HBA-NLM C.S.H.B. 990 76(R) HBA-NLM H.B. 990 76(R) BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 990 By: Dutton Public Health 4/19/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Under current law, it is a felony when an individual improperly receives either financial assistance, food stamps, or medical assistance in excess of $1,500, even though the recipient may not have the intent to commit fraud. However, current law does not provide the authority to use administrative penalties to address fraud when there is no intent. The purpose of this bill is to protect service agencies from fraudulent conduct of individuals and to allow these agencies to implement administrative procedures or seek criminal conviction at the agency's discretion. C.S.H.B. 990 requires the Health and Human Services Commission (commission) to adopt administrative procedures for the commission or an appropriate health and human services agency to use in order to determine whether an individual has engaged in fraudulent conduct in obtaining or attempting to obtain financial assistance and services, food stamps, or medical assistance. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Health and Human Services Commission in SECTION 1 (Section 531.109, Government Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter C, Chapter 531, Government Code, by adding Section 531.109, as follows: Sec. 531.109. ADMINISTRATIVE FINDING OF FRAUD; IMMUNITY FROM CRIMINAL PROSECUTION. (a) Requires the Health and Human Services Commission (commission), by rule, to adopt administrative procedures for the commission or an appropriate health and human services agency to use in order to determine whether an individual has engaged in fraudulent conduct to obtain or attempt to obtain financial assistance and services under Chapter 31, Human Resources Code (Financial Assistance and Service Programs), food stamps under the food stamp program administered under Chapter 33, Human Resources Code (Nutritional Assistance Programs), or medical assistance under the state Medicaid program. (b) Prohibits the commission or health and human services agency from seeking criminal prosecution of an individual alleged to have engaged in fraudulent conduct in obtaining or attempting to obtain assistance or benefits described by Subsection (a) and authorizes the commission or health and human services agency to use only the administrative procedures established under this section to sanction that individual if the individual has not previously engaged in fraudulent conduct of this nature and the monetary value of the alleged conduct is less than $5,000. (c) Authorizes the commission to impose an administrative penalty against an individual for the engagement of fraudulent conduct determined through the administrative procedures under Subsection (a). (d) Specifies that the commission or appropriate agency, in accordance with the administrative procedures, is required to provide written notice to an individual of the alleged engagement in fraudulent conduct to obtain or attempt to obtain assistance or benefits described by Subsection (a). Provides that the notice must include: (1) a specific description of the allegedly fraudulent conduct, including the resulting monetary value of any benefits or assistance the individual received; (2) a copy of the procedures adopted under this section; (3) a statement that an administrative penalty may be imposed against the individual, if a penalty is authorized by the commission under Subsection (c); (4) a statement that a finding of fraudulent conduct will subject the individual to criminal prosecution for subsequent fraudulent conduct to which Subsection (a) applies; and (5) a statement that the individual is entitled to submit a written response or to request a hearing before the commission or the appropriate agency. (e) Requires the commission or appropriate agency to determine whether the individual engaged in fraudulent conduct to obtain or attempt to obtain assistance or benefits described by Subsection (a), after considering any written response and after conducting a requested hearing. Provides that if the commission or agency determines that the individual engaged in fraudulent conduct, the commission or agency: (1) is required to issue a finding of fraudulent conduct, maintain a permanent record of the finding, and seek to recover from the individual the amount of benefits or assistance, if any, obtained through the fraudulent conduct; and (2) is authorized to impose an administrative penalty against the individual, if a penalty is authorized by the commission under Subsection (b). (f) Provides that a hearing under this section shall be conducted in the manner provided for a contested case hearing under Chapter 2001, Government Code (Administrative Procedures). (g) Provides for the combination of administrative procedures required by this section with any other appropriate administrative procedures conducted by the commission or an appropriate health and human services agency. (h) Specifies that an individual who engages in fraudulent conduct to obtain or attempt to obtain assistance or benefits listed under Subsection (a) with a monetary value of less than $5,000, except as provided by Subsection (i), may be convicted of: _perjury, under Section 37.02, Penal Code, _tampering with a governmental record under Section 37.10, Penal Code, _an offense against property under Title 7, Penal Code, or _an offense under Section 33.011, Human Resources Code ( Prohibited Activities; Penalties), in connection with the fraudulent conduct only if the individual has been found under this section by the commission or an appropriate agency to have previously engaged in fraudulent conduct to which Subsection (a) applies. (i) Provides that the immunity from conviction granted by Subsection (h) does not apply to an individual who fails to pay or defaults in a payment plan relating to an amount sought or imposed by the commission or an appropriate agency under Subsection (e). SECTION 2. Makes application of this Act prospective. SECTION 3. Effective date: September 1, 1999. SECTION 4. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 990 modifies the original in SECTION 1 (proposed Section 531.109, Government Code) by adding a new Subsection (b) to prohibit the commission or a health and human services agency from seeking criminal prosecution of an individual alleged to have engaged in fraudulent conduct in obtaining or attempting to obtain assistance or benefits described by Subsection (a) and authorizes the commission or health and human services agency to use only the administrative procedures established under this section to sanction that individual if the individual has not previously engaged in fraudulent conduct of this nature and the monetary value of the alleged conduct is less than $5,000. C.S.H.B. 990 modifies the original in SECTION 1 to redesignate proposed Subsections (b)-(h) of the original as Subsections (c)-(i) of the substitute, and makes nonsubstantive and conforming changes. C.S.H.B. 990 modifies the original in Subsection (h), redesignated from Subsection (g) to specify that an individual who engages in fraudulent conduct to obtain or attempt to obtain assistance or benefits listed under Subsection (a) with a monetary value of less than $5,000 may be convicted of certain offenses.