services Commission a semiannual report detailing the department's progress in reaching its goals under Subsection (a)(2). The report may be consolidated with any other report relating to the same subject that the department is required to submit under other law.</p> <p><b>Sec. 22.0252. TELEPHONE COLLECTION PROGRAM.</b> (a) The department shall use the telephone to attempt to collect reimbursement from a person who receives a benefit granted in error under the food stamp program or the program of financial assistance under Chapter 31.</p> <p>(b) The department shall submit to the governor, the Legislative Budget Board, and the Health and Human Services Commission a semiannual report on the operation and success of the telephone collection program. The report may be consolidated with any other report relating to the same subject that the department is required to submit under other law.</p> <p><b>Sec. 22.0253. PARTICIPATION IN FEDERAL TAX REFUND OFFSET PROGRAM.</b> The department shall participate in the Federal Tax Refund Offset Program (FTROP) to attempt to recover benefits granted by the department in error under the food stamp program. The department shall submit as many claims that meet program criteria as possible for offset against income tax returns.</p> <p><b>Sec. 22.0254. PROSECUTION OF FRAUDULENT CLAIMS.</b> (a) The department shall keep a record of the dispositions of referrals made by the department to a district attorney concerning fraudulent claims for benefits under the food stamp program or the program of financial assistance under Chapter 31.</p> <p>(b) The department may:</p> <p>(1) request status information biweekly from the appropriate district attorney on each major fraudulent claim referred by the department;</p> <p>(2) request a written explanation from the appropriate district attorney for each case referred in which the district attorney declines to prosecute; and</p> <p>(3) encourage the creation of a special welfare fraud unit in each district attorney's office that serves a municipality with a population of more than 250,000, to be financed by amounts provided by the department.</p> <p>(c) The department by rule may define what constitutes a major fraudulent claim under Subsection (b)(1).</p> <p>(b) Chapter 22, Human Resources Code, is amended by adding Section 22.0291 to read as follows:</p> <p><b>Sec. 22.0291. INFORMATION MATCHING SYSTEM RELATING TO IMMIGRANTS AND FOREIGN VISITORS.</b> (a) The department shall, through the use of a computerized matching system, compare department information relating to applicants for and recipients of food stamps and financial assistance under Chapter 31 with information obtained from the Department of State of the United States and the United States Department of Justice relating to immigrants and visitors to the United States for the purpose of preventing individuals from unlawfully receiving public assistance benefits administered by the department.</p> <p>(b) The department may enter into an agreement with the Department of State of the United States and the United States Department of Justice as necessary to implement this section.</p> <p>(c) The department and federal agencies sharing information under this section shall protect the confidentiality of the shared information in compliance with all existing state and federal privacy guidelines.</p> <p>(d) The department shall submit to the governor, the Legislative Budget Board, and the Health and Human Services Commission a semiannual report on the operation and success of the information matching system required by this section. The report may be consolidated with any other report relating to the same subject matter the department is required to submit under other law.</p> <p>(c) Not later than January 1, 1998, the Texas Department of Human Services shall begin operation of the telephone collection program required by Section 22.0252, Human Resources Code, as added by this section.</p> <p>(d) Not later than January 1, 1998, the Texas Department of Human Services shall submit the initial reports required by Subsection (b), Section 22.0251 and Subsection (d), Section 22.0291, Human Resources Code, as added by this section.</p> <p>(e) Not later than September 1, 1998, the Texas Department of Human Services shall submit the initial report required by Subsection (b), Section 22.0252, Human Resources Code, as added by this section.</p> <p> </p> <p><b>SECTION 1.02. USE OF EARNED FEDERAL FUNDS.</b> Chapter 22, Human Resources Code, is amended by adding Section 22.032 to read as follows:</p> <p><b>Sec. 22.032. USE OF EARNED FEDERAL FUNDS. </b>Subject to the General Appropriations Act, the department may use earned federal funds derived from recovery of amounts paid or benefits granted by the department as a result of fraud to pay the costs of the department's activities relating to preventing fraud.</p> <p><b>SECTION 1.03. PAYMENT OF MEDICAID CLAIMS.</b> (a) Subchapter B, Chapter 32, Human Resources Code, is amended by adding Sections 32.043 and 32.044 to read as follows:</p> <p><b>Sec. 32.043. DUAL MEDICAID AND MEDICARE COVERAGE.</b> (a) At least annually the department shall identify each individual receiving medical assistance under the medical assistance program who is eligible to receive similar assistance under the Medicare program.</p> <p>(b) The department shall analyze claims submitted for payment for a service provided under the medical assistance program to an individual identified under Subsection (a) to ensure that payment is sought first under the Medicare program to the extent allowed by law.</p> <p><b>Sec. 32.044. MISDIRECTED BILLING.</b> To the extent authorized by federal law, the department shall develop a procedure for the state to:</p> <p>(1) match claims for payment for medical assistance provided under the medical assistance program against data available from other entities, including the Veterans Administration and nursing facilities, to determine alternative responsibility for payment of the claims; and</p> <p>(2) ensure that the appropriate entity bears the cost of a claim.</p> <p>(b) This section takes effect on the first date that it may take effect under Section 39, Article III, Texas Constitution.</p> <p> </p> <p><b>SECTION 1.04. ENHANCED MEDICAID REIMBURSEMENT.</b> (a) Subchapter B, Chapter 32, Human Resources Code, is amended by adding Section 32.045 to read as follows:</p> <p><b>Sec. 32.045. ENHANCED REIMBURSEMENT</b>. The department shall develop a procedure for:</p> <p>(1) identifying each service provided under the medical assistance program for which the state is eligible to receive enhanced reimbursement of costs from the federal government; and</p> <p>(2) ensuring that the state seeks the highest level of federal reimbursement available for each service provided.</p> <p>(b) The Texas Department of Health shall identify services provided under the state Medicaid program for the period beginning December 31, 1989, and ending immediately before the effective date of this section for which the state was eligible but did not receive enhanced reimbursement of costs at a 90 percent rate from the federal government. For that period, the department shall seek from the federal government all reimbursements to which the state is entitled.</p> <p>(c) This section takes effect on the first date that it may take effect under Section 39, Article III, Texas Constitution.</p> <p> </p> <p><b>SECTION 1.05. MINIMUM COLLECTION GOAL. </b>(a) Subchapter B, Chapter 531, Government Code, is amended by adding Section 531.047 to read as follows:</p> <p><b>Sec. 531.047. MINIMUM COLLECTION GOAL.</b> (a) Before August 31 of each year, the commission, after consulting with the Texas Department of Human Services, by rule shall set a minimum goal for the Texas Department of Human Services that specifies the percentage of the amount of benefits granted by the department in error under the food stamp program or the program of financial assistance under Chapter 31, Human Resources Code, that the department should recover. The commission shall set the percentage based on comparable recovery rates reported by other states or other appropriate factors identified by the commission and the department.</p> <p>(b) If the department fails to meet the goal set under Subsection (a) for the fiscal year, the commissioner shall notify the comptroller, and the comptroller shall reduce the department's general revenue appropriation by an amount equal to the difference between the amount of state funds the department would have collected had the department met the goal and the amount of state funds the department actually collected.</p> <p>(c) The commission, the governor, and the Legislative Budget Board shall monitor the department's performance in meeting the goal set under this section. The department shall cooperate by providing to the commission, the governor, and the Legislative Budget Board, on request, information concerning the department's collection efforts.</p> <p>(b) This section takes effect on the first date that it may take effect under Section 39, Article III, Texas Constitution.</p> <p> </p> <p><b>SECTION 1.06. COMMISSION POWERS AND DUTIES RELATING TO WELFARE FRAUD</b>. (a) Chapter 531, Government Code, is amended by adding Subchapter C to read as follows:</p> <p align="center"><b>SUBCHAPTER C. MEDICAID AND OTHER WELFARE FRAUD, ABUSE, OR OVERCHARGES</b></p> <p><b>Sec. 531.101. AWARD FOR REPORTING MEDICAID FRAUD, ABUSE, OR OVERCHARGES. </b>(a) The commission may grant an award to an individual who reports activity that constitutes fraud or abuse of funds in the state Medicaid program or reports overcharges in the program if the commission determines that the disclosure results in the recovery of an overcharge or in the termination of the fraudulent activity or abuse of funds.</p> <p>(b) The commission shall determine the amount of an award. The award must be equal to not less than 10 percent of the savings to this state that result from the individual's disclosure. In determining the amount of the award, the commission shall consider how important the disclosure is in ensuring the fiscal integrity of the program.</p> <p>(c) An award under this section is subject to appropriation. The award must be paid from money appropriated to or otherwise available to the commission, and additional money may not be appropriated to the commission for the purpose of paying the award.</p> <p>(d) Payment of an award under this section from federal funds is subject to the permissible use under federal law of funds for this purpose.</p> <p>(e) A person who brings an action under Subchapter C, Chapter 36, Human Resources Code, is not eligible for an award under this section.</p> <p><b>Sec. 531.102. INVESTIGATIONS AND ENFORCEMENT OFFICE.</b> (a) The commission, through the commission's office of investigations and enforcement, is responsible for the investigation of fraud in the provision of health and human services and the enforcement of state law relating to the provision of those services.</p> <p>(b) The commission shall set clear objectives, priorities, and performance standards for the office that emphasize:</p> <p>(1) coordinating investigative efforts to aggressively recover money;</p> <p>(2) allocating resources to cases that have the strongest supportive evidence and the greatest potential for recovery of money; and</p> <p>(3) maximizing opportunities for referral of cases to the office of the attorney general.</p> <p>(c) The commission shall train office staff to enable the staff to pursue priority Medicaid and welfare fraud and abuse cases as necessary.</p> <p>(d) The commission may require employees of health and human services agencies to provide assistance to the commission in connection with the commission's duties relating to the investigation of fraud in the provision of health and human services.</p> <p><b>Sec. 531.103. INTERAGENCY COORDINATION. </b>(a) The commission and the office of the attorney general shall enter into a memorandum of understanding to develop and implement joint written procedures for processing cases of suspected fraud, waste, or abuse under the state Medicaid program. The memorandum of understanding shall require:</p> <p>(1) the commission and the office of the attorney general to set priorities and guidelines for referring cases to appropriate state agencies for investigation to enhance deterrence of fraud, waste, or abuse in the program and maximize the imposition of penalties, the recovery of money, and the successful prosecution of cases;</p> <p>(2) the commission to keep detailed records for cases processed by the commission or the office of the attorney general, including information on the total number of cases processed and, for each case:</p> <p>(A) the agency and division to which the case is referred for investigation;</p> <p>(B) the date on which the case is referred; and</p> <p>(C) the nature of the suspected fraud, waste, or abuse;</p> <p>(3) the commission to notify each appropriate division of the office of the attorney general of each case referred by the commission;</p> <p>(4) the office of the attorney general to ensure that information relating to each case investigated by that office is available to each division of the office with responsibility for investigating suspected fraud, waste, or abuse;</p> <p>(5) the office of the attorney general to notify the commission of each case the attorney general declines to prosecute or prosecutes unsuccessfully;</p> <p>(6) representatives of the commission and of the office of the attorney general to meet not less than quarterly to share case information and determine the appropriate agency and division to investigate each case; and</p> <p>(7) the commission and the office of the attorney general to submit information requested by the comptroller about each resolved case for the comptroller's use in improving fraud detection.</p> <p>(b) An exchange of information under this section between the office of the attorney general and the commission or a health and human services agency does not affect whether the information is subject to disclosure under Chapter 552.</p> <p>(c) The commission and the office of the attorney general shall jointly prepare and submit a semiannual report to the governor, lieutenant governor, and speaker of the house of representatives concerning the activities of those agencies in detecting and preventing fraud, waste, and abuse under the state Medicaid program. The report may be consolidated with any other report relating to the same subject matter the commission or office of the attorney general is required to submit under other law.</p> <p>(d) The commission and the office of the attorney general may not assess or collect investigation and attorney's fees on behalf of any state agency unless the office of the attorney general or other state agency collects a penalty, restitution, or other reimbursement payment to the state.</p> <p>(e) The commission shall refer a case of suspected fraud, waste, or abuse under the state Medicaid program to the appropriate district attorney, county attorney, city attorney, or private collection agency if the attorney general fails to act within 30 days of referral of the case to the office of the attorney general. A failure by the attorney general to act within 30 days constitutes approval by the attorney general under Section 2107.003.</p> <p>(f) The district attorney, county attorney, city attorney, or private collection agency may collect and retain costs associated with the case and 20 percent of the amount of the penalty, restitution, or other reimbursement payment collected.</p> <p><b>Sec. 531.104. ASSISTING INVESTIGATIONS BY ATTORNEY GENERAL.</b> (a) The commission and the attorney general shall execute a memorandum of understanding under which the commission shall provide investigative support as required to the attorney general in connection with cases under Subchapter B, Chapter 36, Human Resources Code. Under the memorandum of understanding, the commission shall assist in performing preliminary investigations and ongoing investigations for actions prosecuted by the attorney general under Subchapter C, Chapter 36, Human Resources Code.</p> <p>(b) The memorandum of understanding must provide that the commission is not required to provide investigative support in more than 100 open investigations in a fiscal year.</p> <p><b>Sec. 531.105. FRAUD DETECTION TRAINING. </b>(a) The commission shall develop and implement a program to provide annual training to contractors who process Medicaid claims and appropriate staff of the Texas Department of Health and the Texas Department of Human Services in identifying potential cases of fraud, waste, or abuse under the state Medicaid program. The training provided to the contractors and staff must include clear criteria that specify:</p> <p>(1) the circumstances under which a person should refer a potential case to the commission; and</p> <p>(2) the time by which a referral should be made.</p> <p>(b) The Texas Department of Health and the Texas Department of Human Services, in cooperation with the commission, shall periodically set a goal of the number of potential cases of fraud, waste, or abuse under the state Medicaid program that each agency will attempt to identify and refer to the commission. The commission shall include information on the agencies' goals and the success of each agency in meeting the agency's goal in the report required by Section 531.103(c).</p> <p><b>Sec. 531.106. LEARNING OR NEURAL NETWORK TECHNOLOGY.</b> (a) The commission shall use learning or neural network technology to identify and deter fraud in the Medicaid program throughout this state.</p> <p>(b) The commission shall contract with a private or public entity to develop and implement the technology. The commission may require the entity it contracts with to install and operate the technology at locations specified by the commission, including commission offices.</p> <p>(c) The data used for neural network processing shall be maintained as an independent subset for security purposes.</p> <p>(d) The commission shall require each health and human services agency that performs any aspect of the state Medicaid program to participate in the implementation and use of the technology.</p> <p>(e) The commission shall maintain all information necessary to apply the technology to claims data covering a period of at least two years.</p> <p>(f) The commission shall refer cases identified by the technology to the commission's office of investigations and enforcement or the office of the attorney general, as appropriate.</p> <p><b>Sec. 531.107. MEDICAID AND PUBLIC ASSISTANCE FRAUD OVERSIGHT TASK FORCE.</b> (a) The Medicaid and Public Assistance Fraud Oversight Task Force advises and assists the commission and the commission's office of investigations and enforcement in improving the efficiency of fraud investigations and collections.</p> <p>(b) The task force is composed of a representative of the:</p> <p>(1) attorney general's office, appointed by the attorney general;</p> <p>(2) comptroller's office, appointed by the comptroller;</p> <p>(3) Department of Public Safety, appointed by the public safety director;</p> <p>(4) state auditor's office, appointed by the state auditor;</p> <p>(5) commission, appointed by the commissioner of health and human services;</p> <p>(6) Texas Department of Human Services, appointed by the commissioner of human services; and</p> <p>(7) Texas Department of Insurance, appointed by the commissioner of insurance.</p> <p>(c) The comptroller or the comptroller's designee serves as the presiding officer of the task force. The task force may elect any other necessary officers.</p> <p>(d) The task force shall meet at least once each fiscal quarter at the call of the presiding officer.</p> <p>(e) The appointing agency is responsible for the expenses of a member's service on the task force. Members of the task force receive no additional compensation for serving on the task force.</p> <p>(f) At least once each fiscal quarter, the commission's office of investigations and enforcement shall provide to the task force:</p> <p>(1) information detailing:</p> <p>(A) the number of fraud referrals made to the office and the origin of each referral;</p> <p>(B) the time spent investigating each case;</p> <p>(C) the number of cases investigated each month, by program and region;</p> <p>(D) the dollar value of each fraud case that results in a criminal conviction; and</p> <p>(E) the number of cases the office rejects and the reason for rejection, by region; and</p> <p>(2) any additional information the task force requires.</p> <p><b>Sec. 531.108. FRAUD PREVENTION.</b> (a) The commission's office of investigations and enforcement shall compile and disseminate accurate information and statistics relating to:</p> <p>(1) fraud prevention; and</p> <p>(2) post-fraud referrals received and accepted or rejected from the commission's case management system or the case management system of a health and human services agency.</p> <p>(b) The commission shall:</p> <p>(1) aggressively publicize successful fraud prosecutions and fraud- prevention programs through all available means, including the use of statewide press releases issued in coordination with the Texas Department of Human Services; and</p> <p>(2) ensure that a toll-free hotline for reporting suspected fraud in programs administered by the commission or a health and human services agency is maintained and promoted, either by the commission or by a health and human services agency.</p> <p>(c) The commission shall develop a cost-effective method of identifying applicants for public assistance in counties bordering other states and in metropolitan areas selected by the commission who are already receiving benefits in other states. If economically feasible, the commission may develop a computerized matching system.</p> <p>(d) The commission shall:</p> <p>(1) verify automobile information that is used as criteria for eligibility; and</p> <p>(2) establish a computerized matching system with the Texas Department of Criminal Justice to prevent an incarcerated individual from illegally receiving public assistance benefits administered by the commission.</p> <p>(e) The commission shall submit to the governor and Legislative Budget Board a semiannual report on the results of computerized matching of commission information with information from neighboring states, if any, and information from the Texas Department of Criminal Justice. The report may be consolidated with any other report relating to the same subject matter the commission is required to submit under other law.</p> <p>(b) Subsection (c), Section 22.028, Human Resources Code, is amended to read as follows:</p> <p>(c) No later than the first day of each month, the department shall send the comptroller a report listing the accounts on which enforcement actions or other steps were taken by the department in response to the records received from the EBT operator under this section, and the action taken by the department. The comptroller shall promptly review the report and, as appropriate, may solicit the advice of the<b> </b>Medicaid and Public Assistance Fraud Oversight Task Force regarding the results of the department's enforcement actions.</p> <p>(c) Section 531.104, Government Code, as added by this section, takes effect only if the transfer of employees of the Texas Department of Human Services and the Texas Department of Health to the Health and Human Services Commission, as proposed by Section 1.07 of this article, or similar legislation, is enacted by the 75th Legislature in regular session and becomes law.</p> <p>(d) Not later than January 1, 1998, the Health and Human Services Commission shall award the contract for the learning or neural network technology required by Section 531.106, Government Code, as added by this section, and the contractor shall begin operations not later than that date. If the commission fails to award the contract or the contractor cannot begin operations on or before January 1, 1998, the commissioner of health and human services shall enter into an interagency agreement with the comptroller of public accounts to enable the comptroller to perform the duties prescribed by Section 531.106, Government Code. In addition to the interagency agreement, the commissioner of health and human services and the comptroller shall execute a memorandum of understanding to ensure that the comptroller receives all data and resources necessary to operate the learning or neural network technology system.</p> <p>(e) Not later than April 1, 1998, the Health and Human Services Commission shall submit the initial report required by Subsection (e), Section 531.108, Government Code, as added by this section.</p> <p>(f) In addition to the substantive changes in law made by this section, this section, in adding Section 531.101, Government Code, conforms to a change in the law made by Section 1, Chapter 444, Acts of the 74th Legislature, 1995.</p> <p>(g) Section 16G, Article 4413(502), Revised Statutes, as added by Section 1, Chapter 444, Acts of the 74th Legislature, 1995, is repealed.</p> <p>(h) To the extent of any conflict, this Act prevails over another Act of the 75th Legislature, Regular Session, 1997, relating to nonsubstantive additions to and corrections in enacted codes.</p> <p>(i) Sections 21.0145 and 22.027, Human Resources Code, are repealed.</p> <p>(j) Sections 531.102 and 531.106, Government Code, as added by this section, take effect on the first date that those sections may take effect under Section 39, Article III, Texas Constitution.</p> <p><b>SECTION 1.07. CONSOLIDATION OF STAFF.</b> (a) On September 1, 1997, or an earlier date provided by an interagency agreement with the affected agencies:</p> <p>(1) all powers, duties, functions, programs, and activities performed by or assigned to the Texas Department of Human Services' utilization and assessment review function immediately before September 1, 1997, are transferred to the Health and Human Services Commission;</p> <p>(2) all funds, obligations, contracts, property, and records of the Texas Department of Human Services' utilization and assessment review function are transferred to the Health and Human Services Commission; and</p> <p>(3) all employees of the Texas Department of Human Services responsible for the department's utilization and assessment review function become employees of the Health and Human Services Commission, to be assigned duties by the commissioner of health and human services.</p> <p>(b) On September 1, 1997, or an earlier date provided by an interagency agreement with the affected agencies:</p> <p>(1) all powers, duties, functions, programs, and activities performed by or assigned to the Texas Department of Health's claims review and analysis group and policy and data analysis group immediately before September 1, 1997, are transferred to the Health and Human Services Commission;</p> <p>(2) all funds, obligations, contracts, property, and records of the Texas Department of Health's claims review and analysis group and policy and data analysis group are transferred to the Health and Human Services Commission; and</p> <p>(3) all employees of the Texas Department of Health's claims review and analysis group and policy and data analysis group become employees of the Health and Human Services Commission, to be assigned duties by the commissioner of health and human services.</p> <p>(c) A rule or form adopted by the Texas Department of Human Services that relates to the utilization and assessment review function or by the Texas Department of Health that relates to the claims review and analysis group or the policy and data analysis group is a rule or form of the Health and Human Services Commission and remains in effect until altered by the commission. The secretary of state is authorized to adopt rules as necessary to expedite the implementation of this subsection.</p> <p>(d) The commissioner of health and human services shall oversee and assist in the transfer of powers, duties, functions, programs, and activities prescribed by Subsections (a) and (b) of this section.</p> <p>(e) The commissioner of health and human services shall determine for each power, duty, function, program, or activity scheduled for transfer:</p> <p>(1) the relevant agency actions that constitute each power, duty, function, program, or activity;</p> <p>(2) the relevant records, property, and equipment used by a state agency for each power, duty, function, program, or activity;</p> <p>(3) the state agency employees whose duties directly or indirectly involve a power, duty, function, program, or activity; and</p> <p>(4) state agency funds and obligations that are related to the power, duty, function, program, or activity.</p> <p>(f) Based on the determinations made under Subsection (e) of this section, the commissioner of health and human services shall assist the agencies in transferring powers, duties, functions, programs, activities, records, equipment, property, funds, obligations, and employees in accordance with the transfer schedule.</p> <p>(g) The commissioner of health and human services shall file any federal plan changes required by this section.</p> <p>(h) The transfer of powers, duties, functions, programs, and activities under this section does not affect or impair any act done, any obligation, right, order, license, permit, rule, criterion, standard, or requirement existing, any investigation begun, or any penalty accrued under former law, and that law remains in effect for any action concerning those matters.</p> <p>(i) An action brought or proceeding commenced before the effective date of this section, including a contested case or a remand of an action or proceeding by a reviewing court, is governed by the law and rules applicable to the action or proceeding before the effective date of this section.</p> <p>(j) This section takes effect on the first date that it may take effect under Section 39, Article III, Texas Constitution.</p> <p> </p> <p><b>SECTION 1.08. USE OF PRIVATE COLLECTION AGENTS. </b>(a) With assistance from the State Council on Competitive Government and subject to approval by the attorney general under Section 2107.003, Government Code, the Texas Department of Human Services shall, in addition to other methods of collection, use private collection agents to collect reimbursements for benefits granted by the department in error under the food stamp program or the program of financial assistance under Chapter 31, Human Resources Code.</p> <p>(b) If approved by the attorney general, the department shall ensure that the collection agents are engaged in collection work on behalf of the department not later than March 1, 1998. The department shall strive to refer approximately 20 percent of the department's claims for reimbursement to the collection agents.</p> <p>(c) On March 1, 1998, and September 1, 1998, the department shall submit a progress report to the governor, the Legislative Budget Board, and the Health and Human Services Commission on the department's efforts to use private collection agents to collect reimbursements for erroneous benefits. On March 1, 1999, the department shall submit to the governor, the Legislative Budget Board, and the Health and Human Services Commission a final report on the success of the private collection effort.</p> <p>(d) Unless otherwise directed by the 76th Legislature, the department shall evaluate the success of the use of private collection agents to collect benefit reimbursements and adjust the number of claims referred to the agents, as appropriate.</p> <p> </p> <p><b>SECTION 1.09. EXPEDITED FOOD STAMP DELIVERY; IMPACT ON FRAUDULENT CLAIMS. </b>(a) The Texas Department of Human Services shall conduct a study to determine the impact of the one-day screening and service delivery requirements prescribed by Subsection (e), Section 33.002, Human Resources Code, on the level of fraud in the food stamp program.</p> <p>(b) Not later than January 1, 1999, the department shall submit to the governor, the Legislative Budget Board, and the Health and Human Services Commission a report on the results of the study. The report must include:</p> <p>(1) detailed statistics by region on the number of fraudulent claims linked to the one-day screening and service delivery requirements; and</p> <p>(2) recommendations on modifying the one-day screening and service delivery requirements, as authorized by Subsection (g), Section 33.002, Human Resources Code.</p> <p align="center"> </p> <p><b>SECTION 1.10. STUDY ON COLLECTION OF ERRONEOUS FOOD STAMP OR FINANCIAL ASSISTANCE BENEFITS THROUGH LIENS OR WAGE GARNISHMENT. </b>(a) The Texas Department of Human Services shall conduct a study to determine the feasibility of collecting amounts of benefits granted by the department in error under the food stamp program or the program of financial assistance under Chapter 31, Human Resources Code, by the garnishment of wages or the filing of liens against property.</p> <p>(b) Not later than March 1, 1999, the department shall submit to the governor, the Legislative Budget Board, and the Health and Human Services Commission a report on the results of the study.</p> <p> </p> <p><b>SECTION 1.11. OPERATION RESTORE TRUST.</b> (a) To the extent authorized by law, the Health and Human Services Commission and the Office of the Attorney General shall cooperate with entities in other states that are participating in "Operation Restore Trust" and share information regarding service providers excluded from the state Medicaid program.</p> <p>(b) In this section, "Operation Restore Trust" means the federal program directed at detecting health-care fraud primarily in home health care, nursing home care, and durable medical equipment in certain states.</p> <p> </p> <p align="center"><b>ARTICLE 2. MEDICAID SERVICE PROVIDERS</b></p> <p> </p> <p><b>SECTION 2.01. AUTHORIZATION FOR AMBULANCE SERVICES.</b> (a) Section 32.024, Human Resources Code, is amended by adding Subsection (t) to read as follows:</p> <p>(t) The department by rule shall require a physician, nursing facility, health care provider, or other responsible party to obtain authorization from the department or a person authorized to act on behalf of the department before an ambulance is used to transport a recipient of medical assistance under this chapter in circumstances not involving an emergency. The rules must provide that:</p> <p>(1) a request for authorization must be evaluated based on the recipient's medical needs and may be granted for a length of time appropriate to the recipient's medical condition;</p> <p>(2) a response to a request for authorization must be made not later than 48 hours after receipt of the request; and</p> <p>(3) a person denied payment for services rendered because of failure to obtain prior authorization or because a request for prior authorization was denied is entitled to appeal the denial of payment to the department.</p> <p>(b) Not later than January 1, 1998, the Health and Human Services Commission and each appropriate health and human services agency that operates part of the state Medicaid program shall adopt the rules required by Subsection (t), Section 32.024, Human Resources Code, as added by this section.</p> <p>(c) This section takes effect on the first date that it may take effect under Section 39, Article III, Texas Constitution.</p> <p> </p> <p><b>SECTION 2.02. DURABLE MEDICAL EQUIPMENT. </b>(a) Section 32.024, Human Resources Code, is amended by adding Subsection (u) to read as follows:</p> <p>(u) The department by rule shall require a health care provider who arranges for durable medical equipment for a child who receives medical assistance under this chapter to:</p> <p>(1) ensure that the child receives the equipment prescribed, the equipment fits properly, if applicable, and the child or the child's parent or guardian, as appropriate considering the age of the child, receives instruction regarding the equipment's use; and</p> <p>(2) maintain a record of compliance with the requirements of Subdivision (1) in an appropriate location.</p> <p>(b) Not later than January 1, 1998, the Health and Human Services Commission and each appropriate health and human services agency that operates part of the state Medicaid program shall adopt the rules required by Subsection (u), Section 32.024, Human Resources Code, as added by this section.</p> <p>(c) This section takes effect on the first date that it may take effect under Section 39, Article III, Texas Constitution.</p> <p> </p> <p><b>SECTION 2.03. SURETY BOND.</b> Subchapter B, Chapter 32, Human Resources Code, is amended by adding Section 32.0321 to read as follows:</p> <p><b>Sec. 32.0321. SURETY BOND. </b>(a) The department by rule may require each provider of medical assistance in a provider type that has demonstrated significant potential for fraud or abuse to file with the department a surety bond in a reasonable amount.</p> <p>(b) The bond must be payable to the department to compensate the department for damages resulting from or penalties or fines imposed in connection with an act of fraud or abuse committed by the provider under the medical assistance program.</p> <p><b>SECTION 2.04. CRIMINAL HISTORY INFORMATION. </b>(a) Subchapter B, Chapter 32, Human Resources Code, is amended by adding Section 32.0322 to read as follows:</p> <p><b>Sec. 32.0322. CRIMINAL HISTORY RECORD INFORMATION</b>. (a) The department may obtain from any law enforcement or criminal justice agency the criminal history record information that relates to a provider under the medical assistance program or a person applying to enroll as a provider under the medical assistance program.</p> <p>(b) The department by rule shall establish criteria for revoking a provider's enrollment or denying a person's application to enroll as a provider under the medical assistance program based on the results of a criminal history check.</p> <p>(b) Subchapter F, Chapter 411, Government Code, is amended by adding Section 411.132 to read as follows:</p> <p><b>Sec. 411.132. ACCESS TO CRIMINAL HISTORY RECORD INFORMATION; AGENCIES OPERATING PART OF MEDICAL ASSISTANCE PROGRAM.</b> (a) The Health and Human Services Commission or an agency operating part of the medical assistance program under Chapter 32, Human Resources Code, is entitled to obtain from the department the criminal history record information maintained by the department that relates to a provider under the medical assistance program or a person applying to enroll as a provider under the medical assistance program.</p> <p>(b) Criminal history record information obtained by the commission or an agency under Subsection (a) may not be released or disclosed to any person except in a criminal proceeding, in an administrative proceeding, on court order, or with the consent of the provider or applicant.</p> <p><b>SECTION 2.05. MANAGED CARE ORGANIZATIONS.</b> (a) Section 16A, Article 4413(502), Revised Statutes, is amended by amending Subsection (n) and adding Subsections (o) through (t) to read as follows:</p> <p>(n)<b> </b>A managed care organization that contracts with the state to provide or arrange to provide health care benefits or services to Medicaid eligible individuals shall:</p> <p>(1) report to the commission or the state's Medicaid claims administrator, as appropriate, all information required by commission rule, including information necessary to set rates, detect fraud, neglect, and physical abuse, and ensure quality of care;</p> <p>(2) not later than 30 days after execution of the contract, develop and submit to the operating agency for approval by the commission a plan for preventing, detecting, and reporting fraud and abuse that:</p> <p>(A) conforms to guidelines developed by the operating agency with assistance from the commission and the office of the attorney general; and</p> <p>(B) requires the managed care organization to report any known or suspected act of fraud or abuse to the operating agency for referral to the commission for investigation;</p> <p>(3) include standard provisions developed by the operating agency in each contract for ancillary services entered into by the managed care organization that affects the delivery of or payment for Medicaid services;</p> <p>(4) submit to the commission for approval each contract for ancillary services entered into by the managed care organization that affects the delivery of or payment for Medicaid services; and</p> <p>(5) submit annual disclosure statements to the commission containing information on:</p> <p>(A) the financial condition of the managed care organization and each of its affiliates; and</p> <p>(B) ownership interests in the managed care organization or any of its affiliates.</p> <p>(o) The operating agency shall require that each contract between a managed care organization and the state to provide or arrange to provide health care benefits or services to Medicaid eligible individuals contain provisions:</p> <p>(1) stating that information provided by a managed care organization under this section may be used as necessary to detect fraud and abuse;</p> <p>(2) specifying the responsibilities of the managed care organization in reducing fraud and abuse; and</p> <p>(3) authorizing specific penalties for failure to provide information required by commission rules.</p> <p>(p) At least once every three years the operating agency shall audit each managed care organization that contracts with the state to provide or arrange to provide health care benefits or services to Medicaid eligible individuals.</p> <p>(q) A managed care organization audited under Subsection (p) of this section is responsible for paying the costs of the audit. The costs of the audit may be allowed as a credit against premium taxes paid by the managed care organization, except as provided by Section 2, Article 1.28, Insurance Code.</p> <p>(r) The operating agency and the Texas Department of Insurance shall enter into a memorandum of understanding to coordinate audits of managed care organizations. The memorandum shall:</p> <p>(1) identify information required in an operating agency audit that is not customarily required in a department audit;</p> <p>(2) encourage the department to include to the extent possible information identified under Subdivision (1) of this subsection in department audits;</p> <p>(3) establish procedures for initiating and distributing the findings of audits of a managed care organization;</p> <p>(4) identify the records of physicians or Medicaid eligible individuals that are served by managed care organizations, that are subject to audit; and</p> <p>(5) require that operating agency and department personnel that audit a managed care organization receive specific training in detecting Medicaid fraud and abuse.</p> <p>(s) In this section, "operating agency" means the appropriate health and human services agency operating part of the state Medicaid program.</p> <p>(t) This section expires September 1, 2001.</p> <p>(b) Section 532.001, Government Code, as added by H.B. No. 1845 or S.B. No. 898, Acts of the 75th Legislature, Regular Session, 1997, relating to nonsubstantive additions to and corrections in enacted codes, is amended by adding Subdivision (5) to read as follows:</p> <p>(5) "Operating agency" means the appropriate health and human services agency operating part of the state Medicaid program.</p> <p>(c) Subchapter B, Chapter 532, Government Code, as added by H.B. No. 1845 or S.B. No. 898, Acts of the 75th Legislature, Regular Session, 1997, relating to nonsubstantive additions to and corrections in enacted codes, is amended by adding Sections 532.112 and 532.113 to read as follows:</p> <p><b>Sec. 532.112. DUTIES OF MANAGED CARE ORGANIZATION; CONTRACTUAL PROVISIONS. </b>(a) A managed care organization that contracts with the state to provide or arrange to provide health care benefits or services to Medicaid eligible individuals shall:</p> <p>(1) report to the commission or the state's Medicaid claims administrator, as appropriate, all information required by commission rule, including information necessary to set rates, detect fraud, neglect, and physical abuse, and ensure quality of care;</p> <p>(2) not later than 30 days after execution of the contract, develop and submit to the operating agency for approval by the commission a plan for preventing, detecting, and reporting fraud and abuse that:</p> <p>(A) conforms to guidelines developed by the operating agency with assistance from the commission and the office of the attorney general; and</p> <p>(B) requires the managed care organization to report any known or suspected act of fraud or abuse to the operating agency for referral to the commission for investigation;</p> <p>(3) include standard provisions developed by the operating agency in each contract for ancillary services entered into by the managed care organization that affects the delivery of or payment for Medicaid services;</p> <p>(4) submit to the commission for approval each contract for ancillary services entered into by the managed care organization that affects the delivery of or payment for Medicaid services; and</p> <p>(5) submit annual disclosure statements to the commission containing information on:</p> <p>(A) the financial condition of the managed care organization and each of its affiliates; and</p> <p>(B) ownership interests in the managed care organization or any of its affiliates.</p> <p>(b) The operating agency shall require that each contract between a managed care organization and the state to provide or arrange to provide health care benefits or services to Medicaid eligible individuals contain provisions:</p> <p>(1) stating that information provided by a managed care organization under this section may be used as necessary to detect fraud and abuse;</p> <p>(2) specifying the responsibilities of the managed care organization in reducing fraud and abuse; and</p> <p>(3) authorizing specific penalties for failure to provide information required by commission rules.</p> <p><b>Sec. 532.113. AUDITS; MEMORANDUM OF UNDERSTANDING.</b> (a) At least once every three years the operating agency shall audit each managed care organization that contracts with the state to provide or arrange to provide health care benefits or services to Medicaid eligible individuals.</p> <p>(b) A managed care organization audited under Subsection (a) is responsible for paying the costs of the audit. The costs of the audit may be allowed as a credit against premium taxes paid by the managed care organization, except as provided by Section 2, Article 1.28, Insurance Code.</p> <p>(c) The operating agency and the Texas Department of Insurance shall enter into a memorandum of understanding to coordinate audits of managed care organizations. The memorandum shall:</p> <p>(1) identify information required in an operating agency audit that is not customarily required in a department audit;</p> <p>(2) encourage the department to include to the extent possible information identified under Subdivision (1) in department audits;</p> <p>(3) establish procedures for initiating and distributing the findings of audits of a managed care organization;</p> <p>(4) identify the records of physicians or Medicaid eligible individuals that are served by managed care organizations that are subject to audit; and</p> <p>(5) require that operating agency and department personnel that audit a managed care organization receive specific training in detecting Medicaid fraud and abuse.</p> <p>(d) Not later than November 1, 1997, the Texas Department of Health or the appropriate health and human services agency operating part of the state Medicaid program shall develop guidelines applicable to a managed care organization's plan for preventing, detecting, and reporting Medicaid fraud.</p> <p>(e) Subdivision (2), Subsection (n), Section 16A, Article 4413(502), Revised Statutes, as amended by this section, or Subdivision (2), Subsection (a), Section 532.112, Government Code, as added by this section, depending on which provision takes effect, applies only to a managed care organization that enters into a contract or renews a contract on or after November 1, 1997, with the state to provide or arrange to provide health care benefits to Medicaid eligible individuals.</p> <p>(f) This section applies only to a contract entered into or renewed on or after the effective date of this section. A contract entered into or renewed before the effective date of this section is governed by the law in effect immediately before the effective date of this section, and the former law is continued in effect for that purpose.</p> <p>(g) A managed care organization that contracts with the state to provide or arrange to provide health care benefits to Medicaid eligible individuals before the effective date of this section is not required by this section to:</p> <p>(1) include standard provisions developed by the state in a contract for ancillary services executed before the effective date of this section;</p> <p>(2) submit a contract for ancillary services executed before the effective date of this section to the commission for approval; or</p> <p>(3) modify a contract between the managed care organization and the state executed before the effective date of this section.</p> <p>(h) A managed care organization that renews a contract subject to this section after the effective date of this section shall include in the renewed contract all provisions required to be included by this section.</p> <p>(i) Subsection (a) of this section takes effect only if neither H.B. No. 1845 nor S.B. No. 898, Acts of the 75th Legislature, Regular Session, 1997, relating to nonsubstantive additions to and corrections in enacted codes, take effect.</p> <p>(j) Subsections (b) and (c) of this section take effect only if H.B. No. 1845 or S.B. No. 898, Acts of the 75th Legislature, Regular Session, 1997, relating to nonsubstantive additions to and corrections in enacted codes, takes effect.</p> <p> </p> <p><b>SECTION 2.06. PILOT PROGRAM; ON-SITE REVIEWS OF PROSPECTIVE PROVIDERS.</b> (a) The Health and Human Services Commission by rule shall establish a pilot program to reduce fraud by conducting random on-site reviews of persons who apply to provide health care services under the state Medicaid program before authorizing those persons to provide the services.</p> <p>(b) The commission shall implement the pilot program initially in not more than five or fewer than three urban counties selected by the commission. The commission shall select counties for the pilot program that:</p> <p>(1) offer the greatest potential for achieving a reduction of provider fraud; and</p> <p>(2) contain established field offices of the commission or the Texas Department of Human Services, as appropriate.</p> <p>(c) At a minimum, the pilot program shall provide for random on-site reviews of durable medical equipment providers, home health providers, therapists, and laboratories. The commission may include other groups of providers in the pilot program.</p> <p>(d) The commission shall develop questions to be used during an on-site review of a prospective provider to verify that the provider has the ability to provide the proposed services.</p> <p>(e) The on-site reviews shall be conducted by personnel in the appropriate field offices of the commission or the Texas Department of Human Services.</p> <p>(f) The commission may waive an on-site review of a prospective provider if the provider has been subject to a comparable review by a certifying body in the preceding year.</p> <p>(g) If the pilot program is successful in reducing provider fraud in the counties initially selected under Subsection (b) of this section, the commission may expand the pilot program to include additional counties.</p> <p>(h) Not later than January 15, 1999, the commission shall submit to the governor and the legislature a report concerning the effectiveness of the pilot program that includes:</p> <p>(1) the number of applications denied as a result of an on-site review; and</p> <p>(2) recommendations on expanding the pilot program.</p> <p>(i) This section expires September 1, 1999.</p> <p align="center"> </p> <p><b>SECTION 2.07. DEVELOPMENT OF NEW PROVIDER CONTRACT.</b> (a) As soon as possible after the effective date of this section, the Health and Human Services Commission shall develop a new provider contract for health care services that contains provisions designed to strengthen the commission's ability to prevent provider fraud under the state Medicaid program.</p> <p>(b) In developing the new provider contract, the commission shall solicit suggestions and comments from representatives of providers in the state Medicaid program.</p> <p>(c) As soon as possible after development of the new provider contract, the commission and each agency operating part of the state Medicaid program by rule shall require each provider who enrolled in the program before completion of the new contract to reenroll in the program under the new contract or modify the provider's existing contract in accordance with commission or agency procedures as necessary to comply with the requirements of the new contract. A provider must reenroll in the state Medicaid program or make the necessary contract modifications not later than September 1, 1999, to retain eligibility to participate in the program.</p> <p> </p> <p><b>SECTION 2.08. COMPETITIVE PROCESS FOR OBTAINING DURABLE MEDICAL EQUIPMENT.</b> (a) As soon as possible and not later than the 45th day after the effective date of this section:</p> <p>(1) the Texas Department of Health shall develop a process for selecting providers of durable medical equipment and supplies that encourages competition; and</p> <p>(2) the Health and Human Services Commission shall submit an amendment to the state's Medicaid plan authorizing implementation of the process developed by the Texas Department of Health.</p> <p>(b) This section takes effect on the first date that it may take effect under Section 39, Article III, Texas Constitution.</p> <p> </p> <p><b>SECTION 2.09. REVIEW OF SERVICE PROVIDER BILLING PRACTICES.</b> (a) The Texas Department of Health shall conduct an automated review of physician, laboratory, radiology, and other health care provider services to identify improper billing practices designed to inflate a service provider's claim for payment for services provided under the state Medicaid program.</p> <p>(b) After completing the review required by Subsection (a) of this section, the Texas Department of Health shall:</p> <p>(1) refer each identified improper billing practice to the Health and Human Services Commission's office of investigations and enforcement; and</p> <p>(2) require the entity that administers the state Medicaid program on behalf of the department to modify the entity's claims processing and monitoring procedures and computer technology as necessary to prevent improper billing by service providers.</p> <p>(c) This section takes effect on the first date that it may take effect under Section 39, Article III, Texas Constitution.</p> <p align="center"><b>ARTICLE 3. ADMINISTRATIVE PENALTIES AND SANCTIONS RELATING TO MEDICAID FRAUD</b></p> <p><b>SECTION 3.01. ADMINISTRATIVE PENALTIES</b>. (a) Section 32.039, Human Resources Code, is amended to read as follows:</p> <p><b>Sec. 32.039. CIVIL DAMAGES AND PENALTIES. </b>(a) In this section:</p> <p>(1) "Claim", "claim" means an application for payment of health care services under Title XIX of the federal Social Security Act that is submitted by a person who is under a contract or provider agreement with the department.</p> <p>(2) "Managed care organization" means any entity or person that is authorized or otherwise permitted by law to arrange for or provide a managed care plan.</p> <p>(3) "Managed care plan" means a plan under which a person undertakes to provide, arrange for, pay for, or reimburse any part of the cost of any health care service. A part of the plan must consist of arranging for or providing health care services as distinguished from indemnification against the cost of those services on a prepaid basis through insurance or otherwise. The term does not include a plan that indemnifies a person for the cost of health care services through insurance.</p> <p>(b) A person commits a violation if the person:</p> <p>(1) presents or causes to be presented to the department a claim that contains a statement or representation the person knows to be false; or</p> <p>(2) is a managed care organization that contracts with the department to provide or arrange to provide health care benefits or services to individuals eligible for medical assistance and:</p> <p>(A) fails to provide to an individual a health care benefit or service that the organization is required to provide under the contract with the department;</p> <p>(B) fails to provide to the department information required to be provided by law, department rule, or contractual provision;</p> <p>(C) engages in a fraudulent activity in connection with the enrollment in the organization's managed care plan of an individual eligible for medical assistance or in connection with marketing the organization's services to an individual eligible for medical assistance; or</p> <p>(D) engages in actions that indicate a pattern of:</p> <p>(i) wrongful denial of payment for a health care benefit or service that the organization is required to provide under the contract with the department; or</p> <p>(ii) wrongful delay of at least 45 days or a longer period specified in the contract with the department, not to exceed 60 days, in making payment for a health care benefit or service that the organization is required to provide under the contract with the department.</p> <p>(c)<b> </b>(b) A person who<b> </b>commits a violation under Subsection (b)<b> </b>presents or causes to be presented to the department a claim that contains a statement or representation the person knows to be false is liable to the department for:</p> <p>(1) the amount paid, if any, as a result<b> </b>because of the<b> </b>violation<b> </b>false claim and interest on that amount determined at the rate provided by law for legal judgments and accruing from the date on which the payment was made;<b> </b>and</p> <p>(2) payment of<b> </b>an administrative<b> </b>a civil penalty<b> </b>of an amount not to exceed twice the amount paid, if any, as a result<b> </b>because of the<b> </b>violation, plus an amount:</p> <p>(A) not less than $5,000 or more than $15,000 for each violation that results in injury to an elderly person, as defined by Section 48.002(1), a disabled person, as defined by Section 48.002(8)(A), or a person younger than 18 years of age; or</p> <p>(B) not more than $10,000 for each violation that does not result in injury to a person described by Paragraph (A)<b> </b>false claim; and</p> <p>(3) payment of a civil penalty of not more than $2,000 for each item or service for which payment was claimed.</p> <p>(d)<b> </b>(c) Unless the provider submitted information to the department for use in preparing a voucher that the provider knew was false or failed to correct information that the provider knew was false when provided an opportunity to do so, this section does not apply to a claim based on the voucher if the department calculated and printed the amount of the claim on the voucher and then submitted the voucher to the provider for the provider's signature. In addition, the provider's signature on the voucher does not constitute fraud. The department shall adopt rules that establish a grace period during which errors contained in a voucher prepared by the department may be corrected without penalty to the provider.</p> <p>(e)<b> </b>(d) In determining the amount of the penalty to be assessed under<b> </b>Subsection (c)(2)<b> </b>Subdivision (3) of Subsection (b) of this section, the department shall consider:</p> <p>(1) the seriousness of the violation;</p> <p>(2) whether the person had previously<b> </b>committed a violation<b> </b>submitted false claims; and</p> <p>(3) the amount necessary to deter the person from<b> </b>committing<b> </b>submitting future<b> </b>violations<b> </b>false claims.</p> <p>(f)<b> </b>(e) If after an examination of the facts the department concludes that the person<b> </b>committed a violation<b> </b>did submit a false claim, the department may issue a preliminary report stating the facts on which it based its conclusion, recommending that<b> </b>an administrative<b> </b>a civil penalty under this section be imposed and recommending the amount of the proposed penalty.</p> <p>(g)<b> </b>(f) The department shall give written notice of the report to the person charged with<b> </b>committing the violation<b> </b>submitting the false claim. The notice must include a brief summary of the facts, a statement of the amount of the recommended penalty, and a statement of the person's right to an informal review of the<b> </b>alleged violation<b> </b>false claim, the amount of the penalty, or both the<b> </b>alleged violation<b> </b>false claim and the amount of the penalty.</p> <p>(h)<b> </b>(g) Not later than the 10th day after the date on which the person charged with<b> </b>committing the violation<b> </b>submitting the false claim receives the notice, the person may either give the department written consent to the report, including the recommended penalty, or make a written request for an informal review by the department.</p> <p>(i)<b> </b>(h) If the person charged with<b> </b>committing the violation<b> </b>submitting the false claim consents to the penalty recommended by the department or fails to timely request an informal review, the department shall assess the penalty. The department shall give the person written notice of its action. The person shall pay the penalty not later than the 30th day after the date on which the person receives the notice.</p> <p>(j)<b> </b>(i) If the person charged with<b> </b>committing the violation<b> </b>submitting a false claim requests an informal review as provided by Subsection<b> </b>(h)<b> </b>(g) of this section, the department shall conduct the review. The department shall give the person written notice of the results of the review.</p> <p>(k)<b> </b>(j) Not later than the 10th day after the date on which the person charged with<b> </b>committing the violation<b> </b>submitting the false claim receives the notice prescribed by Subsection<b> </b>(j)<b> </b>(i) of this section, the person may make to the department a written request for a hearing. The hearing must be conducted in accordance with Chapter 2001, Government Code.</p> <p>(l)<b> </b>(k) If, after informal review, a person who has been ordered to pay a penalty fails to request a formal hearing in a timely manner, the department shall assess the penalty. The department shall give the person written notice of its action. The person shall pay the penalty not later than the 30th day after the date on which the person receives the notice.</p> <p>(m) Within 30 days after the date on which the board's order issued after a hearing under Subsection (k) becomes final as provided by Section 2001.144, Government Code, the person shall:</p> <p>(1) pay the amount of the penalty;</p> <p>(2) pay the amount of the penalty and file a petition for judicial review contesting the occurrence of the violation, the amount of the penalty, or both the occurrence of the violation and the amount of the penalty; or</p> <p>(3) without paying the amount of the penalty, file a petition for judicial review contesting the occurrence of the violation, the amount of the penalty, or both the occurrence of the violation and the amount of the penalty.</p> <p>(n) A person who acts under Subsection (m)(3) within the 30-day period may:</p> <p>(1) stay enforcement of the penalty by:</p> <p>(A) paying the amount of the penalty to the court for placement in an escrow account; or</p> <p>(B) giving to the court a supersedeas bond that is approved by the court for the amount of the penalty and that is effective until all judicial review of the department's order is final; or</p> <p>(2) request the court to stay enforcement of the penalty by:</p> <p>(A) filing with the court a sworn affidavit of the person stating that the person is financially unable to pay the amount of the penalty and is financially unable to give the supersedeas bond; and</p> <p>(B) giving a copy of the affidavit to the commissioner by certified mail.</p> <p>(o) If the commissioner receives a copy of an affidavit under Subsection (n)(2), the commissioner may file with the court, within five days after the date the copy is received, a contest to the affidavit. The court shall hold a hearing on the facts alleged in the affidavit as soon as practicable and shall stay the enforcement of the penalty on finding that the alleged facts are true. The person who files an affidavit has the burden of proving that the person is financially unable to pay the amount of the penalty and to give a supersedeas bond.</p> <p>(p)<b> </b>(l) Except as provided by Subsection (m) of this section, not later than 30 days after the date on which the department issues a final decision after a hearing under Subsection (j) of this section, a person who has been ordered to pay a penalty under this section shall pay the penalty in full.</p> <p>(m) If the person seeks judicial review of either the fact of the submission of a false claim or the amount of the penalty or of both the fact of the submission and the amount of the penalty, the person shall forward the amount of the penalty to the department for placement in an escrow account or, instead of payment into an escrow account, post with the department a supersedeas bond in a form approved by the department for the amount of the penalty. The bond must be effective until all judicial review of the order or decision is final.</p> <p>(n) Failure to forward the money to or to post the bond with the department within the period provided by Subsection (l) or (m) of this section results in a waiver of all legal rights to judicial review. If the person charged<b> </b>does not pay the amount of the penalty and the enforcement of the penalty is not stayed<b> </b>fails to forward the money or post the bond within the period provided by Subsection (h), (k), (l), or (m) of this section, the department may forward the matter to the attorney general for enforcement of the penalty and interest as provided by law for legal judgments. An action to enforce a penalty order under this section must be initiated in a court of competent jurisdiction in Travis County or in the county<b> </b>in<b> </b>from which the<b> </b>violation<b> </b>false claim was<b> </b>committed<b> </b>submitted.</p> <p>(q)<b> </b>(o) Judicial review of a department order or review under this section assessing a penalty is under the substantial evidence rule. A suit may be initiated by filing a petition with a district court in Travis County, as provided by Subchapter G, Chapter 2001, Government Code.</p> <p>(r)<b> </b>(p) If a penalty is reduced or not assessed, the department shall remit to the person the appropriate amount plus accrued interest if the penalty has been paid or shall execute a release of the bond if a supersedeas bond has been posted. The accrued interest on amounts remitted by the department under this subsection shall be paid at a rate equal to the rate provided by law for legal judgments and shall be paid for the period beginning on the date the penalty is paid to the department under this section and ending on the date the penalty is remitted.</p> <p>(s)<b> </b>(q) A damage, cost, or penalty collected under this section is not an allowable expense in a claim or cost report that is or could be used to determine a rate or payment under the medical assistance program.</p> <p>(t)<b> </b>(r) All funds collected under this section shall be deposited in the State Treasury to the credit of the General Revenue Fund.</p> <p>(u) A person found liable for a violation under Subsection (c) that resulted in injury to an elderly person, as defined by Section 48.002(1), a disabled person, as defined by Section 48.002(8)(A), or a person younger than 18 years of age may not provide or arrange to provide health care services under the medical assistance program for a period of 10 years. The department by rule may provide for a period of ineligibility longer than 10 years. The period of ineligibility begins on the date on which the determination that the person is liable becomes final. This subsection does not apply to a person who operates a nursing facility or an ICF-MR facility.</p> <p>(v) A person found liable for a violation under Subsection (c) that did not result in injury to an elderly person, as defined by Section 48.002(1), a disabled person, as defined by Section 48.002(8)(A), or a person younger than 18 years of age may not provide or arrange to provide health care services under the medical assistance program for a period of three years. The department by rule may provide for a period of ineligibility longer than three years. The period of ineligibility begins on the date on which the determination that the person is liable becomes final. This subsection does not apply to a person who operates a nursing facility or an ICF-MR facility.</p> <p> </p> <p>(b) The change in law made by this section applies only to a violation committed on or after the effective date of this section. For purposes of this subsection, a violation is committed on or after the effective date of this section only if each element of the violation occurs on or after that date. A violation committed before the effective date of this section is covered by the law in effect when the violation was committed, and the former law is continued in effect for that purpose.</p> <p> </p> <p><b>SECTION 3.02. SANCTIONS APPLICABLE TO VENDOR DRUG PROGRAM.</b> Subchapter B, Chapter 32, Human Resources Code, is amended by adding Section 32.046 to read as follows:</p> <p><b>Sec. 32.046. VENDOR DRUG PROGRAM; SANCTIONS AND PENALTIES</b>. (a) The department shall adopt rules governing sanctions and penalties that apply to a provider in the vendor drug program who submits an improper claim for reimbursement under the program.</p> <p>(b) The department shall notify each provider in the vendor drug program that the provider is subject to sanctions and penalties for submitting an improper claim.</p> <p> </p> <p><b>SECTION 3.03. PROHIBITION OF CERTAIN PERSONS CONVICTED OF FRAUD. </b>Subchapter B, Chapter 32, Human Resources Code, is amended by adding Section 32.047 to read as follows:</p> <p><b>Sec. 32.047. PROHIBITION OF CERTAIN HEALTH CARE SERVICE PROVIDERS</b>. A person is permanently prohibited from providing or arranging to provide health care services under the medical assistance program if:</p> <p>(1) the person is convicted of an offense arising from a fraudulent act under the program; and</p> <p>(2) the person's fraudulent act results in injury to an elderly person, as defined by Section 48.002(1), a disabled person, as defined by Section 48.002(8)(A), or a person younger than 18 years of age.</p> <p> </p> <p><b>SECTION 3.04. DEDUCTIONS FROM LOTTERY WINNINGS.</b> (a) Subsections (a) and (c), Section 466.407, Government Code, are amended to read as follows:</p> <p>(a) The executive director shall deduct the amount of a delinquent tax or other money from the winnings of a person who has been finally determined to be:</p> <p>(1) delinquent in the payment of a tax or other money collected by the comptroller, the state treasurer, or the Texas Alcoholic Beverage Commission;</p> <p>(2) delinquent in making child support payments administered or collected by the attorney general;</p> <p>(3)<b> </b>delinquent in reimbursing the Texas Department of Human Services for a benefit granted in error under the food stamp program or the program of financial assistance under Chapter 31, Human Resources Code;</p> <p>(4) in default on a loan made under Chapter 52, Education Code; or</p> <p>(5)<b> </b>(4) in default on a loan guaranteed under Chapter 57, Education Code.</p> <p>(c) The attorney general, comptroller,<b> </b>state treasurer, Texas Alcoholic Beverage Commission,<b> </b>Texas Department of Human Services, Texas Higher Education Coordinating Board, and Texas Guaranteed Student Loan Corporation shall each provide the executive director with a report of persons who have been finally determined to be delinquent in the payment of a tax or other money collected by the agency. The commission shall adopt rules regarding the form and frequency of reports under this subsection.</p> <p>(b) The Texas Department of Human Services shall take all action necessary to implement the change in law made by this section not later than January 1, 1998. The department may not seek recovery through lottery prize deduction of an amount of a benefit granted in error to a person under the food stamp program or the program of financial assistance under Chapter 31, Human Resources Code, before September 1, 1997.</p> <p>(c) The executive director of the Texas Lottery Commission is not required under Section 466.407, Government Code, as amended by this section, to deduct from lottery prizes erroneous amounts granted to lottery winners by the Texas Department of Human Services until the department provides to the commission all necessary information and reports required for implementation of that section.</p> <p> </p> <p align="center"><b>ARTICLE 4. CIVIL REMEDIES RELATING TO MEDICAID FRAUD AND CREATION OF CRIMINAL</b></p> <p align="center"><b>OFFENSE</b></p> <p> </p> <p><b>SECTION 4.01. REDESIGNATION.</b> (a) Chapter 36, Human Resources Code, is amended by designating Sections 36.001, 36.002, 36.007, 36.008, 36.009, 36.010, 36.011, and 36.012 as Subchapter A, renumbering Sections 36.007, 36.008, 36.009, 36.010, 36.011, and 36.012 as Sections 36.003, 36.004, 36.005, 36.006, 36.007, and 36.008, respectively, and adding a subchapter heading to read as follows:</p> <p align="center"><b>SUBCHAPTER A. GENERAL PROVISIONS</b></p> <p>(b) Chapter 36, Human Resources Code, is amended by designating Sections 36.003, 36.004, 36.005, and 36.006 as Subchapter B, renumbering those sections as Sections 36.051, 36.052, 36.053, and 36.054, respectively, and adding a subchapter heading to read as follows:</p> <p align="center"><b>SUBCHAPTER B. ACTION BY ATTORNEY GENERAL</b></p> <p> </p> <p><b>SECTION 4.02. DEFINITIONS.</b> Section 36.001, Human Resources Code, is amended by amending Subdivisions (5) through (11) and adding Subdivision (12) to read as follows:</p> <p>(5)<b> </b>"Managed care organization" has the meaning assigned by Section 32.039(a).</p> <p>(6) "Medicaid program" means the state Medicaid program.</p> <p>(7)<b> </b>(6) "Medicaid recipient" means an individual on whose behalf a person claims or receives a payment from the Medicaid program or a fiscal agent, without regard to whether the individual was eligible for benefits under the Medicaid program.</p> <p>(8)<b> </b>(7) "Physician" means a physician licensed to practice medicine in this state.</p> <p>(9)<b> </b>(8) "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:</p> <p>(A) a management company that manages, operates, or controls another provider;</p> <p>(B) a person, including a medical vendor, that provides a product or service to a provider or to a fiscal agent;<b> </b>and</p> <p>(C) an employee of a provider; and</p> <p>(D) a managed care organization.</p> <p>(10)<b> </b>(9) "Service" includes care or treatment of a Medicaid recipient.</p> <p>(11)<b> </b>(10) "Signed" means to have affixed a signature directly or indirectly by means of handwriting, typewriting, signature stamp, computer impulse, or other means recognized by law.</p> <p>(12)<b> </b>(11) "Unlawful act" means an act declared to be unlawful under Section 36.002.</p> <p> </p> <p><b>SECTION 4.03. UNLAWFUL ACTS RELATING TO MANAGED CARE ORGANIZATION</b>. Section 36.002, Human Resources Code, is amended to read as follows:</p> <p><b>Sec. 36.002. UNLAWFUL ACTS. </b>A person commits an unlawful act if the person:</p> <p>(1) knowingly or intentionally makes or causes to be made a false statement or misrepresentation of a material fact:</p> <p>(A) on an application for a contract, benefit, or payment under the Medicaid program; or</p> <p>(B) that is intended to be used to determine a person's eligibility for a benefit or payment under the Medicaid program;</p> <p>(2) knowingly or intentionally conceals or fails to disclose an event:</p> <p>(A) that the person knows affects the initial or continued right to a benefit or payment under the Medicaid program of:</p> <p>(i) the person; or</p> <p>(ii) another person on whose behalf the person has applied for a benefit or payment or is receiving a benefit or payment; and</p> <p>(B) to permit a person to receive a benefit or payment that is not authorized or that is greater than the payment or benefit that is authorized;</p> <p>(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;</p> <p>(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:</p> <p>(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:</p> <p>(i) a hospital;</p> <p>(ii) a nursing facility or skilled nursing facility;</p> <p>(iii) a hospice;</p> <p>(iv) an intermediate care facility for the mentally retarded;</p> <p>(v) a personal care facility; or</p> <p>(vi) a home health agency; or</p> <p>(B) information required to be provided by a federal or state law, rule, regulation, or provider agreement pertaining to the Medicaid program;</p> <p>(5) except as authorized under the Medicaid program, knowingly 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 continued service to a Medicaid recipient if the cost of the service provided to the Medicaid recipient is paid for, in whole or in part, under the Medicaid program;</p> <p>(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:</p> <p>(A) is not licensed to provide the product or render the service, if a license is required; or</p> <p>(B) is not licensed in the manner claimed;</p> <p>(7) knowingly or intentionally makes a claim under the Medicaid program for:</p> <p>(A) a service or product that has not been approved or acquiesced in by a treating physician or health care practitioner;</p> <p>(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</p> <p>(C) a product that has been adulterated, debased, mislabeled, or that is otherwise inappropriate;</p> <p>(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;<b> </b>or</p> <p>(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</p> <p>(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:</p> <p>(A) fails to provide to an individual a health care benefit or service that the organization is required to provide under the contract;</p> <p>(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;</p> <p>(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</p> <p>(D) obstructs an investigation by the attorney general of an alleged unlawful act under this section.</p> <p> </p> <p><b>SECTION 4.04. APPLICABLE PENALTIES AND CONFORMING AMENDMENT.</b> Section 36.004, Human Resources Code, as renumbered by this article as Section 36.052, is amended by amending Subsections (a) and (e) to read as follows:</p> <p>(a) Except as provided by Subsection (c), a person who commits an unlawful act is liable to the state for:</p> <p>(1) restitution of the value of any payment or monetary or in-kind benefit provided under the Medicaid program, directly or indirectly, as a result of the unlawful act;</p> <p>(2) interest on the value of the payment or 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;</p> <p>(3) a civil penalty of:</p> <p>(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(1), a disabled person, as defined by Section 48.002(8)(A), or a person younger than 18 years of age; or</p> <p>(B) not less than $1,000 or more than $10,000 for each unlawful act committed by the person<b> </b>that does not result in injury to a person described by Paragraph (A); and</p> <p>(4) two times the value of the payment or benefit described by Subdivision (1).</p> <p>(e) The attorney general may:</p> <p>(1) bring an action for civil remedies under this section together with a suit for injunctive relief under Section<b> </b>36.051<b> </b>36.003; or</p> <p>(2) institute an action for civil remedies independently of an action for injunctive relief.</p> <p> </p> <p> </p> <p><b>SECTION 4.05. CONFORMING AMENDMENT. </b>Section 36.005, Human Resources Code, as renumbered by this article as Section 36.053, is amended by amending Subsection (b) to read as follows:</p> <p>(b) In investigating an unlawful act, the attorney general may:</p> <p>(1) require the person to file on a prescribed form a statement in writing, under oath or affirmation, as to all the facts and circumstances concerning the alleged unlawful act and other information considered necessary by the attorney general;</p> <p>(2) examine under oath a person in connection with the alleged unlawful act; and</p> <p>(3) execute in writing and serve on the person a civil investigative demand requiring the person to produce the documentary material and permit inspection and copying of the material under Section<b> </b>36.054<b> </b>36.006.</p> <p> </p> <p><b>SECTION 4.06. ADDITIONAL SANCTIONS FOR MEDICAID FRAUD.</b> Section 36.009, Human Resources Code, as renumbered by this article as Section 36.005, is amended to read as follows:</p> <p><b>Sec. 36.005 36.009. SUSPENSION OR REVOCATION OF AGREEMENT; PROFESSIONAL DISCIPLINE.</b> (a) The commissioner of human services, the commissioner of public health, the commissioner of mental health and mental retardation, the executive director of the Department of Protective and Regulatory Services, or the executive director of another state health care regulatory agency:</p> <p>(1) shall suspend or revoke:</p> <p>(A) a provider agreement between the department or agency and a person, other than a person who operates a nursing facility or an ICF-MR facility, found liable under Section 36.052; and</p> <p>(B) a permit, license, or certification granted by the department or agency to a person, other than a person who operates a nursing facility or an ICF-MR facility, found liable under Section 36.052; and</p> <p>(2) may suspend or revoke:</p> <p>(A)<b> </b>(1) a provider agreement between the department or agency and a person<b> </b>who operates a nursing facility or an ICF-MR facility and who is found liable under Section<b> </b>36.052<b> </b>36.004; or</p> <p>(B)<b> </b>(2) a permit, license, or certification granted by the department or agency to a person<b> </b>who operates a nursing facility or an ICF-MR facility and who is found liable under Section<b> </b>36.052<b> </b>36.004.</p> <p>(b)<b> </b>A person found liable under Section 36.052 for an unlawful act may not provide or arrange to provide health care services under the Medicaid program for a period of 10 years. The 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 person is liable becomes final. This subsection does not apply to a person who operates a nursing facility or an ICF-MR facility.</p> <p>(c) A person licensed by a state regulatory agency who commits an unlawful act is subject to professional discipline under the applicable licensing law or rules adopted under that law.</p> <p>(d) For purposes of this section, a person is considered to have been found liable under Section 36.052 if the person is found liable in an action brought under Subchapter C.</p> <p><b>SECTION 4.07. AUTHORITY OF ATTORNEY GENERAL.</b> (a) Subchapter B, Chapter 36, Human Resources Code, as designated by this article, is amended by adding Section 36.055 to read as follows:</p> <p><b>Sec. 36.055. ATTORNEY GENERAL AS RELATOR IN FEDERAL ACTION. </b>To the extent permitted by 31 U.S.C. Sections 3729-3733, the attorney general may bring an action as relator under 31 U.S.C. Section 3730 with respect to an act in connection with the Medicaid program for which a person may be held liable under 31 U.S.C. Section 3729. The attorney general may contract with a private attorney to represent the state under this section.</p> <p> </p> <p>(b) The Office of the Attorney General shall develop strategies to increase state recoveries under 31 U.S.C. Sections 3729 through 3733. The office shall report the results of the office's effort to the legislature not later than September 1, 1998.</p> <p> </p> <p><b>SECTION 4.08. CIVIL ACTION BY PRIVATE PERSON FOR MEDICAID FRAUD</b>. Chapter 36, Human Resources Code, is amended by adding Subchapter C to read as follows:</p> <p align="center"><b>SUBCHAPTER C. ACTION BY PRIVATE PERSONS</b></p> <p><b>Sec. 36.101. ACTION BY PRIVATE PERSON AUTHORIZED.</b> (a) A person may bring a civil action for a violation of Section 36.002 for the person and for the state. The action shall be brought in the name of the person and of the state.</p> <p>(b) In an action brought under this subchapter, a person who violates Section 36.002 is liable as provided by Section 36.052.</p> <p><b>Sec. 36.102. INITIATION OF ACTION.</b> (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.</p> <p>(b) The petition shall be filed in camera and shall remain under seal until at least the 60th day after the date the petition is filed. The petition may not be served on the defendant until the court orders service on the defendant.</p> <p>(c) The state may elect to intervene and proceed with the action not later than the 60th day after the date the attorney general receives the petition and the material evidence and information.</p> <p>(d) The state may, for good cause shown, move the court to extend the time during which the petition remains under seal under Subsection (b). A motion under this subsection may be supported by affidavits or other submissions in camera.</p> <p>(e) An action under this subchapter may be dismissed before the end of the period 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.</p> <p><b>Sec. 36.103. ANSWER BY DEFENDANT. </b>A defendant is not required to file 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.</p> <p><b>Sec. 36.104. CONTINUATION OR DISMISSAL OF ACTION BASED ON STATE DECISION. </b>(a) Not later than the last day of the period prescribed by Section 36.102(c), the state shall:</p> <p>(1) proceed with the action; or</p> <p>(2) notify the court that the state declines to take over the action.</p> <p>(b) If the state declines to take over the action, the court shall dismiss the action.</p> <p><b>Sec. 36.105. REPRESENTATION OF STATE BY PRIVATE ATTORNEY. </b>The attorney general may contract with a private attorney to represent the state in an action under this subchapter with which the state elects to proceed.</p> <p><b>Sec. 36.106. INTERVENTION BY OTHER PARTIES PROHIBITED. </b>A person other than the state may not intervene or bring a related action based on the facts underlying a pending action brought under this subchapter.</p> <p><b>Sec. 36.107. RIGHTS OF PARTIES IF STATE CONTINUES ACTION.</b> (a) If the state proceeds with the action, the state has the primary responsibility for prosecuting the action and is not bound by an act of the person bringing the action. The person bringing the action has the right to continue as a party to the action, subject to the limitations set forth by this section.</p> <p>(b) The state may dismiss the action notwithstanding the objections of the person bringing the action if:</p> <p>(1) the attorney general notifies the person that the state has filed a motion to dismiss; and</p> <p>(2) the court provides the person with an opportunity for a hearing on the motion.</p> <p>(c) The state may settle the action with the defendant notwithstanding the objections of the person bringing the action if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all the circumstances. On a showing of good cause, the hearing may be held in camera.</p> <p>(d) On a showing by the state that unrestricted participation during the course of the litigation by the person bringing the action would interfere with or unduly delay the state's prosecution of the case, or would be repetitious, irrelevant, or for purposes of harassment, the court may impose limitations on the person's participation, including:</p> <p>(1) limiting the number of witnesses the person may call;</p> <p>(2) limiting the length of the testimony of witnesses called by the person;</p> <p>(3) limiting the person's cross-examination of witnesses; or</p> <p>(4) otherwise limiting the participation by the person in the litigation.</p> <p>(e) On a showing by the defendant that unrestricted participation during the course of the litigation by the person bringing the action would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense, the court may limit the participation by the person in the litigation.</p> <p><b>Sec. 36.108. STAY OF CERTAIN DISCOVERY.</b> (a) On a showing by the state that certain actions of discovery by the person bringing the action would interfere with the state's investigation or prosecution of a criminal or civil matter arising out of the same facts, the court may stay the discovery for a period not to exceed 60 days.</p> <p>(b) The court shall hear a motion to stay discovery under this section in camera.</p> <p>(c) The court may extend the period prescribed by Subsection (a) on a further showing in camera that the state has pursued the criminal or civil investigation or proceedings with reasonable diligence and that any proposed discovery in the civil action will interfere with the ongoing criminal or civil investigation or proceedings.</p> <p><b>Sec. 36.109. PURSUIT OF ALTERNATE REMEDY BY STATE. </b>(a) Notwithstanding Section 36.101, the state may elect to pursue the state's claim through any alternate remedy available to the state, including any administrative proceeding to determine an administrative penalty. If an alternate remedy is pursued in another proceeding, the person bringing the action has the same rights in the other proceeding as the person would have had if the action had continued under this subchapter.</p> <p>(b) A finding of fact or conclusion of law made in the other proceeding that has become final is conclusive on all parties to an action under this subchapter. For purposes of this subsection, a finding or conclusion is final if:</p> <p>(1) the finding or conclusion has been finally determined on appeal to the appropriate court;</p> <p>(2) no appeal has been filed with respect to the finding or conclusion and all time for filing an appeal has expired; or</p> <p>(3) the finding or conclusion is not subject to judicial review.</p> <p><b>Sec. 36.110. AWARD TO PRIVATE PLAINTIFF. </b>(a) If the state proceeds with an action under this subchapter, the person bringing the action is entitled, except as provided by Subsection (b), to receive at least 10 percent but not more than 25 percent of the proceeds of the action, depending on the extent to which the person substantially contributed to the prosecution of the action.</p> <p>(b) If the court finds that the action is based primarily on disclosures of specific information, other than information provided by the person bringing the action, relating to allegations or transactions in a criminal or civil hearing, in a legislative or administrative report, hearing, audit, or investigation, or from the news media, the court may award the amount the court considers appropriate but not more than seven percent of the proceeds of the action. The court shall consider the significance of the information and the role of the person bringing the action in advancing the case to litigation.</p> <p>(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 an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable attorney's fees and costs. Expenses, fees, and costs shall be awarded against the defendant.</p> <p>(d) In this section, "proceeds of the action" includes proceeds of a settlement of the action.</p> <p><b>Sec. 36.111. REDUCTION OF AWARD. </b>(a) If the court finds that the action was brought by a person who planned and initiated the violation of Section 36.002 on which the action was brought, the court may, to the extent the court considers appropriate, reduce the share of the proceeds of the action the person would otherwise receive under Section 36.110, taking into account the person's role in advancing the case to litigation and any relevant circumstances pertaining to the violation.</p> <p>(b) If the person bringing the action is convicted of criminal conduct arising from the person's role in the violation of Section 36.002, the court shall dismiss the person from the civil action and the person may not receive any share of the proceeds of the action. A dismissal under this subsection does not prejudice the right of the state to continue the action.</p> <p><b>Sec. 36.112. AWARD TO DEFENDANT FOR FRIVOLOUS ACTION. </b>Chapter 105, Civil Practice and Remedies Code, applies in an action under this subchapter with which the state proceeds.</p> <p><b>Sec. 36.113. CERTAIN ACTIONS BARRED.</b> (a) A person may not bring an action under this subchapter that is based on allegations or transactions that are the subject of a civil suit or an administrative penalty proceeding in which the state is already a party.</p> <p>(b) A person may not bring an action under this subchapter that is based on the public disclosure of allegations or transactions in a criminal or civil hearing, in a legislative or administrative report, hearing, audit, or investigation, or from the news media, unless the person bringing the action is an original source of the information. In this subsection, "original source" means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the state before filing an action under this subchapter that is based on the information.</p> <p><b>Sec. 36.114. STATE NOT LIABLE FOR CERTAIN EXPENSES. </b>The state is not liable for expenses that a person incurs in bringing an action under this subchapter.</p> <p><b>Sec. 36.115. RETALIATION BY EMPLOYER AGAINST PERSON BRINGING SUIT PROHIBITED</b>. (a) A person who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms of employment by the person's employer because of a lawful act taken by the person in furtherance of an action under this subchapter, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this subchapter, is entitled to:</p> <p>(1) reinstatement with the same seniority status the person would have had but for the discrimination; and</p> <p>(2) not less than two times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorney's fees.</p> <p>(b) A person may bring an action in the appropriate district court for the relief provided in this section.</p> <p><b>Sec. 36.116. SOVEREIGN IMMUNITY NOT WAIVED. </b>Except as provided by Section 36.112, this subchapter does not waive sovereign immunity.</p> <p><b>Sec. 36.117. ATTORNEY GENERAL COMPENSATION.</b> The office of the attorney general may retain a reasonable portion of recoveries under this subchapter, not to exceed amounts specified in the General Appropriations Act, for the administration of this subchapter.</p> <p> </p> <p>SECTION <b>4.09. CRIMINAL OFFENSE AND REVOCATION OF CERTAIN LICENSES. </b>Chapter 36, Human Resources Code, is amended by adding Subchapter D to read as follows:</p> <p align="center"><b>SUBCHAPTER D. CRIMINAL PENALTIES AND REVOCATION OF CERTAIN OCCUPATIONAL</b></p> <p align="center"><b>LICENSES</b></p> <p><b>Sec. 36.131. CRIMINAL OFFENSE. </b>(a) A person commits an offense if the person commits an unlawful act under Section 36.002.</p> <p>(b) An offense under this section is:</p> <p>(1) a Class C misdemeanor if the value of any payment or monetary or in- kind benefit provided under the Medicaid program, directly or indirectly, as a result of the unlawful act is less than $50;</p> <p>(2) a Class B misdemeanor if the value of any payment or monetary or in- kind benefit provided under the Medicaid program, directly or indirectly, as a result of the unlawful act is $50 or more but less than $500;</p> <p>(3) a Class A misdemeanor if the value of any payment or monetary or in- kind benefit provided under the Medicaid program, directly or indirectly, as a result of the unlawful act is $500 or more but less than $1,500;</p> <p>(4) a state jail felony if the value of any payment or monetary or in- kind benefit provided under the Medicaid program, directly or indirectly, as a result of the unlawful act is $1,500 or more but less than $20,000;</p> <p>(5) a felony of the third degree if the value of any payment or monetary or in-kind benefit provided under the Medicaid program, directly or indirectly, as a result of the unlawful act is $20,000 or more but less than $100,000;</p> <p>(6) a felony of the second degree if the value of any payment or monetary or in-kind benefit provided under the Medicaid program, directly or indirectly, as a result of the unlawful act is $100,000 or more but less than $200,000; or</p> <p>(7) a felony of the first degree if the value of any payment or monetary or in-kind benefit provided under the Medicaid program, directly or indirectly, as a result of the unlawful act is $200,000 or more.</p> <p>(c) If conduct constituting an offense under this section also constitutes an offense under another provision of law, including a provision in the Penal Code, the actor may be prosecuted under either this section or the other provision.</p> <p>(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.</p> <p><b>Sec. 36.132. REVOCATION OF LICENSES.</b> (a) In this section:</p> <p>(1) "License" means a license, certificate, registration, permit, or other authorization that:</p> <p>(A) is issued by a licensing authority;</p> <p>(B) is subject before expiration to suspension, revocation, forfeiture, or termination by an issuing licensing authority; and</p> <p>(C) must be obtained before a person may practice or engage in a particular business, occupation, or profession.</p> <p>(2) "Licensing authority" means:</p> <p>(A) the Texas State Board of Medical Examiners;</p> <p>(B) the State Board of Dental Examiners;</p> <p>(C) the Texas State Board of Examiners of Psychologists;</p> <p>(D) the Texas State Board of Social Worker Examiners;</p> <p>(E) the Board of Nurse Examiners;</p> <p>(F) the Board of Vocational Nurse Examiners;</p> <p>(G) the Texas Board of Physical Therapy Examiners;</p> <p>(H) the Texas Board of Occupational Therapy Examiners; or</p> <p>(I) another state agency authorized to regulate a provider who receives or is eligible to receive payment for a health care service under the Medicaid program.</p> <p>(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 36.131. In revoking the license, the licensing authority shall comply with all procedures generally applicable to the licensing authority in revoking licenses.</p> <p> </p> <p><b>SECTION 4.10. APPLICATION. </b>(a) The changes in law made by this article apply only to a violation committed on or after the effective date of this article. For purposes of this section, a violation is committed on or after the effective date of this article only if each element of the violation occurs on or after that date.</p> <p>(b) A violation committed before the effective date of this article is covered by the law in effect when the violation was committed, and the former law is continued in effect for this purpose.</p> <p> </p> <p align="center"><b>ARTICLE 5. SUSPENSION OF LICENSES</b></p> <p> </p> <p><b>SECTION 5.01. SUSPENSION OF LICENSES. </b>(a) Subtitle B, Title 2, Human Resources Code, is amended by adding Chapter 23 to read as follows:</p> <p align="center"><b>CHAPTER 23. SUSPENSION OF DRIVER'S OR RECREATIONAL LICENSE FOR FAILURE TO</b></p> <p align="center"><b>REIMBURSE DEPARTMENT</b></p> <p><b>Sec. 23.001. DEFINITIONS. </b>In this chapter:</p> <p>(1) "License" means a license, certificate, registration, permit, or other authorization that:</p> <p>(A) is issued by a licensing authority;</p> <p>(B) is subject before expiration to suspension, revocation, forfeiture, or termination by an issuing licensing authority; and</p> <p>(C) a person must obtain to:</p> <p>(i) operate a motor vehicle; or</p> <p>(ii) engage in a recreational activity, including hunting and fishing, for which a license or permit is required.</p> <p>(2) "Order suspending a license" means an order issued by the department directing a licensing authority to suspend a license.</p> <p><b>Sec. 23.002. LICENSING AUTHORITIES SUBJECT TO CHAPTER.</b> In this chapter, "licensing authority" means:</p> <p>(1) the Parks and Wildlife Department; and</p> <p>(2) the Department of Public Safety of the State of Texas.</p> <p><b>Sec. 23.003. SUSPENSION OF LICENSE.</b> The department may issue an order suspending a license as provided by this chapter of a person who, after notice:</p> <p>(1) has failed to reimburse the department for an amount in excess of $250 granted in error to the person under the food stamp program or the program of financial assistance under Chapter 31;</p> <p>(2) has been provided an opportunity to make payments toward the amount owed under a repayment schedule; and</p> <p>(3) has failed to comply with the repayment schedule.</p> <p><b>Sec. 23.004. INITIATION OF PROCEEDING. </b>(a) The department may initiate a proceeding to suspend a person's license by filing a petition with the department's hearings division.</p> <p>(b) The proceeding shall be conducted by the department's hearings division. The proceeding is a contested case under Chapter 2001, Government Code, except that Section 2001.054 does not apply.</p> <p>(c) The commissioner or the commissioner's designated representative shall render a final decision in the proceeding.</p> <p><b>Sec. 23.005. CONTENTS OF PETITION.</b> A petition under this chapter must state that license suspension is authorized under Section 23.003 and allege:</p> <p>(1) the name and, if known, social security number of the person;</p> <p>(2) the type of license the person is believed to hold and the name of the licensing authority; and</p> <p>(3) the amount owed to the department.</p> <p><b>Sec. 23.006. NOTICE. </b>(a) On initiating a proceeding under Section 23.004, the department shall give the person named in the petition:</p> <p>(1) notice of the person's right to a hearing before the hearings division of the department;</p> <p>(2) notice of the deadline for requesting a hearing; and</p> <p>(3) a form requesting a hearing.</p> <p>(b) Notice under this section may be served as in civil cases generally.</p> <p>(c) The notice must state that an order suspending a license shall be rendered on the 60th day after the date of service of the notice unless by that date:</p> <p>(1) the person pays the amount owed to the department;</p> <p>(2) the person presents evidence of a payment history satisfactory to the department in compliance with a reasonable repayment schedule; or</p> <p>(3) the person appears at a hearing before the hearings division and shows that the request for suspension should be denied or stayed.</p> <p><b>Sec. 23.007. HEARING ON PETITION TO SUSPEND LICENSE. </b>(a) A request for a hearing and motion to stay suspension must be filed with the department not later than the 20th day after the date of service of the notice under Section 23.006.</p> <p>(b) If a request for a hearing is filed, the hearings division of the department shall:</p> <p>(1) promptly schedule a hearing;</p> <p>(2) notify the person and an appropriate representative of the department of the date, time, and location of the hearing; and</p> <p>(3) stay suspension pending the hearing.</p> <p><b>Sec. 23.008. ORDER SUSPENDING LICENSE.</b> (a) On making the findings required by Section 23.003, the department shall render an order suspending a license.</p> <p>(b) The department may stay an order suspending a license conditioned on the person's compliance with a reasonable repayment schedule that is incorporated in the order. An order suspending a license with a stay of the suspension may not be served on the licensing authority unless the stay is revoked as provided by this chapter.</p> <p>(c) A final order suspending a license rendered by the department shall be forwarded to the appropriate licensing authority.</p> <p>(d) If the department renders an order suspending a license, the person may also be ordered not to engage in the licensed activity.</p> <p>(e) If the department finds that the petition for suspension should be denied, the petition shall be dismissed without prejudice, and an order suspending a license may not be rendered.</p> <p><b>Sec. 23.009. DEFAULT ORDER. </b>The department shall consider the allegations of the petition for suspension to be admitted and shall render an order suspending a license if the person fails to:</p> <p>(1) respond to a notice issued under Section 23.006;</p> <p>(2) request a hearing; or</p> <p>(3) appear at a hearing.</p> <p><b>Sec. 23.010. REVIEW OF FINAL ADMINISTRATIVE ORDER. </b>An order issued by the department under this chapter is a final agency decision and is subject to review as provided by Chapter 2001, Government Code.</p> <p><b>Sec. 23.011. ACTION BY LICENSING AUTHORITY.</b> (a) On receipt of a final order suspending a license, the licensing authority shall immediately determine if the authority has issued a license to the person named on the order and, if a license has been issued:</p> <p>(1) record the suspension of the license in the licensing authority's records;</p> <p>(2) report the suspension as appropriate; and</p> <p>(3) demand surrender of the suspended license if required by law for other cases in which a license is suspended.</p> <p>(b) A licensing authority shall implement the terms of a final order suspending a license without additional review or hearing. The authority may provide notice as appropriate to the license holder or to others concerned with the license.</p> <p>(c) A licensing authority may not modify, remand, reverse, vacate, or stay an order suspending a license issued under this chapter and may not review, vacate, or reconsider the terms of a final order suspending a license.</p> <p>(d) A person who is the subject of a final order suspending a license is not entitled to a refund for any fee or deposit paid to the licensing authority.</p> <p>(e) A person who continues to engage in the licensed activity after the implementation of the order suspending a license by the licensing authority is liable for the same civil and criminal penalties provided for engaging in the licensed activity without a license or while a license is suspended that apply to any other license holder of that licensing authority.</p> <p>(f) A licensing authority is exempt from liability to a license holder for any act authorized under this chapter performed by the authority.</p> <p>(g) Except as provided by this chapter, an order suspending a license or dismissing a petition for the suspension of a license does not affect the power of a licensing authority to grant, deny, suspend, revoke, terminate, or renew a license.</p> <p>(h) The denial or suspension of a driver's license under this chapter is governed by this chapter and not by Subtitle B, Title 7, Transportation Code.</p> <p><b>Sec. 23.012. MOTION TO REVOKE STAY. </b>(a) The department may file a motion with the department's hearings division to revoke the stay of an order suspending a license if the person does not comply with the terms of a reasonable repayment plan entered into by the person.</p> <p>(b) Notice to the person of a motion to revoke stay under this section may be given by personal service or by mail to the address provided by the person, if any, in the order suspending a license. The notice must include a notice of hearing before the hearings division. The notice must be provided to the person not less than 10 days before the date of the hearing.</p> <p>(c) A motion to revoke stay must allege the manner in which the person failed to comply with the repayment plan.</p> <p>(d) If the department finds that the person is not in compliance with the terms of the repayment plan, the department shall revoke the stay of the order suspending a license and render a final order suspending a license.</p> <p><b>Sec. 23.013. VACATING OR STAYING ORDER SUSPENDING A LICENSE.</b> (a) The department may render an order vacating or staying an order suspending a license if the person has paid all amounts owed to the department or has established a satisfactory payment record.</p> <p>(b) The department shall promptly deliver an order vacating or staying an order suspending a license to the appropriate licensing authority.</p> <p>(c) On receipt of an order vacating or staying an order suspending a license, the licensing authority shall promptly reinstate and return the affected license to the person if the person is otherwise qualified for the license.</p> <p>(d) An order rendered under this section does not affect the right of the department to any other remedy provided by law, including the right to seek relief under this chapter. An order rendered under this section does not affect the power of a licensing authority to grant, deny, suspend, revoke, terminate, or renew a license as otherwise provided by law.</p> <p><b>Sec. 23.014. FEE BY LICENSING AUTHORITY.</b> A licensing authority may charge a fee to a person who is the subject of an order suspending a license in an amount sufficient to recover the administrative costs incurred by the authority under this chapter.</p> <p><b>Sec. 23.015. COOPERATION BETWEEN LICENSING AUTHORITIES AND DEPARTMENT. </b>(a) The department may request from each licensing authority the name, address, social security number, license renewal date, and other identifying information for each individual who holds, applies for, or renews a license issued by the authority.</p> <p>(b) A licensing authority shall provide the requested information in the manner agreed to by the department and the licensing authority.</p> <p>(c) The department may enter into a cooperative agreement with a licensing authority to administer this chapter in a cost-effective manner.</p> <p>(d) The department may adopt a reasonable implementation schedule for the requirements of this section.</p> <p><b>Sec. 23.016. RULES, FORMS, AND PROCEDURES. </b>The department by rule shall prescribe forms and procedures for the implementation of this chapter.</p> <p> </p> <p>(b) The Texas Department of Human Services shall take all action necessary to implement the change in law made by this article not later than January 1, 1998. The department may not suspend a license because of a person's failure to reimburse the department for a benefit granted in error under the food stamp program or the program of financial assistance under Chapter 31, Human Resources Code, before September 1, 1997.</p> <p> </p> <p align="center"><b>ARTICLE 6. MEASUREMENT OF FRAUD</b></p> <p> </p> <p><b>SECTION 6.01. HEALTH CARE FRAUD STUDY.</b> (a) Subchapter B, Chapter 403, Government Code, is amended by adding Section 403.026 to read as follows:</p> <p><b>Sec. 403.026. HEALTH CARE FRAUD STUDY.</b> (a) The comptroller shall conduct a study each biennium to determine the number and type of fraudulent claims for medical or health care benefits submitted:</p> <p>(1) under the state Medicaid program;</p> <p>(2) under group health insurance programs administered through the Employees Retirement System of Texas for active and retired state employees; or</p> <p>(3) by or on behalf of a state employee and administered by the attorney general under Chapter 501, Labor Code.</p> <p>(b) A state agency that administers a program identified by Subsection (a) shall cooperate with the comptroller and provide any information required by the comptroller in connection with the study. A state agency may enter into a memorandum of understanding with the comptroller regarding the use and confidentiality of the information provided. This subsection does not require a state agency to provide confidential information if release of the information is prohibited by law.</p> <p>(c) The comptroller shall report the results of the study to each state agency that administers a program included in the study so that the agency may modify its fraud control procedures as necessary.</p> <p>(b) The comptroller of public accounts shall complete the initial study required by Section 403.026, Government Code, as added by this section, not later than December 1, 1998.</p> <p> </p> <p><b>SECTION 6.02. COMPILATION OF STATISTICS. </b>(a) Subchapter B, Chapter 531, Government Code, is amended by adding Section 531.0215 to read as follows:</p> <p><b>Sec. 531.0215. COMPILATION OF STATISTICS RELATING TO FRAUD.</b> The commission and each health and human services agency that administers a part of the state Medicaid program shall maintain statistics on the number, type, and disposition of fraudulent claims for benefits submitted under the part of the program the agency administers.</p> <p>(b) Subchapter C, Chapter 501, Labor Code, is amended by adding Section 501.0431 to read as follows:</p> <p><b>Sec. 501.0431. COMPILATION OF STATISTICS RELATING TO FRAUD.</b> The director shall maintain statistics on the number, type, and disposition of fraudulent claims for medical benefits under this chapter.</p> <p>(c) Subsection (a), Section 17, Texas Employees Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code), is amended to read as follows:</p> <p>(a) The trustee shall:</p> <p>(1) make a continuing study of the operation and administration of this Act, including surveys and reports of group coverages and benefits available to employees and on the experience thereof; and</p> <p>(2) maintain statistics on the number, type, and disposition of fraudulent claims for benefits under this Act.</p> <p> </p> <p align="center"><b>ARTICLE 7. MISCELLANEOUS PROVISIONS</b></p> <p><b>Sec. 7.01. THEFT BY GOVERNMENT CONTRACTOR.</b> (a) Subsection (f), Section 31.03, Penal Code, is amended to read as follows:</p> <p>(f) An offense described for purposes of punishment by Subsections (e)(1)-(6) is increased to the next higher category of offense if it is shown on the trial of the offense that:</p> <p>(1) the actor was a public servant at the time of the offense; and</p> <p>(2)<b>-</b> the property appropriated came into the actor's custody, possession, or control by virtue of his status as a public servant; or</p> <p>(2) the actor was in a contractual relationship with government at the time of the offense and the property appropriated came into the actor's custody, possession, or control by virtue of the contractual relationship.</p> <p>(b) The changes in law made by this section apply only to an offense committed on or after the effective date of this section. For purposes of this section, an offense is committed before the effective date of this section if any element of the offense occurs before that date.</p> <p>(c) An offense committed before the effective date of this section is covered by the law in effect at the time the offense was committed.</p> <p> </p> <p align="center"><b>ARTICLE 8. WAIVERS; EFFECTIVE DATE; EMERGENCY</b></p> <p> </p> <p><b>SECTION 8.01. WAIVERS.</b> If before implementing any provision of this Act, a state agency determines that a waiver or authorization from a federal agency is necessary for implementation of that provision, the agency affected by the provision shall request the waiver or authorization and may delay implementing that provision until the waiver or authorization is granted.</p> <p> </p> <p><b>SECTION 8.02. EFFECTIVE DATE.</b> Except as otherwise provided by this Act, this Act takes effect September 1, 1997.</p> <p> </p> <p><b>SECTION 8.03. EMERGENCY.</b> The importance of this legislation and the crowded condition of the calendars in both houses create an emergency and an imperative public necessity that the constitutional rule requiring bills to be read on three several days in each house be suspended, and this rule is hereby suspended, and that this Act take effect and be in force according to its terms, and it is so enacted.</p> <p>Passed the Senate on April 17, 1997: Yeas 31, Nays 0; May 26, 1997, Senate refused to concur in House amendments and requested appointment of Conference Committee; May 29, 1997, House granted request of the Senate; May 31, 1997, Senate adopted Conference Committee Report by the following vote: Yeas 30, Nays 0; passed the House, with amendments, on May 23, 1997: Yeas 127, Nays 0, one present not voting; May 29, 1997, House granted request of the Senate for appointment of Conference Committee; June 1, 1997, House adopted Conference Committee Report by the following vote: Yeas 144, Nays 0, one present not voting.</p> <p>Approved June 20, 1997.</p> <p align="center">Effective September 1, 1997, except as provided in secs. 1.03(b), 1.04(c), 1.05(b), 1.06(j), 1.07(j), 2.01(c), 2.02(c), 2.08(b), and 2.09(c).<br> <br> <font SIZE="1">� 1998 Phillips and Cohen. 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