SECTION 371.23. Surety Bond

(a) The OIG may require each provider of medical assistance in the Medicaid program, in a provider type that has demonstrated significant potential for fraud, waste, or abuse, to file with the OIG a surety bond in a reasonable amount. The amount of the surety bond may not exceed the maximum amount allowed by state or federal law, plus the maximum amount of penalties allowed by state and federal law.

(b) The OIG requires a provider of medical assistance or person to file, with the OIG, a surety bond in a reasonable amount if the OIG identifies acts or behavior that indicate suspected fraud, waste, or abuse involving criminal conduct relating to the provider's services under the program that indicates the need for protection against potential future acts of fraud, waste, or abuse. The amount of the surety bond shall not exceed the maximum amount allowed by state or federal law, plus the maximum amount of penalties allowed by state and federal law.

(c) The surety bond required of a provider or person, by the OIG, under subsections (a) and (b) of this section must be payable to HHSC to compensate HHSC for damages resulting from, or penalties or fines imposed in connection with, an act of fraud, waste, or abuse committed by the provider or person under the program.

(d) The OIG may require a provider of medical assistance or person to file with the OIG a surety bond in an amount and manner specified by the OIG. A surety bond may be required if the OIG identifies acts or behavior that indicate suspected fraud, waste, or abuse that involves criminal conduct that relates to the provider's services under the program and that indicate the need for protection against potential loss of recoupment of overpayments, penalties, damages, or other debts assessed against the provider by the OIG, due to potential default of the provider or failure of the provider to reimburse the OIG assessed amounts. Among other reasons, a surety bond may be imposed in connection with a settlement agreement, a provisional, probationary, or closed end contract, or as a condition of reinstatement.

(e) Subject to subsection (f) or (g) of this section, the OIG may require each provider of medical assistance that establishes a resident's trust fund account to post a surety bond to secure the account. The bond must be payable to HHSC to compensate residents of the bonded provider for trust funds that are lost, stolen, or otherwise unaccounted for if the provider does not repay any deficiency in a resident's trust fund account to the person legally entitled to receive the funds.

(f) For that portion of a case involving a resident's trust fund accounts, the OIG does not require the amount of a surety bond posted for a single facility provider under subsection (e) of this section to exceed the average of the total average monthly balance of all of the provider's resident trust fund accounts for the 12-month period preceding the bond issuance or renewal date. This limitation does not apply to any type of violations other than resident trust fund accounts.

(g) If an employee of a provider of medical assistance is responsible for the loss of funds in a resident's trust fund account, the resident, the resident's family, and the resident's legal representative are not obligated to make any payments to the provider that would have been made out of the trust fund had the loss not occurred.

(h) Failure by a provider or person to post a surety bond timely and as required by the OIG may result in imposition of any of the administrative actions or sanctions and/or imposition of damages and penalties, as specified in Subchapter G of this chapter (relating to Administrative Actions and Sanctions).

(i) Surety bonds required by the OIG are considered administrative actions. Administrative actions are further described in §371.1701 of this chapter (relating to Administrative Actions).

Source Note: The provisions of this §371.23 adopted to be effective January 9, 2005, 29 TexReg 12128; amended to be effective May 1, 2016, 41 TexReg 2941