TITLE 1. ADMINISTRATION

PART 3. OFFICE OF THE ATTORNEY GENERAL

CHAPTER 55. CHILD SUPPORT ENFORCEMENT

SUBCHAPTER M. INTERCEPT OF INSURANCE CLAIMS

1 TAC §§55.601 - 55.605

The Office of the Attorney General (OAG) adopts amendments to 1 Texas Administrative Code (TAC), Part 3, Chapter 55, Subchapter M, §§55.601 - 55.605. The rules address insurance reporting and intercept of certain insurance settlements and awards for child support purposes pursuant to Texas Family Code §§231.003 and 231.015. These rules are adopted with minor non-substantive edits to the proposed text as published in the December 17, 2021, issue of the Texas Register (46 TexReg 8409) and will be republished.

EXPLANATION OF AND JUSTIFICATION FOR THE RULES

These amendments implement changes made to Texas Family Code §231.015 by Senate Bill 1174, 84th Legislature, Regular Session (2015) and House Bill 3845, 85th Legislature, Regular Session (2017). Insurance industry stakeholders provided input on those changes. In addition, the Texas Department of Insurance provided feedback on the adopted rules.

The adopted rules prescribe how the OAG, a Title IV-D agency (Texas Family Code §231.001), will operate a program under which insurers cooperate with the OAG in (1) identifying obligors who owe child support arrearages and are subject to liens for child support arrearages, and (2) intercepting certain insurance settlements or awards for claims in satisfaction of the arrearage amounts ("insurance intercept program").

SECTION-BY-SECTION SUMMARY

The following paragraphs explain how the amendments are implemented.

Section 55.601. The adopted amendments to 1 TAC §55.601 reflect the changes made to Texas Family Code §231.015 during the 84th and 85th Legislative Sessions. The amendments address concerns submitted by insurance industry stakeholders and clarify the economic benefits that do not need to be reported by insurers.

The adopted amendments to 1 TAC §55.601(c)(1) reflect the language in Texas Family Code §231.015(c)(1) and pertain to certain first-party actual property damage claims. These claims consist of insurance policy benefits that arise out of covered damage for actual repair, replacement, or loss of use of insured property (i.e., roof damage).

The adopted amendments to 1 TAC §55.601(c)(8) reflect the language of Texas Family Code §231.015(c)(4) and (c)(5) and address concerns from insurance industry stakeholders that these claims should be excluded from the reporting requirement regardless of the claim amount or period of days covered by the claim. The amendment deletes the language, "that do not exceed $1,000 per person over a 30-day period," which triggered reporting of these claims.

New 1 TAC §55.601(c)(11) reflects the language in Texas Family Code §231.015(c)(2), removing the requirement to report certain third-party property damage claims. These claims consist of insurance policy benefits payable to a vendor, repair facility, or a claimant for payments made by the claimant to a vendor or repair facility for the actual repair, replacement, or loss of use of dwellings, vehicles, or other tangible property. Typically, these claims are not sought by the Child Support Division to pay child support arrears.

New 1 TAC §55.601(c)(12) removes the requirement to report the payment of funds when benefits are paid or payable to a claimant under workers' compensation coverage where the claimant has paid a healthcare provider's bill, and the payment is less than the amount owed. These types of funds are not typically sought by the Child Support Division to pay child support arrears.

New 1 TAC §55.601(c)(13) reflects the language in Texas Family Code §231.015(c)(3). This new subsection also incorporates input from insurance industry stakeholders who requested a specific reporting exemption for small face-value insurance policies (also known as pre-need policies) designed to provide benefits payable to a funeral or burial provider for funeral or burial expenses. These types of funds are not typically sought by the Child Support Division to pay child support arrears.

The adopted amendments to 1 TAC §55.601(d) clarify insurers' matching and reporting requirements for life insurance policies and annuities issued to individuals who reside in Texas as well as for coverage to an insured party on a third-party claim that occurs in Texas. The amendments require that insurers must match and report when a life insurance policy or an annuity was issued to an individual who resides in Texas. This removes the "is located" provision because insurers do not have stored information on where an individual may be located other than his or her place of residence.

The amendments also clarify that liability insurers or eligible surplus lines insurers must match and report when they provide coverage to an insured for a third-party claim if the claim occurs in Texas. In addition, the amendments remove provisions that would require the insurer to match and report when the insurer is authorized to provide liability insurance in Texas, but there is no known connection or link between the particular policy and Texas.

The adopted amendments to 1 TAC §55.601(i) provide current Child Support Division contact information to insurers who seek compliance exemption requests.

Overall, the Child Support Division anticipates that these amendments will result in fewer requests for specific exceptions under 1 TAC §55.601(i) and fewer reports of economic benefits already intended to be exceptions to the reporting requirements. However, the proposed amendments only pertain to reporting requirements and do not negate the Child Support Division's ability or statutory authority to file a lien against these types of economic benefits.

Section 55.602. The adopted amendments to 1 TAC §55.602 reflect that insurers have multiple data matching options to match claims. As insurers have data matching options through the Child Support Lien Network (CSLN) or the federal Office of Child Support Enforcement (OCSE), the title has been revised from "Child Support Lien Network" to "Data Matching Options."

The adopted amendment to 1 TAC §55.602(b) revises the phrase, "Other Partners" to "Partners" to track the current section title on the OCSE website.

New 1 TAC §55.602(c) paraphrases requirements previously included in 1 TAC §55.602(b) and addresses the request of some insurers to permit "bulk" data matching. If an insurer performs "bulk" data matching, a claim cannot be paid without the insurer first confirming with the Child Support Division that the match is still valid. In addition, an insurer must receive and process a notice of child support lien or an income withholding order to secure the payment of the past-due support amount or a release.

Section 55.603. The adopted amendments to 1 TAC §55.603, "Insurance Services Office Data Match," clarify that an insurer can conduct a data match of its pending claims against a list of delinquent child support obligors maintained by the Insurance Services Office (ISO). The ISO matches and claim reports may be performed manually or an automatic data match. As such, the title has been revised from "Automated Data Match" to "Insurance Services Office Data Match."

Section 55.604. The adopted amendments to 1 TAC §55.604(g) clarify that a life insurer that uses the OCSE's website for claim matching and reporting must await a response from the Child Support Division before it issues a payment. CSLN provides a real time response; the OCSE's process does not. This clarification is necessary as insurers can utilize either the CSLN interactive option or the OCSE's option for matching and reporting.

Section 55.605. The adopted amendments to 1 TAC §55.605(b)(3) reflect the requests of the OAG and insurance industry stakeholders to simplify the payment process for insurers such that if a claimant has no attorney, and the insurer has not received a copy of any signed agreement between the claimant and the Child Support Division, the insurer is required to remit the child support insurance lien payment to the OAG with the funds made payable to the OAG.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Ruth Anne Thornton, Director of Child Support (IV-D Director), has determined that for the first five-year period the adopted rules are in effect, enforcing or administering the rules does not have foreseeable implications relating to cost or revenues of the state or local governments.

PUBLIC BENEFIT AND COST

Ms. Thornton has also determined that for each year of the first five years the adopted rules are in effect the public will benefit from clarification of the process for intercept of insurance claims under Texas Family Code §231.015. In addition, for each year of the first five-year period the adopted rules are in effect, there are no anticipated economic costs to persons who are required to comply with the adopted rules.

FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

Ms. Thornton has determined that there will be no foreseeable adverse fiscal impact on small business, micro-businesses, or rural communities. Since the adopted rule will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, is not required.

LOCAL EMPLOYMENT OR ECONOMY IMPACT

Ms. Thornton has determined that the adopted rules do not have an impact on local employment or economies. Therefore, no local employment or economy impact statement is required under Texas Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

In compliance with Texas Government Code §2001.0221, the OAG has prepared the following government growth impact statement. During the first five years the adopted rules will be in effect, the adopted rules:

- will not create or eliminate a government;

- will not require the creation of new employee positions or the elimination of existing employee positions;

- will not require an increase or decrease in future legislative appropriations to the agency;

- will not require an increase or decrease in fees paid to the agency;

- will create new regulations;

- will not expand, limit, or repeal an existing regulation;

- will not increase or decrease the number of individuals subject to the rule's applicability; and

- will not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

Ms. Thornton has determined that no private real property interests are affected by the adopted rules and the adopted rules do not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the adopted rules do not constitute a taking or require a takings impact assessment under Texas Government Code §2007.043.

PUBLIC COMMENT

The adopted rules were published in the December 17, 2021 issue of the Texas Register (46 TexReg 8409). The deadline for public comment was January 16, 2022. The OAG did not receive any comments from interested parties on the adopted rules during the 30-day public comment period.

STATUTORY AUTHORITY. OAG adopts amendments to 1 TAC §55.601 - §55.605 pursuant to Texas Family Code §§231.001, 231.003, and 231.015. Section 231.001 designates the OAG as Texas's Title IV-D agency. Section 231.003 authorizes the OAG to promulgate procedures for the implementation of Chapter 231 by rule. Section 231.015 provides that the OAG will operate an insurance intercept program by rule through which insurers will cooperate with the OAG in (1) identifying obligors who owe child support arrearages and are subject to liens for child support arrearages, and (2) intercepting certain insurance settlements or awards for claims in satisfaction of the arrearage amounts.

CROSS-REFERENCE TO STATUTE. No other rules, codes, or statutes are affected by this change.

§55.601.Scope.

(a) Under Texas Family Code §231.015, the Child Support Division (CSD) of the Office of the Attorney General, in consultation with the Texas Department of Insurance and representatives of the insurance industry, is required to operate by rule an insurance intercept program under which insurers must cooperate with the CSD in matching the names of claimants with the names of child support obligors who owe past-due child support. When such an individual is identified, the insurer will receive either a notice of child support lien or an income withholding order to secure the payment of the amount of past-due support. This subchapter explains how the matching process and the reporting process work.

(b) Except as provided by subsection (c) of this section, as used in this subchapter, a "claim" that must be matched and must be reported is any which seeks an economic benefit for the claimant.

(1) An "economic benefit" under a life, accident, health policy or annuity is defined as a payment in which an individual is paid as the payee or co-payee:

(A) for a claim by a beneficiary under a life insurance policy;

(B) for the cash surrender value by an owner of a life insurance policy or annuity;

(C) for payments to an annuitant; or

(D) a payment to an individual as the payee or co-payee on a first-party claim as defined herein, unless excluded under subsection (c)(2) of this section.

(2) An "economic benefit" under a property and casualty insurance policy is defined as a payment involving:

(A) a payment to an individual as the payee or co-payee on a first-party claim as defined herein, unless excluded under subsection (c)(1) of this section; payments involving third-party claims, as defined herein, where the individual would be entitled to compensations from an insured covered by a liability insurance policy or self-insurer including claims covering personal or bodily injury, lost wages, property damage, non-economic tort damages, wrongful death damages, or accidental death damages; or

(B) payments to individuals for employment or workers' compensation benefits covered by an insurance policy or certified self-insurer.

(3) The term "first-party claim" means:

(A) a claim that is made by the insured or policyholder under an insurance policy or contract or by a beneficiary named in a life insurance policy or annuity; and

(B) the proceeds must be paid by the insurer directly to the insured or beneficiary.

(4) The term "third-party claim" means a claim for bodily injury, property damage or other damages that is brought by a third-party against an insured that is covered by a liability insurance policy or contract or by a self-insured.

(c) The following economic benefits are not considered economic benefits that require reporting:

(1) "first-party actual property damage claims" defined as benefits payable under an insurance policy arising out of covered damage for actual repair, replacement, or loss of use of insured property. Examples include:

(A) physical damage coverage under a personal automobile policy for actual repair, replacement, loss of use, or other associated costs including, but not limited to towing, storage, vehicle rentals, or costs to an insured vehicle;

(B) coverage for loss of damage to an insured dwelling and contents under a residential, homeowners, farm and ranch owners, condominium owners, tenant property insurance policy, or other similar policies including additional living expenses payable under such a policy;

(C) benefits paid to the mortgagee or lienholder of the property including payments issued jointly to the insured and mortgagee; and

(D) coverage for physical loss or damage to commercial property or business personal property insured under a commercial property, farm, inland marine, builder's risk, or other similar policies.

(2) "actual medical expenses" defined as a payment

(A) issued and sent directly to a healthcare provider; or

(B) issued and sent directly to the claimant after the claimant provides proof of the amount actually paid by the claimant to the healthcare provider or providers, the amount is at least as much as the insurance payment and, the amount does not include any amounts billed but not paid.

(3) A co-payable insurance payment mailed directly to a vendor, repair facility, or healthcare provider that includes the claimant as a co-payee under subsection (1) or (2) of this section.

(4) A loan against the cash value or surrender value of an insurance policy or annuity, including loans for premium payments.

(5) Dividends or other payments made under an insurance policy or annuity that are credited or retained by the insurer or that will not exceed $1,200 over a 12-month period.

(6) Benefits payable directly to a creditor of a claimant under the terms of the policy.

(7) Benefits assigned to be paid to a healthcare provider or facility for "actual expenses" defined as the amount actually owed by the insured not otherwise paid or reimbursed.

(8) Limited benefits that include coverage for one or more specified diseases or illnesses; dental or vision benefits; hospital indemnity or other fixed indemnity insurance coverage; and, short-term major medical contracts, including any benefits to be paid under a plan or rider of accident insurance, accidental death, or loss of limb coverage.

(9) Benefits paid in accordance with a "long term care benefit plan" as defined in §1651.003 of the Insurance Code.

(10) Benefits paid on behalf of an individual directly to a retirement plan or an accelerated death benefit as defined in Chapter 1111 of the Insurance Code.

(11) "third-party property damage claims" defined as benefits paid or payable to:

(A) a vendor or repair facility for the actual repair, replacement, or loss of use of:

(i) a dwelling, condominium, or other improvements on real property;

(ii) a vehicle, including a motor vehicle, motorcycle, or recreational vehicle; or

(iii) other tangible property that has sustained actual damage or loss; or

(B) a claimant for reimbursement of the claimant for payments made by the claimant to a vendor or repair facility for the actual repair, replacement, or loss of use of:

(i) a dwelling, condominium, or other improvements on real property;

(ii) a vehicle, including a motor vehicle, motorcycle, or recreational vehicle; or

(iii) other tangible property that has sustained actual damage or loss.

(12) Benefits paid or payable to a claimant under workers' compensation coverage where the claimant has paid a healthcare provider's bill and payment is no greater than the amount owed for the treatment rendered.

(13) A claim for benefits, or a portion of a claim for benefits, assigned to be paid to a funeral service provider or facility for actual funeral expenses owed by the insured that are not otherwise paid or reimbursed.

(d) All insurers are subject to the matching and reporting requirements under this subchapter and must match and report any claim seeking an economic benefit in which:

(1) the owner of a life policy or annuity that was issued to an individual resides in Texas;

(2) the beneficiary making a claim on a life policy or annuity resides in Texas;

(3) a first-party claimant making a claim resides in Texas;

(4) a third-party claimant making a third-party claim, as defined in subsection (b)(4) of this section, resides in Texas; or

(5) a liability insurer or an eligible surplus lines insurer is providing coverage to an insured on a third-party claim and the claim occurs in Texas.

(e) For a claim under subsection (d)(4) or (d)(5) of this section, the liability insurer must comply with the match and reporting requirements if coverage to an insured would result in payments to the third-party claimant as a child support obligor based on the liability of the insured to the third-party claimant.

(f) To determine whether a recipient of funds paid under a claim owes child support arrearages or is subject to a lien for child support arrearages, insurers are encouraged to report all claims.

(g) As used in this subchapter, "insurer" means:

(1) a domestic, foreign, or alien company which provides insurance coverage of any kind, including:

(A) life insurance;

(B) health insurance;

(C) liability insurance for an occurrence;

(D) an annuity; or

(E) any combination of subparagraphs (A) - (D) of this paragraph;

(2) a Lloyd's plan;

(3) a reciprocal or interinsurance exchange;

(4) a fraternal benefit society;

(5) a mutual aid association, including a mutual insurance company;

(6) a surplus lines insurer;

(7) a certified self-insurer granted a certificate of authority as authorized by Labor Code Chapter 407;

(8) a certified self-insurer group granted a certificate of approval as authorized by Labor Code Chapter 407A; or

(9) a governmental entity that self-insures, either individually or collectively under an interlocal cooperation contract as authorized by Government Code Chapter 791.

(h) To assure the flexibility to accommodate the various types of operations of the entities subject to the rules, these rules will be liberally construed.

(i) If compliance with these rules may result in an operational hardship or an injustice to any party, the rules may be suspended at the discretion of the Title IV-D Director. An exemption request under this provision must be sent to the Office of the Attorney General of Texas, Special Collections Unit, by mail: P.O. Box 12027, Austin, Texas 78711-2027, by FAX: (512) 433-4691, or by e-mail: txinsscu@oag.texas.gov, providing the basis or the hardship or injustice and the length of time needed to comply.

(j) The Title IV-D Director may delegate a power, duty, or responsibility under these rules to one or more persons in the Child Support Division.

§55.602.Data Matching Options.

(a) The Child Support Division (CSD) has contracted with the State of Rhode Island and Providence Plantations to participate in the Child Support Lien Network (CSLN). CSLN provides an insurer with two methods of matching: an Automated Data Match and an Interactive Lookup. An insurer subject to the requirements of this subchapter may choose to provide or obtain matching information using either or both the CSLN Automated Data Match process and the CSLN Interactive Lookup.

(b) As an alternative to an automated data match with CSLN, an insurer may participate in a similar automated data match with the federal Office of Child Support Enforcement (OCSE). An insurer may obtain information about the OCSE match program, including enrollment options, through the OCSE website (http://www.acf.hhs.gov/css). An insurer or agent of an insurer participating in OCSE's automated, data match process may either submit information on claims to OCSE or receive a file from OCSE containing information about individuals who owe past-due support (delinquent obligor information) and generate a match file to OCSE.

(c) A data match must occur before any claim is paid. The data match must be made at the time or after a claim is filed but before the claim has been paid. In addition to this match, an insurer can perform periodic data matching in advance of such claims. In the event of a match prior to a claim, the insurer will not pay the claim without first confirming with CSD that the match is still valid, and without first receiving and processing either a notice of child support lien or an income withholding order to secure payment of the amount of past-due support or a release.

§55.603.Insurance Services Office Data Match.

(a) An insurer can conduct an automatic data match of its pending claims against a list of delinquent child support obligors maintained by the Insurance Services Office (ISO). ISO is an industry service provider, located in New Jersey, which provides a claim search service to assist subscribing insurers in fraud detection.

(b) An insurer participating in the automated data matching process must give ISO permission to match the insurer's claim data with Child Support Lien Network (CSLN) or the federal Office of Child Support Enforcement (OCSE).

(c) CSLN matches its list of child support obligors daily against the ISO claim data. ISO returns matches to OCSE to distribute to the State child support agency(ies) responsible for collecting past-due support.

(d) A participating insurer will receive a notice of child support lien (or withholding instrument for a workers' compensation claim) only on those claims that the insurer has registered with ISO and that match the name of an obligor who owes past-due child support. Claims information that does not match individuals who owe past-due support is discarded.

§55.604.Interactive Lookup.

(a) By accessing the Child Support Lien Network (CSLN) database (http://www.childsupportliens.com), an insurer may determine whether a claimant owes past-due child support.

(b) Secure access to the CSLN database will be approved once the registration information and confidentiality statement have been received and reviewed.

(c) Unless the insurer is participating in the CSLN or the federal Office of the Child Support Enforcement (OCSE) Automated Data Match, the insurer must query the database prior to the payment of the claim.

(1) For claims involving periodic payments after the insurer has determined that benefits will be payable, the query must be made only prior to the initial payment after the insurer has determined that benefits are payable. No inquiry is required for each periodic payment for 12 months thereafter. Examples of these types of claims would include:

(A) periodic payments under a disability policy;

(B) workers' compensation policy;

(C) accident or health insurance policy involving periodic payments; or

(D) payments to an annuitant for an annuitization including systematic withdrawal.

(2) If additional information is required to be submitted to continue periodic payments, this will not be considered a new claim if the information is provided within 12 months of the initial determination.

(3) A claim involving different benefits or coverages will be considered a new claim and the data base must be queried.

(d) Insurers are notified when a query of the database results in:

(1) no match.

(2) a positive match, in which basic match data is provided.

(3) multiple positive matches within one state, in which the insurer is prompted to contact CSLN to identify the correct obligor.

(4) multiple possible matches within more than one state, in which the insurer is notified that CSLN will work with the insurer and the affected states to determine the appropriate course of action.

(e) When an interactive match occurs, CSLN notifies the State child support enforcement agency of a match. CSLN or the State child support agency will send a notice of child support lien (or, in the case of workers' compensation claim, a withholding instrument) to the insurer.

(f) As an alternative to CSLN, a life insurance company can use OCSE's web-based application, the Debt Inquiry Service, to submit information about life insurance beneficiaries who have filed a claim prior to making a payout to determine if a beneficiary owes past-due support. The information may be provided through individual look-ups or by uploading a single file containing information about multiple individuals. The information provided by the life insurance companies is compared with individuals who owe past-due child support. If there is a match, the life insurance company receives the name of the State(s) where the individual owes past-due support and contact information for that State. If the match identifies an individual subject to a child support order being enforced by the Child Support Division (CSD), the life insurance company may either contact the CSD or await notice from the CSD concerning the match; however, no payout will be made to the claimant unless authorized by the CSD.

(g) Apart from life insurance claims, the OCSE Debt Inquiry Services portal does not provide enough information to satisfy the insurance data match requirements under this subchapter.

§55.605.Protection from Liability; Remittance of Funds.

(a) An insurer that provides information required by this subchapter or acts in good faith to comply with procedures established by the Child Support Division (CSD) for the operation of the insurance intercept program under this subchapter, including the remittance of funds as specified under this rule, or responds to a notice of child support lien or levy under Texas Family Code Chapter 157, Subchapter G, is not liable for those acts under any law to any person. This includes but is not limited to any claims asserted under Chapter 541, Chapter 542, Chapter 601, or Chapter 602 of the Insurance Code; Chapter 17 of the Business and Commerce Code; Chapter 181 of the Health and Safety Code; or an action for common law bad faith. However, an insurer who fails to comply with a child support lien, including the remittance of funds as specified under this rule, may be liable to the CSD as the child support lien claimant in an amount equal to the amount of funds payable under an insurance claim, not to exceed the amount of the child support arrearages for which the lien was issued. See Texas Family Code §157.324. An insurer who has questions or concerns about a child support lien, including the appropriate remittance of funds under a policy to which the lien attaches, must contact the Texas Special Collections Unit, P.O. Box 12027, Austin, Texas 78711-2027, before paying out any funds under the policy.

(b) An insurer should remit funds in satisfaction of a child support lien in one of the following ways:

(1) On receipt of a signed agreement between the CSD and a claimant and/or claimant's attorney, the insurer should remit the funds agreed to be paid to satisfy the child support lien to: Texas State Disbursement Unit, Insurance Intercept, P.O. Box 245996, San Antonio, Texas 78224-5996. The funds should be made payable to the Office of the Attorney General, and the remittance should identify the name of the claimant/obligor and the CSD's case number(s) as shown on the Notice of Lien.

(2) If the claimant is represented by an attorney but the insurer has not received a copy of any signed agreement between the attorney and the CSD, the insurer should remit all the funds directly to the claimant's attorney and must include the Office of the Attorney General as a co-payee and provide the Office of the Attorney General with written notice of the data and amount of the payment sent to the attorney.

(3) If the claimant has no attorney, and the insurer has not received a copy of any signed agreement between the claimant and the CSD, the insurer must remit all the funds to the Texas State Disbursement Unit, Insurance Intercept, P.O. Box 245996, San Antonio, Texas 78224-5996 with the funds being made payable to the Office of the Attorney General and the remittance should identify the name of the claimant/obligor and the CSD's case number(s) as shown on the Notice of Lien.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 22, 2022.

TRD-202201588

Austin Kinghorn

General Counsel

Office of the Attorney General

Effective date: May 12, 2022

Proposal publication date: December 17, 2021

For further information, please call: (800) 252-8014


PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

CHAPTER 391. PURCHASE OF GOODS AND SERVICES BY THE TEXAS HEALTH AND HUMAN SERVICES COMMISSION

The Texas Health and Human Services Commission (HHSC) adopts amendments to §391.101, concerning Purpose; §391.103, concerning Authority; §391.105, concerning Exceptions; §391.107, concerning Definitions; §391.201, concerning Procurement Methods; §391.203, concerning Spot Purchases; §391.205, concerning Competitive Bidding through Informal Bidding; §391.207, concerning Competitive Sealed Bidding through Invitation for Bids; §391.209, concerning Request for Proposals; §391.211, concerning Request for Qualifications; §391.213, concerning Request for Offers; §391.215, concerning Proprietary Purchases; §391.217, concerning Emergency Purchases; §391.219, concerning Award Notification; §391.241, concerning Contracting and Delivery Procedures for Construction; §391.303, concerning Applicability; §391.309, concerning Contract Awards During Protest; §391.503, concerning Mandatory Review of Historically Underutilized Business Subcontracting Plan; §391.601, concerning Open Enrollment Contracts; and new §391.245, concerning Group Purchasing Organizations Program; and §391.247, concerning Direct Contract Award.

New §391.247 is adopted with changes to the proposed text as published in the February 11, 2022, issue of the Texas Register (47 TexReg 613). This rule will be republished. The amendments to §§391.101, 391.103, 391.105, 391.107, 391.201, 391.203, 391.205, 391.207, 391.209, 391.211, 391.213, 391.215, 391.217, 391.219, 391.241, 391.303, 391.309, 391.503, 391.601; and new §391.245 are adopted without changes to the proposed text as published in the February 11, 2022, issue of the Texas Register (47 TexReg 613). These rules will not be republished.

BACKGROUND AND JUSTIFICATION

The adopted amendments are necessary to implement Senate Bill (S.B.) 799 and S.B. 1896, 87th Texas Legislature, Regular Session, 2021. S.B. 799 made changes to laws relating to contracting procedures and requirements for governmental entities, effective September 1, 2021. S.B. 1896 classified the Department of Family and Protective Services (DFPS) as a health and human services agency subject to the procurement authority under Texas Government Code §2155.144, effective June 14, 2021.

The adopted new rules are necessary to implement the purchase of goods and services made through group purchasing organizations as authorized by Texas Government Code §2155.144 and §2155.1441.

The adopted rules include other non-substantive edits and revisions.

COMMENTS

The 31-day comment period ended March 14, 2022.

During this period, HHSC did not receive any comments regarding the proposed rules.

A minor editorial change was made to §391.247(c) to correct a statutory reference.

SUBCHAPTER A. GENERAL PROVISIONS

1 TAC §§391.101, 391.103, 391.105, 391.107

STATUTORY AUTHORITY

The amendments are adopted under Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies, and Texas Government Code §2155.144(g), which allows HHSC to adopt rules and procedures for the procurement and acquisition of goods and services under the section; and Texas Government Code §2155.144(h), which requires HHSC to adopt rules and procedures for the acquisition of goods and services that apply to all health and human services agencies, including rules adopted with the commission's assistance that allow an agency to make purchases through a group purchasing program.

The adopted rules implement Texas Government Code §§531.0055, 531.102(m-1) and (m-2), 2155.076, 2155.132(e), 2155.144(a), 2155.144(g), 2155.144(h), 2155.144(o), 2155.1441, and 2254.008.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 20, 2022.

TRD-202201508

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: May 10, 2022

Proposal publication date: February 11, 2022

For further information, please call: (512) 406-2500


SUBCHAPTER B. PROCUREMENT AND SPECIAL CONTRACTING METHODS

DIVISION 1. PROCUREMENT METHODS

1 TAC §§391.201, 391.203, 391.205, 391.207, 391.209, 391.211, 391.213, 391.215, 391.217, 391.219

STATUTORY AUTHORITY

The amendments are adopted under Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies, and Texas Government Code §2155.144(g), which allows HHSC to adopt rules and procedures for the procurement and acquisition of goods and services under the section; and Texas Government Code §2155.144(h), which requires HHSC to adopt rules and procedures for the acquisition of goods and services that apply to all health and human services agencies, including rules adopted with the commission's assistance that allow an agency to make purchases through a group purchasing program.

The adopted rules implement Texas Government Code §§531.0055, 531.102(m-1) and (m-2), 2155.076, 2155.132(e), 2155.144(a), 2155.144(g), 2155.144(h), 2155.144(o), 2155.1441, and 2254.008.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 20, 2022.

TRD-202201507

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: May 10, 2022

Proposal publication date: February 11, 2022

For further information, please call: (512) 406-2500


DIVISION 2. SPECIAL CONTRACTING METHODS

1 TAC §§391.241, 391.245, 391.247

STATUTORY AUTHORITY

The amendment and new rules are adopted under Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies, and Texas Government Code §2155.144(g), which allows HHSC to adopt rules and procedures for the procurement and acquisition of goods and services under the section; and Texas Government Code §2155.144(h), which requires HHSC to adopt rules and procedures for the acquisition of goods and services that apply to all health and human services agencies, including rules adopted with the commission's assistance that allow an agency to make purchases through a group purchasing program.

The adopted rules implement Texas Government Code §§531.0055, 531.102(m-1) and (m-2), 2155.076, 2155.132(e), 2155.144(a), 2155.144(g), 2155.144(h), 2155.144(o), 2155.1441, and 2254.008.

§391.247.Direct Contract Award.

(a) Texas HHSC Office of Inspector General (OIG) direct contract award. If HHS does not receive any responsive proposals on a competitive solicitation for the services of a qualified expert to review investigative findings under Texas Government Code §531.102(l) or §531.102(m), HHS may instead award contracts that are not subject to competitive advertising and proposal evaluation requirements. HHS may negotiate with and award a contract to a qualified expert based on:

(1) the contractor's agreement to set a fee (range or lump-sum); and

(2) the contractor's affirmation and the OIG's verification that the contractor has the necessary occupational licenses and experience.

(b) OIG direct contract awards not subject to competitive advertising. In accordance with Texas Government Code §531.102(m-1) and §531.102(m-2), and notwithstanding Texas Government Code §2155.083 and §2261.051, a contract awarded under subsection (a) of this section is not subject to competitive advertising and proposal evaluation requirements.

(c) HHSC state operated facilities direct contract award. If HHSC does not receive any responsive competitive bids or proposals in response to a solicitation for goods or services for a state hospital or a state supported living center as defined by Texas Health and Safety Code §531.002, HHSC, after the procurement director makes a written determination that competition is not available, may negotiate with and award a contract to any qualified vendor who meets the requirements of the original solicitation. The contract must be at current market value price and the term may not exceed five years.

(d) Direct contract award for professional services of physicians, optometrists, and registered nurses. If procuring services in connection with professional employment or practice of a physician, optometrist, or registered nurse as defined by Texas Government Code §2254.002(2)(B)(v), (vi), or (ix) and the number of contracts is not otherwise limited, HHS, DFPS, and TCCO may make the selection and award based on:

(1) the provider's agreement to a set fee, as a range or lump sum amount; and

(2) the provider's affirmation and the HHS, DFPS, or TCCO's verification that the provider has the necessary occupational licenses and experience.

(e) Professional services for physicians, optometrists, and registered nurses not subject to competitive advertising. In accordance with Texas Government Code §2254.008, and notwithstanding Texas Government Code §2155.083 and §2261.051, a contract awarded under subsection (d) of this section is not subject to competitive advertising and proposal evaluation requirements.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 20, 2022.

TRD-202201509

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: May 10, 2022

Proposal publication date: February 11, 2022

For further information, please call: (512) 406-2500


SUBCHAPTER C. PROTESTS

1 TAC §391.303, §391.309

STATUTORY AUTHORITY

The amendments are adopted under Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies, and Texas Government Code §2155.144(g), which allows HHSC to adopt rules and procedures for the procurement and acquisition of goods and services under the section; and Texas Government Code §2155.144(h), which requires HHSC to adopt rules and procedures for the acquisition of goods and services that apply to all health and human services agencies, including rules adopted with the commission's assistance that allow an agency to make purchases through a group purchasing program.

The adopted rules implement Texas Government Code §§531.0055, 531.102(m-1) and (m-2), 2155.076, 2155.132(e), 2155.144(a), 2155.144(g), 2155.144(h), 2155.144(o), 2155.1441, and 2254.008.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 20, 2022.

TRD-202201510

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: May 10, 2022

Proposal publication date: February 11, 2022

For further information, please call: (512) 406-2500


SUBCHAPTER E. HISTORICALLY UNDERUTILIZED BUSINESSES

1 TAC §391.503

STATUTORY AUTHORITY

The amendment is adopted under Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies, and Texas Government Code §2155.144(g), which allows HHSC to adopt rules and procedures for the procurement and acquisition of goods and services under the section; and Texas Government Code §2155.144(h), which requires HHSC to adopt rules and procedures for the acquisition of goods and services that apply to all health and human services agencies, including rules adopted with the commission's assistance that allow an agency to make purchases through a group purchasing program.

The adopted rules implement Texas Government Code §§531.0055, 531.102(m-1) and (m-2), 2155.076, 2155.132(e), 2155.144(a), 2155.144(g), 2155.144(h), 2155.144(o), 2155.1441, and 2254.008.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 20, 2022.

TRD-202201512

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: May 10, 2022

Proposal publication date: February 11, 2022

For further information, please call: (512) 406-2500


SUBCHAPTER F. CONTRACTS

1 TAC §391.601

STATUTORY AUTHORITY

The amendment is adopted under Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies, and Texas Government Code §2155.144(g), which allows HHSC to adopt rules and procedures for the procurement and acquisition of goods and services under the section; and Texas Government Code §2155.144(h), which requires HHSC to adopt rules and procedures for the acquisition of goods and services that apply to all health and human services agencies, including rules adopted with the commission's assistance that allow an agency to make purchases through a group purchasing program.

The adopted rules implement Texas Government Code §§531.0055, 531.102(m-1) and (m-2), 2155.076, 2155.132(e), 2155.144(a), 2155.144(g), 2155.144(h), 2155.144(o), 2155.1441, and 2254.008.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 20, 2022.

TRD-202201513

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Effective date: May 10, 2022

Proposal publication date: February 11, 2022

For further information, please call: (512) 406-2500