86R3280 BRG-D
By: Phelan H.B. No. 632
A BILL TO BE ENTITLED
AN ACT
relating to a pilot program for the recovery of delinquent state
obligations owed to certain state agencies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 2107, Government Code, is amended by
designating Sections 2107.001 through 2107.008 as Subchapter A and
adding a subchapter heading to read as follows:
SUBCHAPTER A. COLLECTION OF DELINQUENT OBLIGATIONS BY ATTORNEY
GENERAL
SECTION 2. Chapter 2107, Government Code, is amended by
adding Subchapter B to read as follows:
SUBCHAPTER B. PILOT PROGRAM FOR RECOVERY OF OBLIGATIONS OWED TO
STATE AGENCIES
Sec. 2107.051. DEFINITIONS. In this subchapter:
(1) "Contractor" means an entity selected by the
attorney general under Section 2107.052(a).
(2) "Debtor" means a person who is indebted to a state
agency for any delinquent account, charge, fee, loan, or other form
of indebtedness.
(3) "Financial institution" means a bank or any other
form of depository institution, credit union, benefit association,
insurance entity, safe deposit entity, bond fund, money market
mutual fund, or mutual fund of any kind or character.
Sec. 2107.052. PILOT PROGRAM FOR DELINQUENT STATE
OBLIGATION RECOVERY. (a) The attorney general shall contract with
one or more entities to collect delinquent obligations owed to
state agencies as provided by this subchapter.
(b) The attorney general shall provide for a contractor
selected by the attorney general under Subsection (a) to conduct an
assessment of all nontax delinquent obligations owed to all state
agencies and identify for participation in a pilot program the 75
state agencies that have the highest percentage of recoverable
obligations.
(c) A state agency that is identified for participation in
the pilot program under Subsection (b) shall refer outstanding
obligations owed to the agency to a contractor for collection in
accordance with this subchapter to the extent the referral is
allowable under state and federal law.
(d) In addition to the state agencies identified by a
contractor under Subsection (b), an entity in the state judicial
system or a public institution of higher education may refer
outstanding obligations owed to the entity or institution to a
contractor for collection in accordance with this subchapter to the
extent the referral is allowable under state and federal law.
Sec. 2107.053. POWERS AND DUTIES OF CONTRACTOR. (a) A
contractor shall attempt to collect each obligation referred to the
contractor by a state agency.
(b) A contractor is not a debt collection agency. The nature
of an obligation owed to a state agency and referred to a contractor
does not change as a result of the referral.
(c) With respect to a referred obligation, a contractor may:
(1) sue;
(2) file a lien;
(3) enter into a payment agreement with the debtor,
subject to Section 55, Article III, Texas Constitution;
(4) impose a cost recovery fee;
(5) collect information for obligation recovery
purposes;
(6) exercise any settlement authority the referring
state agency is authorized by law to exercise and delegates to the
contractor;
(7) seek a judicial or administrative determination of
a referred obligation and, following the rendering of the
determination:
(A) deliver a notice of levy to a financial
institution possessing or controlling assets or funds owned by, or
owed to, a debtor; or
(B) impose income garnishment or withholding
against a debtor to the extent permitted by law;
(8) create and maintain a data match system with
financial institutions;
(9) create and maintain a centralized electronic
obligation management system to collect, track, and maintain
information relating to obligation recovery under this subchapter;
(10) reduce the amount of any money to be paid to a
debtor by this state by the amount of the referred obligation;
(11) enter into contracts with one or more third-party
debt collectors to collect the obligation on behalf of the
contractor;
(12) use any other debt collection method authorized
by state law; and
(13) use any other power this subchapter grants the
contractor.
(d) The contractor may determine the method or methods that
are most suitable to use in attempting to collect a referred
obligation.
(e) A contractor selected by the attorney general under
Section 2107.052(b) shall perform annually an assessment of all
outstanding obligations owed to state agencies that are eligible
for referral to the contractor.
Sec. 2107.054. NOTICE OF REFERRAL OF OBLIGATION TO
CONTRACTOR. (a) Before referring a delinquent obligation to a
contractor for collection, the state agency to which the obligation
is owed must provide a final notice to the debtor stating that:
(1) the debt will be referred to a contractor for
collection; and
(2) a cost recovery fee of 30 percent of the total
amount due on the date of the referral will be added to the total
amount owed if the obligation is referred to a contractor.
(b) A state agency may enter into a contract with a
contractor that, using a benefits-funded model, enables the
contractor to:
(1) provide the final notice required by Subsection
(a) to debtors on behalf of the agency; or
(2) collect delinquent obligations that are owed to
the agency on behalf of the agency, before the referral of the
obligations to the contractor by the agency in accordance with the
pilot program created under this subchapter.
(c) The attorney general shall create a process for a debtor
to challenge the recovery of an obligation by a contractor under
this subchapter. The process must provide that a challenge to the
recovery of an obligation by a contractor may be made only by the
debtor and must be made in writing.
Sec. 2107.055. COLLECTION OF INFORMATION. (a) Information
regarding an obligation referred to a contractor for collection
under this subchapter is confidential.
(b) Notwithstanding any other law, a state agency that
refers an obligation to a contractor for collection may share any
information with the contractor that the contractor considers
relevant and necessary to assist in the collection of the
obligation.
(c) Information a state agency provides to a contractor may
be used only for the purpose of collecting a referred obligation.
(d) Any information, record, or file used by a contractor to
collect an obligation under this subchapter is privileged and
confidential. A person may not disclose any information obtained
from the information, records, or files used by a contractor,
except in relation to the administration or enforcement of an
obligation.
(e) A contractor may not use any information, record, or
file that contains information protected by the Health Insurance
Portability and Accountability Act and Privacy Standards, as that
term is defined by Section 181.001, Health and Safety Code, to
collect an obligation.
Sec. 2107.056. COST RECOVERY FEE. (a) To fund the
obligation recovery authorized under this subchapter, a contractor
shall impose a cost recovery fee for any referred obligation. The
cost recovery fee is a debt owed by the debtor and is in addition to
the amount of the referred obligation.
(b) The amount of the cost recovery fee is equal to 30
percent of the total amount due on the date of the referral.
(c) A contractor may use any debt collection method
authorized by law for collecting a referred debt to collect the cost
recovery fee.
Sec. 2107.057. COLLECTION OF OBLIGATION BY CONTRACTOR. (a)
Notwithstanding any other provision of law providing for execution,
attachment, garnishment, or levy against a person's accounts, a
contractor may seek income garnishment or a notice of levy for a
financial institution to collect an obligation referred to the
contractor.
(b) If a debtor has an outstanding obligation that has been
referred to a contractor for collection, any payment made by the
debtor to the state is subject to offset by the contractor unless:
(1) the debtor has paid the referred obligation and
cost recovery charge in full; or
(2) the debtor has entered into a payment plan with the
contractor and is not delinquent.
(c) If a contractor is unable to recover an obligation, the
contractor, subject to approval by the referring state agency, may
forward the obligation to a collection agency. A collection agency
that is forwarded an obligation under this subsection may impose an
additional collection charge to the obligation.
Sec. 2107.058. ALLOCATION, REMITTANCE, AND DEPOSIT OF
COLLECTED AMOUNTS. (a) A contractor shall remit any money
recovered from a debtor, less the cost recovery fee, to the
comptroller not later than the 30th day after the last day of the
month in which the contractor recovered the money from the debtor.
(b) The comptroller shall deposit any money a contractor
remits under Subsection (a) to the credit of the foundation school
fund.
(c) If a contractor collects on a referred obligation in an
amount that is less than the total amount owed on the obligation,
including the cost recovery fee, the amount collected is allocated
proportionally between:
(1) the total amount of the referred obligation; and
(2) the cost recovery fee.
(d) If more than one obligation owed by the same debtor is
referred to a contractor, amounts the contractor collects from the
debtor are allocated to each referred obligation and cost recovery
fee imposed in the order in which the obligations were referred to
the contractor. If the obligations were referred concurrently,
amounts the contractor collects from the debtor shall be allocated
proportionally between each referred obligation and cost recovery
fee.
Sec. 2107.059. RULES. The attorney general may adopt rules
necessary to implement this subchapter.
Sec. 2107.060. REPORT. (a) Not later than October 1 of
each year, the attorney general shall provide a report to the
legislature regarding:
(1) the collection of referred obligations by a
contractor under this subchapter during the preceding fiscal year;
and
(2) any recommendations to improve or enhance the
pilot program created under this subchapter.
(b) A contractor shall maintain any information necessary
to allow for statistical measurements and evaluations of the
operation of the obligation recovery pilot program under this
subchapter.
SECTION 3. Not later than March 1, 2020, the attorney
general shall contract with one or more entities to create the
delinquent state obligation recovery pilot program, as provided
under Subchapter B, Chapter 2107, Government Code, as added by this
Act.
SECTION 4. 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 on the 91st day after the last day of the
legislative session.