By: Schwertner  S.B. No. 267          (In the Senate - Filed December 5, 2016; January 30, 2017,   read first time and referred to Committee on Health & Human   Services; March 13, 2017, reported adversely, with favorable   Committee Substitute by the following vote:  Yeas  8, Nays 0;   March 13, 2017, sent to printer.)Click here to see the committee vote     COMMITTEE SUBSTITUTE FOR S.B. No. 267 By:  Schwertner     A BILL TO BE ENTITLED   AN ACT     relating to the licensing and regulation of hospitals in this   state; increasing the amount of administrative penalties assessed   or imposed against certain hospitals; authorizing the imposition of   a fee.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 241.022(b), Health and Safety Code, is   amended to read as follows:          (b)  The application must contain:                (1)  the name and social security number of the sole   proprietor, if the applicant is a sole proprietor;                (2)  the name and social security number of each   general partner who is an individual, if the applicant is a   partnership;                (3)  the name and social security number of any   individual who has an ownership interest of more than five [25]   percent in the corporation, if the applicant is a corporation; and                (4)  any other information that the department may   reasonably require.          SECTION 2.  Subchapter B, Chapter 241, Health and Safety   Code, is amended by adding Section 241.0261 to read as follows:          Sec. 241.0261.  INFORMATION SHARING WITH OFFICE OF INSPECTOR   GENERAL. (a)  The department in accordance with department rules   may share with the office of inspector general of the commission   information relating to an applicant for a hospital license under   this chapter or a hospital license holder.          (b)  Any information shared by the department under this   section with the office of inspector general of the commission that   is confidential under Section 241.051 must remain confidential and   is not subject to disclosure under Chapter 552, Government Code.          (c)  The executive commissioner shall adopt the rules   necessary to implement this section.          SECTION 3.  Section 241.051, Health and Safety Code, is   amended by amending Subsection (a) and adding Subsections (a-1),   (a-2), and (a-3) to read as follows:          (a)  The department shall conduct an [may make any]   inspection of each hospital licensed under this chapter as provided   by Subsections (a-1) and (a-2), and the department may make any   inspection, survey, or investigation [that] it considers   necessary.  A representative of the department may enter the   premises of a hospital at any reasonable time to make an inspection,   a survey, or an investigation to assure compliance with or prevent a   violation of this chapter, the rules adopted under this chapter, an   order or special order of the commissioner, a special license   provision, a court order granting injunctive relief, or other   enforcement procedures.  The department shall maintain the   confidentiality of hospital records as applicable under state or   federal law.          (a-1)  The department shall adopt a schedule for the   inspection of each hospital licensed under this chapter so that 10   percent of the hospitals, or as near as possible to 10 percent, are   scheduled to be inspected each year. In scheduling a hospital for   inspection under this subsection, the department must consider an   accreditation, validation, or other full survey and must prioritize   the inspection of hospitals in accordance with risk factors the   department considers important, including:                (1)  the date on which a hospital was last inspected;                (2)  the number of deficiencies noted during the   previous inspection of a hospital; and                (3)  the number of complaints received regarding a   hospital.          (a-2)  Notwithstanding Subsection (a-1), the department   shall inspect a hospital licensed under this chapter at least once   every three years if the hospital:                (1)  is not accredited by an accreditation body that is   approved by the Centers for Medicare and Medicaid Services; or                (2)  does not meet the conditions of participation for   certification under Title XVIII of the Social Security Act (42   U.S.C. Section 1395 et seq.).          (a-3)  The department may request a copy of a hospital's   latest accreditation survey at any time. The hospital shall comply   with the department's request.          SECTION 4.  Subchapter C, Chapter 241, Health and Safety   Code, is amended by adding Section 241.0532 to read as follows:          Sec. 241.0532.  EMERGENCY SUSPENSION. (a)  The department   may issue an emergency order to suspend a license issued under this   chapter if the department has reasonable cause to believe that the   conduct of a license holder creates an immediate danger to public   health and safety. An emergency suspension is effective   immediately without a hearing on notice to the license holder.          (b)  Before issuing an emergency order to suspend a license   under Subsection (a), the department must provide the license   holder the opportunity to respond to the department's findings.          (c)  After the issuance of an emergency order under this   section, on written request of the license holder to the department   for a hearing, the department shall refer the matter to the State   Office of Administrative Hearings.  An administrative law judge of   the office shall conduct a hearing not earlier than the 10th day or   later than the 30th day after the date the hearing request is   received by the department to determine if the emergency suspension   is to be continued, modified, or rescinded.          (d)  The hearing and any appeal are governed by the   department's rules for a contested case hearing and Chapter 2001,   Government Code.          SECTION 5.  Section 241.059, Health and Safety Code, is   amended by amending Subsections (b) and (c) and adding Subsections   (c-1), (c-2), and (c-3) to read as follows:          (b)  In determining the amount of the penalty, the department   shall consider:                (1)  the hospital's previous violations;                (2)  the seriousness of the violation;                (3)  any threat to the health, safety, or rights of the   hospital's patients;                (4)  the demonstrated good faith of the hospital; [and]                (5)  the effect of the penalty on the hospital's ability   to continue to provide services; and                (6)  such other matters as justice may require.          (c)  A [The] penalty assessed under this section may not   exceed:                (1)  $10,000 [$1,000] for each violation, if the   hospital is a rural hospital with 75 beds or fewer; or                (2)  $25,000 for each violation for all other   hospitals.          (c-1)  Notwithstanding Subsection (c), [except that] the   penalty for a violation of Section 166.004 shall be $500.          (c-2)  Each day of a continuing violation, other than a   violation of Section 166.004, may be considered a separate   violation.          (c-3)  In this section, "rural hospital" means a hospital   that:                (1)  is designated as a critical access hospital under   and in compliance with 42 U.S.C. Section 1395i-4;                (2)  is classified as a rural referral center under 42   U.S.C. Section 1395ww(d)(5)(C)(i);                (3)  is a sole community hospital, as defined by 42   U.S.C. Section 1395ww(d)(5)(D)(iii); or                (4)  is located in a county with a population of 60,000   or less.          SECTION 6.  Chapter 241, Health and Safety Code, is amended   by adding Subchapters D and D-1 to read as follows:   SUBCHAPTER D.  TRUSTEES FOR HOSPITALS          Sec. 241.081.  INVOLUNTARY APPOINTMENT. (a)  The   department may request the attorney general to bring an action in   the name and on behalf of the state for the appointment of a trustee   to operate a hospital if:                (1)  the hospital is operating without a license;                (2)  the department has suspended or revoked the   hospital's license;                (3)  license suspension or revocation procedures   against the hospital are pending and the department determines that   an immediate danger to public health and safety exists;                (4)  the department determines that an emergency exists   that presents an immediate danger to public health and safety; or                (5)  the hospital is closing and arrangements for   relocation of the patients to other licensed institutions have not   been made before closure.          (b)  A trustee appointed under Subsection (a)(5) may only   ensure an orderly and safe relocation of the hospital's patients as   quickly as possible.          (c)  After a hearing, a court shall appoint a trustee to take   charge of a hospital if the court finds that involuntary   appointment of a trustee is necessary.          (d)  The court shall appoint as trustee an individual whose   background includes institutional medical administration.          (e)  Venue for an action brought under this section is in   Travis County.          (f)  A court having jurisdiction of a judicial review of the   matter may not order arbitration, whether on the motion of any party   or on the court's own motion, to resolve the legal issues of a   dispute involving the:                (1)  appointment of a trustee under this section; or                (2)  conduct with respect to which the appointment of a   trustee is sought.          Sec. 241.082.  QUALIFICATIONS OF TRUSTEES. (a)  A court may   appoint a person to serve as a trustee under this subchapter only if   the proposed trustee can demonstrate to the court that the proposed   trustee will be:                (1)  present at the hospital as required to perform the   duties of a trustee; and                (2)  available on call to appropriate staff at the   hospital, the department, and the court as necessary during the   time the trustee is not present at the hospital.          (b)  A trustee shall report to the court in the event that the   trustee is unable to satisfy the requirements of Subsection (a)(1)   or (2).          (c)  On the motion of any party or on the court's own motion,   the court may replace a trustee who is unable to satisfy the   requirements of Subsection (a)(1) or (2).          (d)  A trustee's charges must separately identify personal   hours worked for which compensation is claimed. A trustee's claim   for personal compensation may include only compensation for   activities related to the trusteeship and performed in or on behalf   of the hospital.          Sec. 241.083.  COMPENSATION; RELEASE OF FUNDS. (a)  A   trustee appointed under this subchapter is entitled to reasonable   compensation as determined by the court. On the motion of any   party, the court shall review the reasonableness of the trustee's   compensation. The court shall reduce the amount if the court   determines that the compensation is not reasonable.          (b)  The trustee may petition the court to order the release   to the trustee of any payment owed the trustee for care and services   provided to the patients if the payment has been withheld,   including a payment withheld by the commission at the   recommendation of the department.          (c)  Withheld payments may include payments withheld by a   governmental agency or other entity during the appointment of the   trustee, such as payments:                (1)  for Medicaid, Medicare, or insurance;                (2)  by another third party; or                (3)  for medical expenses borne by the patient.          (d)  Payments withheld under 42 C.F.R. Section 455.23 or   Section 531.102(g), Government Code, are not subject to release   under this section.          Sec. 241.084.  COMMUNICATIONS BY TRUSTEE. (a)  Except as   provided by Subsection (b), a trustee appointed under this   subchapter shall provide periodic reports to the department and the   governing body of the hospital regarding:                (1)  the status of the hospital following the emergency   order to suspend the hospital's license and during the period the   hospital is operated by the trustee; and                (2)  each activity performed by the trustee on behalf   of the hospital.          (b)  A trustee is not required to report to the governing   body of the hospital any information that may limit or impair the   authority or activities of the trustee.          Sec. 241.085.  EXEMPTION. This subchapter does not apply to   a hospital owned, operated, or leased by a governmental entity.   SUBCHAPTER D-1.  HOSPITAL PERPETUAL CARE ACCOUNT; FEE          Sec. 241.091.  HOSPITAL PERPETUAL CARE ACCOUNT. (a)  The   hospital perpetual care account is a dedicated account in the   general revenue fund.          (b)  The account consists of:                (1)  fees deposited to the credit of the account under   this subchapter; and                (2)  money transferred or appropriated to the account   by the legislature.          (c)  The executive commissioner shall administer the   account. Money in the account may be used only to pay for   department costs associated with:                (1)  the storage of medical records by the department;   and                (2)  any court-ordered appointment of a trustee to   operate a hospital as provided under Section 241.081, including the   payment of reasonable compensation to the trustee under Section   241.083.          Sec. 241.092.  HOSPITAL PERPETUAL CARE FEE. (a)  The   executive commissioner may impose and the department may collect a   fee from each hospital in an amount necessary to maintain a balance   of $5 million in the hospital perpetual care account at all times.          (b)  The fee imposed under this section shall be deposited to   the credit of the hospital perpetual care account.          (c)  The department shall suspend collection of the fee for   the duration of a period during which the balance of the hospital   perpetual care account is $5 million or more.          SECTION 7.  (a)  The executive commissioner of the Health   and Human Services Commission shall adopt the rules required by   Chapter 241, Health and Safety Code, as amended by this Act, not   later than May 1, 2018.          (b)  The changes in law made by this Act apply only to an   application submitted under Section 241.022, Health and Safety   Code, as amended by this Act, or the assessment or imposition of an   administrative penalty under Section 241.059, Health and Safety   Code, as amended by this Act, for a violation that occurs on or   after the effective date of this Act. An application submitted   under Section 241.022 before the effective date of this Act or the   assessment or imposition of an administrative penalty under Section   241.059 for a violation that occurs before the effective date of   this Act is governed by the law in effect on the date the   application was submitted or the violation occurred, and that law   is continued in effect for that purpose.          (c)  Notwithstanding Section 6(e)(2)(B), Chapter 615 (S.B.   1367), Acts of the 83rd Legislature, Regular Session, 2013, on   January 1, 2018, the commissioner of insurance shall transfer $5   million from the fund established under Subchapter F, Chapter 1508,   Insurance Code, to the hospital perpetual care account established   under Section 241.091, Health and Safety Code, as added by this Act.          SECTION 8.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution.  If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect September 1, 2017.     * * * * *