TITLE 40.SOCIAL SERVICES AND ASSISTANCE

Part 1. TEXAS DEPARTMENT OF HUMAN SERVICES

Chapter 18. NURSING FACILITY ADMINISTRATORS

The Texas Department of Human Services (DHS) proposes to repeal §§18.1 - 18.20, concerning licensure of nursing facility administrators; and proposes new Subchapter A, concerning general information, §§18.1 - 18.4; Subchapter B, concerning requirements for licensure, §§18.11 - 18.16; Subchapter C, concerning licenses, §§18.31 - 18.41; and Subchapter D, concerning referrals, complaint procedures, and sanctions, §§18.51 - 18.57, in its Nursing Facility Administrators chapter. The purpose of the repeals and new sections is to reorganize the chapter and rewrite the rules in plain English. The rules cover the requirements, application procedures, types of licenses, fees, complaint procedures, violations, and sanctions governing the licensing of nursing facility administrators in the state of Texas. Policies contained in the new rules are substantially the same as current policy, with two exceptions. New §18.13 allows DHS to accept alternate education, training, and experience in lieu of current academic requirements. New §18.35 allows administrators to receive continuing education credit for a DHS-sponsored event or upper-division course taken at a post-secondary institution of higher education that meets DHS's continuing education requirements.

Gordon Taylor, Chief Financial Officer, has determined that, for the first five-year period the proposed sections are in effect, there are no fiscal implications for state or local government as a result of enforcing or administering the sections.

Bettye Mitchell, Deputy Commissioner for Long Term Care, has determined that, for each year of the first five years the sections are in effect, the public benefit anticipated as a result of enforcing the sections is to have rules governing nursing facility administrators that are easier for the public to navigate and understand. New policies in §18.13 and §18.35 will help ensure that nursing facility administrators licensed in the state of Texas have the necessary licensure qualifications and expertise to provide greater protection for the health and safety of residents of nursing facilities that DHS regulates. There is no adverse economic effect on small or micro businesses as a result of enforcing or administering the sections, because the new rules contain substantially the same polices as are currently in place. The flexibility provided in new §18.13 and §18.35 may help increase the availability of licensed nursing facility administrators in the state of Texas by allowing the recognition of experience, training, and qualifications of persons wanting to practice in Texas but who cannot meet the current educational requirements. There is no anticipated economic cost to persons who are required to comply with the proposed sections. There is no anticipated effect on local employment in geographic areas affected by these sections.

Questions about the content of this proposal may be directed to Amy Harper at (512) 231-5819 in DHS's Credentialing Department. Written comments on the proposal may be submitted to Supervisor, Rules and Handbooks Unit-045, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register .

Under §2007.003(b) of the Government Code, DHS has determined that Chapter 2007 of the Government Code does not apply to these rules. Accordingly, DHS is not required to complete a takings impact assessment regarding these rules.

These rules are promulgated by DHS. This state agency is currently scheduled to be merged into a successor agency, the Texas Health and Human Services Commission (HHSC) and one of its subordinate departments, the Texas Department of Aging and Disability Services, sometime in 2004. This change is mandated by legislation passed by the 78th Legislature.

At the time of that transition, HHSC will have complete authority for these and all related rules. This may result in these rules being changed from one chapter of the Texas Administrative Code to another or variations in the rules adoption process.

40 TAC §§18.1 - 18.20

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Texas Department of Human Services or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The repeals are proposed under the Health and Safety Code, Chapter 242, Subchapter I, consisting of §§242.301 - 242.322, as added by Acts 1997, 75th Legislature, Chapter 1280, §1.01, which authorizes DHS to license and regulate nursing facility administrators.

The repeals implement the Health and Safety Code, §§242.301 - 242.322, as added by Acts 1997, 75th Legislature, Chapter 1280, §1.01.

§18.1.Introduction.

§18.2.The Nursing Facility Administrators Advisory Committee.

§18.3.Application and Licensure Fees.

§18.4.Applicant Requirements for Examination and Licensure.

§18.5.Academic Requirements for Examination and Licensure.

§18.6.Administrator-In-Training (AIT) Internship Requirements.

§18.7.Successful Completion of Examination.

§18.8.Provisional Licensure.

§18.9.Licensure Renewal and Inactive Status.

§18.10.Continuing Education Requirements.

§18.11.Complaint Procedures.

§18.12.Referrals.

§18.13.Schedule of Sanctions.

§18.14.Violations by an Unlicensed Person.

§18.15.Default Orders.

§18.16.Licensure of Individuals with Criminal Backgrounds.

§18.17.Formal Hearing Procedures.

§18.18.Informal Reconsideration.

§18.19.Standards of Conduct.

§18.20.Administrative Penalties.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308831

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Chapter 18. NURSING FACILITY ADMINISTRATORS

Subchapter A. GENERAL INFORMATION

40 TAC §§18.1 - 18.4

The new sections are proposed under the Health and Safety Code, Chapter 242, Subchapter I, consisting of §§242.301 - 242.322, as added by Acts 1997, 75th Legislature, Chapter 1280, §1.01, which authorizes DHS to license and regulate nursing facility administrators.

The new sections implement the Health and Safety Code, §§242.301 - 242.322, as added by Acts 1997, 75th Legislature, Chapter 1280, §1.01.

§18.1.Purpose.

This chapter implements the provisions of the Texas Health and Safety Code, Chapter 242, Subchapter I, Nursing Facility Administration, for the purpose of licensing nursing facility administrators in the state of Texas.

§18.2.Definitions.

The words and terms in this chapter have the following meanings, unless the context clearly indicates otherwise:

(1) Abuse--Any act, failure to act, or incitement to act done willfully, knowingly, or recklessly through words or physical action that causes or could cause mental or physical injury or harm or death to a resident. Includes verbal, sexual, mental/psychological, or physical abuse; corporal punishment; involuntary seclusion; or any other actions within this definition.

(2) Administrative law judge (ALJ)--A State Office of Administrative Hearings (SOAH) attorney who conducts formal hearings for the Texas Department of Human Services (DHS).

(3) Administrator--A licensed nursing facility administrator.

(4) Administrator-in-training (AIT)--A person undergoing a minimum 1,000-hour internship under a DHS-approved certified preceptor.

(5) Applicant--A person applying for a Texas nursing facility administrator license.

(6) Application--The notarized DHS application for licensure as a nursing facility administrator, as well as all required forms, fees, and supporting documentation.

(7) Complaint--An allegation that a licensed nursing facility administrator violated one or more of the licensure rules or statutory requirements.

(8) Contested case--A proceeding in accordance with the Administrative Procedure Act pertaining to DHS's rule enforcement and licensing activities that results in the determination of a party's legal rights, duties, or privileges as determined by an administrative law judge.

(9) Credentialing Department--The section of DHS's Long Term Care Regulatory division that is responsible for the licensing of nursing facility administrators.

(10) Deficiency--Violation of a federal participation requirement in a nursing facility.

(11) Domains of the NAB--The five domains of the National Association of Boards of Examiners of Long Term Care Administrators, Inc. (NAB) are resident care and quality of life; human resources; finance; physical environment and atmosphere; and leadership and management.

(12) Equivalent--A level of achievement that is equal in amount and quality to completion of an educational or training program.

(13) Formal hearing--A hearing held by SOAH to adjudicate a sanction taken by DHS against a licensed administrator.

(14) Good standing--The licensure status of a nursing facility administrator who is in compliance with the rules in this chapter and/or, if applicable, the terms of any sanction imposed by DHS.

(15) Informal review--The opportunity for a licensee to dispute the allegations made by DHS. The informal review includes the opportunity to show compliance.

(16) Internship--The 1,000-hour training period in a nursing facility for an AIT.

(17) License--A nursing facility administrator license or provisional license.

(18) Licensee--A person licensed by DHS as a nursing facility administrator.

(19) Long Term Care Regulatory--The division of DHS responsible for long term care regulation, including surveying nursing facilities to determine compliance with licensure and certification and licensing nursing facility administrators.

(20) Misappropriation of resident property--The taking, secretion, misapplication, deprivation, transfer, or attempted transfer to any person not entitled to receive any property, real or personal, or anything of value belonging to or under the legal control of a resident without the effective consent of the resident or other appropriate legal authority, or taking of any action contrary to any duty imposed by federal or state law prescribing conduct relating to the custody or disposition of property of a resident.

(21) NAB--Acronym for the National Association of Boards of Examiners of Long Term Care Administrators, Inc., which is composed of state boards or agencies responsible for the licensure of nursing facility administrators.

(22) NAB examination--The national examination developed by NAB that applicants must pass in combination with the state licensure examination to be issued a license to practice nursing facility administration in Texas.

(23) NCERS--Acronym for the National Continuing Education Review Service, the part of NAB that approves and monitors continuing education activities for nursing facility administrators.

(24) Neglect--A deprivation of life's necessities of food, water, or shelter; or a failure of an individual to provide services, treatment, or care to a resident that causes or could cause mental or physical injury, harm, or death to the resident.

(25) Nursing facility--An institution or facility licensed by DHS as a nursing home, nursing facility, or skilled nursing facility.

(26) Nursing facility administrator--A person who is licensed to engage in the practice of nursing facility administration, regardless of whether the person has ownership interest in the facility.

(27) Nursing Facility Administrators Advisory Committee (NFAAC)--The nine-member governor-appointed advisory committee that makes recommendations to DHS about the practice and regulation of nursing facility administration.

(28) Opportunity to show compliance--An informal meeting between DHS and a licensee that allows the licensee an opportunity to show compliance with the requirements of law for the retention of the license. The opportunity to show compliance is part of an informal review.

(29) Preceptor--A licensed nursing facility administrator certified by DHS to provide supervision to an AIT.

(30) Referral--A recommendation made by Long Term Care Regulatory to investigate an administrator's compliance with licensure requirements when deficiencies and/or substandard quality of care deficiencies are found in a nursing facility, as required by Title 42 Code of Federal Regulations.

(31) Sanctions--Any adverse licensure actions DHS imposes against a licensee, including letter of reprimand, and suspension, revocation, and denial of license.

(32) State examination--The state licensure examination that applicants must pass, in combination with the NAB examination, to be issued a license to practice nursing facility administration in Texas. This examination covers the nursing facility requirements found in Chapter 19 of this title (relating to Nursing Facility Requirements for Licensure and Medicaid Certification).

(33) Substandard quality of care--Any deficiency in Resident Behavior and Facility Practices, Quality of Life, or Quality of Care that is immediate jeopardy to resident health or safety; or a pattern of widespread actual harm that is not immediate jeopardy; or a widespread potential for more than minimal harm that is not immediate jeopardy, with no actual harm.

(34) Survey--A resident-focused complaint/incident investigation or annual licensure and/or certification inspection of a nursing facility by DHS.

(35) Sylvan Prometric--The testing agency that administers the NAB and state examinations to applicants seeking licensure as nursing facility administrators.

(36) Texas Department of Human Services (DHS)--The licensing authority for nursing facility administrators.

§18.3.Nursing Facility Administrators Advisory Committee.

(a) The governor-appointed Nursing Facility Administrators Advisory Committee (NFAAC) advises the Texas Department of Human Services on:

(1) the licensing of nursing facility administrators;

(2) minimum standards of conduct for the practice of nursing facility administration;

(3) rule changes;

(4) administrator complaints and referrals; and

(5) sanctions for rule violations.

(b) NFAAC members serve staggered terms of six years.

(c) The nine-member advisory committee is made up of:

(1) three licensed nursing facility administrators, one of whom represents a not-for-profit nursing facility;

(2) three licensed healthcare professionals with geriatric experience and not employed by a nursing facility, consisting of:

(A) a licensed physician;

(B) a registered nurse; and

(C) a licensed social worker; and

(3) three public members who have working experience with the chronically ill and infirm.

§18.4.Schedule of Fees.

The Texas Department of Human Services charges the following administrative and licensure fees:

(1) application fee--$100;

(2) state examination fee--$135;

(3) state reexamination fee--$135;

(4) National Association of Boards of Examiners of Long Term Care Administrators, Inc. (NAB) examination fee--$260;

(5) NAB reexamination fee--$260;

(6) initial licensure fee--$250;

(7) renewal fee--$250 every two years when the license is renewed on or before the date the license expires;

(8) late renewal fees for license renewals made after the license expires:

(A) $375 for an expired license renewed during the first 90 days after the license expires; and

(B) $500 for an expired license renewed between 91 and 365 days after the license expires;

(9) formal inactive status fee--$250;

(10) reinstatement of licensure fee--$500; and

(11) duplicate license fee--$25.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308832

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Subchapter B. REQUIREMENTS FOR LICENSURE

40 TAC §§18.11 - 18.16

The new sections are proposed under the Health and Safety Code, Chapter 242, Subchapter I, consisting of §§242.301 - 242.322, as added by Acts 1997, 75th Legislature, Chapter 1280, §1.01, which authorizes DHS to license and regulate nursing facility administrators.

The new sections implement the Health and Safety Code, §§242.301 - 242.322, as added by Acts 1997, 75th Legislature, Chapter 1280, §1.01.

§18.11.Academic Requirements.

(a) Applicants seeking licensure must meet the following academic requirements:

(1) a baccalaureate degree in any subject from a university or health science center accredited by an association recognized by the Texas Higher Education Coordinating Board; and

(2) completion of a minimum of 15 semester credit hours in long term care administration, or its equivalent, that includes courses in the following domains of the National Association of Boards of Examiners of Long Term Care Administrators, Inc.:

(A) resident care and quality of life;

(B) human resources;

(C) finance;

(D) physical environment and atmosphere; and

(E) leadership and management.

(b) The Texas Department of Human Services accepts foreign university degrees and coursework that is counted as transfer credit by accredited universities recognized by the American Association of Collegiate Registrars and Admissions Officers.

§18.12.Internship Requirements.

An administrator-in-training (AIT) must meet the following requirements:

(1) Before starting the internship, the AIT must provide the Texas Department of Human Services (DHS) written notice of:

(A) the name and license number of the DHS-approved preceptor providing training; and

(B) the name and address of the nursing facility where the internship will be completed.

(2) The nursing facility must have a minimum of 60 beds.

(3) The internship must be a minimum of 1,000 hours of training.

(4) The AIT can train no more than 40 hours a week.

(5) Upon completing the internship, the AIT must submit to DHS:

(A) a complete and notarized AIT Final Report and Preceptor Performance Report; or

(B) official transcript from a university accredited by an association recognized by the Texas Higher Education Coordinating Board that reflects completion of the internship.

§18.13.Alternate Education, Training, and Experience.

(a) Applicants not meeting the academic and/or internship requirements for licensure in §18.11 and §18.12 of this chapter (relating to Academic Requirements; and Internship Requirements), are eligible for licensure if they present evidence satisfactory to the Texas Department of Human Services of the following alternate education and experience:

(1) a master's degree in health administration, health services administration, health care administration, or nursing, with one year of management experience and completion of a 500-hour internship; or

(2) a baccalaureate degree in health administration, health services administration, health care administration, or nursing with three years of management experience and completion of a 500-hour internship.

(b) Management experience is defined as full-time employment as a department head or licensed professional supervising two or more employees in a nursing home or skilled nursing hospital unit.

§18.14.Preceptor Requirements.

(a) A licensee seeking to sponsor an administrator-in-training (AIT) must:

(1) be licensed or registered as a nursing facility administrator for a minimum of five years, with the two most recent years in Texas;

(2) be in good standing; and

(3) have completed the Texas Department of Human Services (DHS) preceptor training to become a certified preceptor.

(b) A preceptor must submit a complete and notarized AIT Performance Report to DHS at the end of the internship.

(c) A preceptor must obtain DHS approval for sponsoring more than one AIT at the same time.

(d) DHS may consider any imposed sanction against a preceptor as grounds for refusing to allow the preceptor to sponsor an AIT.

(e) DHS may refuse to allow a preceptor to provide training to an AIT if the preceptor did not provide adequate training to previous AITs.

(f) DHS waives 20 of the 40 hours of continuing education required for license renewal for a preceptor who sponsors an AIT.

(g) A preceptor certificate is valid for two years from the date the licensee completes DHS's preceptor training, providing the licensee remains in good standing.

§18.15.Application Requirements.

(a) Applicants seeking licensure must submit the following to the Texas Department of Human Services (DHS):

(1) a complete and notarized Nursing Facility Administrator's Application for Licensure form;

(2) $100 application fee;

(3) a Texas Department of Public Safety (DPS) Texas Criminal Conviction report and fingerprint card;

(4) an official transcript reflecting a baccalaureate degree from a university or health science center accredited by an association recognized by the Texas Higher Education Coordinating Board;

(5) if not a part of the transcript reflecting a baccalaureate degree, another transcript reflecting 15 semester credit hours in long term care administration or its equivalent that include the five domains of the NAB as listed in §18.11 of this chapter (relating to Academic Requirements); and

(6) proof of completing the minimum applicable internship that meets the internship requirements in §18.12 of this chapter (relating to Internship Requirements).

(b) An application is valid for one year from the date the application fee is received.

(c) Applicants not meeting the requirements for licensure and examination within one year after DHS receives their application must resubmit the following to DHS:

(1) a notarized Nursing Facility Administrator's Application for Licensure form;

(2) $100 application fee; and

(3) a DPS Texas Criminal Conviction report and fingerprint card.

(d) DHS is not responsible for applications, forms, notices, and correspondence unless they are received by DHS.

(e) DHS is not responsible for mail it sends to a licensee or applicant if the licensee's or applicant's last known address was not reported in writing to DHS.

§18.16.Examinations.

(a) Applicants seeking licensure as nursing facility administrators from the Texas Department of Human Services (DHS) must pass the following examinations:

(1) state examination on the nursing facility requirements found in Chapter 19 of this title (relating to Nursing Facility Requirements for Licensure and Medicaid Certification); and

(2) National Association of Boards of Examiners of Long Term Care Administrators, Inc. (NAB) examination.

(b) Applicants register for examination(s) at a designated NAB website by:

(1) submitting an application for approval to test; and

(2) paying the $135 state examination and $260 NAB examination fees on-line.

(c) DHS sends e-mails notifying applicants of their eligibility to take the test.

(d) Applicants must not take any examination without DHS approval.

(e) Applicants complete the on-line state and NAB examinations at a Sylvan Prometric-testing site.

(f) DHS notifies applicants of test scores within two weeks after receiving examination results from the testing agency.

(g) An applicant who fails an examination and wants to retest must pay NAB reexamination fees of:

(1) $135 for the state examination; and/or

(2) $260 for the NAB examination.

(h) Applicants failing the state or NAB examination(s) three consecutive times must complete another minimum 1,000-hour administrator-in-training internship before retesting.

(i) Applicants previously licensed as nursing facility administrators by passing the comprehensive examination and who have an expired licensed for 12 months or longer or voluntarily surrendered their license must pass the NAB and state examinations to obtain a new license.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308833

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Subchapter C. LICENSES

40 TAC §§18.31 - 18.41

The new sections are proposed under the Health and Safety Code, Chapter 242, Subchapter I, consisting of §§242.301 - 242.322, as added by Acts 1997, 75th Legislature, Chapter 1280, §1.01, which authorizes DHS to license and regulate nursing facility administrators.

The new sections implement the Health and Safety Code, §§242.301 - 242.322, as added by Acts 1997, 75th Legislature, Chapter 1280, §1.01.

§18.31.Initial License.

(a) The Texas Department of Human Services (DHS) issues a license certificate to applicants who:

(1) receive passing scores on the state and NAB examinations; and

(2) submit the $250 initial license fee to DHS.

(b) A license expires two years from the date issued.

(c) Licensees must keep DHS informed of their current home address and employment address. If employed by a nursing facility, a licensee must submit a Data Change Request form to DHS within 30 days of a change.

(d) Licensees who do not notify DHS of a change in address or employment within the required 30 days may be subject to an administrative penalty as listed in §18.57 of this chapter (relating to Schedule of Sanctions).

(e) DHS reserves the right to determine whether a criminal conviction or a sanction taken against an applicant in Texas or another state is a basis for pending or denying an initial license.

§18.32.Provisional License.

(a) The Texas Department of Human Services (DHS) issues a provisional license to applicants currently licensed or registered as nursing facility administrators in another state who submit the following to DHS:

(1) complete and notarized Provisional Licensure Questionnaire and Nursing Facility Administrator License Application forms;

(2) the $100 application fee; and

(3) proof of the following:

(A) a license and good standing status in another state with licensing requirements substantially equivalent to the Texas licensure requirements;

(B) employment for at least two years as an administrator of record of a nursing facility;

(C) a passing score on the National Association of Boards of Examiners of Long Term Care Administrators, Inc., examination; and

(D) sponsorship by an administrator licensed by DHS and who is in good standing. Sponsorship is waived in cases of demonstrated hardship.

(b) A provisional license expires 180 days from the date of issue.

(c) DHS issues a license certificate to a provisional license holder:

(1) who passes the state examination; and

(2) pays DHS the $250 initial licensure fee.

(d) DHS reserves the right to determine whether a criminal conviction or a sanction taken against an applicant in Texas or another state is a basis for pending or denying a provisional license.

(e) DHS does not issue a license to an applicant who has had a license revoked in Texas or any other state.

§18.33.Duplicate License.

The Texas Department of Human Services replaces lost, damaged, or destroyed license certificates to licensees who submit a notarized Duplicate License Request form and $25 duplicate license fee to DHS.

§18.34.License Renewal.

(a) The Texas Department of Human Services (DHS) notifies licensees of their license expiration date and renewal requirements at least 31 days before the license expires.

(b) Failure to receive a renewal notice does not release the licensee from the responsibility of renewing the license on time.

(c) Licensees seeking renewal must submit the following to DHS on or before the date the license expires:

(1) a complete and notarized License Renewal form;

(2) the $250 renewal fee; and

(3) proof of completion of 40 clock hours of continuing education.

(d) DHS uses the postmark date to determine if a renewal application is on time. If there is no postmark or the postmark is not legible, DHS uses the stamp-in date.

(e) DHS issues a two-year license renewal card to eligible licensees who meet the requirements in subsection (c) of this section.

§18.35.Continuing Education Requirements for License Renewal.

(a) The 40 clock hours of continuing education required for license renewal must:

(1) be completed during the previous two-year licensure period;

(2) include one or more of the five domains of the National Association of Boards of Examiners of Long Term Care Administrators, Inc. (NAB) listed in §18.11 of this chapter (relating to Academic Requirements);

(3) include at least six clock hours in ethics; and

(4) be:

(A) approved by the National Continuing Education Review Service;

(B) a Texas Department of Human Services (DHS)-sponsored event; or

(C) an upper-division semester credit course taken or taught at a post-secondary institution of higher education accredited by an association recognized by the Texas Higher Education Coordinating Board.

(b) DHS accepts no more than six hours of NAB-approved self-study courses toward the required 40 hours of continuing education.

(c) DHS waives, at a maximum, 20 of the 40 hours of continuing education to a licensee who completes one three-semester hour upper-division course taken at a post-secondary institution of higher education.

(d) DHS approves continuing education hours once per licensure renewal period for the same course, seminar, workshop, or program.

(e) DHS waives 20 of the required 40 hours of continuing education for preceptors who sponsor an administrator-in-training.

(f) DHS may perform an audit of continuing education courses, seminars, or workshops that the licensee has reported by requesting certificates of attendance.

§18.36.Late Renewals.

(a) A person whose license has expired has up to one year from the expiration date to renew a license by:

(1) completing 40 clock hours of continuing education as listed in §18.35 of this chapter (relating to Continuing Education Requirements for License Renewal); and

(2) submitting the following fee to the Texas Department of Human Services (DHS):

(A) a $375 renewal fee for a license that has been expired for 90 days or less; or

(B) a $500 renewal fee for a license that has been expired for 91 days to 365 days.

(b) A person whose license has been expired for more than one year must meet the licensure and examination requirements for an initial license.

(c) A person must retake the National Association of Boards of Examiners of Long Term Care Administrators, Inc. (NAB) exam if the applicant last took and passed the NAB exam five years before the application date.

(d) A person who does not renew a license on or before the date the license expires must return the license to DHS.

(e) A person who fails to renew a license before the expiration date must not practice in the field of nursing facility administration until the license is renewed.

(f) DHS imposes one or more sanctions listed in §18.57 of this chapter (relating to Schedule of Sanctions) against a person who practices with an expired license.

§18.37.Denial of License Renewal.

(a) The Texas Department of Human Services (DHS) reserves the right to determine if any of the following may result in denial of an application for license renewal:

(1) a sanction taken against a licensee; or

(2) a conviction for a crime listed in §18.41 of this chapter (relating to Licensure of Persons with Criminal Backgrounds).

(b) DHS will not renew a license if:

(1) a person's license was revoked in another jurisdiction;

(2) a licensee defaulted on a guaranteed student loan as addressed in the Education Code, §57.491; or

(3) the licensee did not comply with the terms of a sanction or settlement agreement.

§18.38.Inactive Status.

(a) A licensee may place a license in a formal inactive status with the Texas Department of Human Services (DHS) for up to two renewal periods.

(b) To place a license in a formal inactive status, the licensee submits the following to DHS on or before the date the license expires:

(1) the Inactive Status Application form; and

(2) the $250 inactive status fee.

(c) Licensees must renew the inactive license on or before the date that the second inactive status expires by submitting to DHS:

(1) the $250 renewal fee; and

(2) proof of completing 40 clock hours of continuing education as listed in §18.35 of this chapter (relating to Continuing Education Requirements for License Renewal).

§18.39.Voluntary Surrender of a License.

(a) A licensee may voluntarily surrender a license by returning the license certificate to the Texas Department of Human Services.

(b) A licensee who voluntarily surrenders a license while under investigation for a violation of licensure requirements may still receive:

(1) a written reprimand; and/or

(2) an administrative penalty.

(c) A licensee who voluntarily surrenders a license in lieu of a proposed sanction, other than license revocation, may not reapply for licensure until two years after the surrender date.

(d) A licensee who voluntarily surrenders a license in lieu of a proposed license revocation is disqualified from licensure in Texas.

§18.40.Reinstatement.

Applicants who previously were licensed and in good standing in Texas may obtain a new license without reexamination if they:

(1) are licensed in good standing in another state;

(2) practiced in that state for at least the preceding two years before the date of their current licensure application; and

(3) pay the Texas Department of Human Services a $500 reactivation fee.

§18.41.Licensure of Persons with Criminal Backgrounds.

(a) The Texas Department of Human Services (DHS) considers applicant's or licensee's conviction(s) for crimes as a potential basis for:

(1) denying an initial or renewal application for licensure; and

(2) imposing a sanction listed in §18.57 of this chapter (relating to Schedule of Sanctions).

(b) DHS considers the following when determining if a criminal conviction directly relates to the duties and responsibilities of a nursing facility administrator:

(1) the nature and seriousness of the crime;

(2) the extent to which a license may offer an individual an opportunity to engage in the same type of criminal activity; and

(3) the relationship of the crime to the ability or fitness required to perform the duties of nursing facility administrator.

(c) DHS believes that the following crimes relate to nursing facility administration and reflect an inability or tendency of an individual to inadequately perform as an administrator:

(1) intentionally acting as a nursing facility administrator without a license; and

(2) attempting or conspiring to commit any offense under the following chapters of the Texas Penal Code:

(A) Title 5 (offenses against persons), including homicide, kidnapping, unlawful restraint, and sexual and assault offenses;

(B) Title 7 (offenses against property), including arson, criminal mischief, robbery, burglary, criminal trespass, theft, fraud, computer crimes, telecommunications crimes, money laundering, and insurance fraud;

(C) Title 9 (offenses against public order and decency), including disorderly conduct and public indecency; and

(D) Title 10 (offenses against public health, safety, and morals), including weapons, gambling, conduct affecting public health, intoxication, and alcoholic beverage offenses.

(d) DHS may consider other crimes and pertinent information as a potential basis for denying an initial or renewal application.

(e) Convictions under federal law or another state or nation for offenses containing elements similar to offenses listed in subsection (c) of this section may be a basis for DHS imposing sanctions.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308834

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Subchapter D. REFERRALS, COMPLAINT PROCEDURES, AND SANCTIONS

40 TAC §§18.51 - 18.57

The new sections are proposed under the Health and Safety Code, Chapter 242, Subchapter I, consisting of §§242.301 - 242.322, as added by Acts 1997, 75th Legislature, Chapter 1280, §1.01, which authorizes DHS to license and regulate nursing facility administrators.

The new sections implement the Health and Safety Code, §§242.301 - 242.322, as added by Acts 1997, 75th Legislature, Chapter 1280, §1.01.

§18.51.Referral and Complaint Procedures.

(a) The Texas Department of Human Services (DHS), Credentialing Department, receives and investigates:

(1) referrals from Long Term Care Regulatory regional staff to determine an administrator's compliance with licensure requirements when survey findings cite deficiencies and/or substandard quality of care; and

(2) complaints alleging an administrator violated one or more of the licensure rules.

(b) Persons wanting to file a complaint against a licensee may contact the Credentialing Department's Complaint Investigations Unit:

(1) by calling (512) 231-5800; or

(2) by writing the Texas Department of Human Services, Credentialing Department, Mail Code Y-978, ATTN: NFA Complaint Investigations, P.O. Box 149030, Austin, TX 78714-9030.

(c) DHS sends a Nursing Facility Administrator Complaint form to persons wanting to file a complaint. The complainant should complete, sign, and return the form to DHS.

(d) Once a referral or complaint is received, the Credentialing Department notifies the licensee and, if applicable, the person filing the complaint of the:

(1) alleged rule violation;

(2) assigned case number; and

(3) investigator contact information.

(e) DHS investigates referrals and complaints by first determining if a complaint is within Credentialing's authority to investigate, then by:

(1) reviewing pertinent documentation maintained by the facility, including financial and resident medical records;

(2) gathering additional evidence, including licensee and witness statements;

(3) determining licensee culpability for survey or investigative findings; and

(4) utilizing the services of a private investigator when special circumstances exist.

(f) DHS protects copies of documents or records for privacy and confidentiality in accordance with applicable state and federal laws.

(g) DHS prioritizes complaints as follows:

(1) Priority one complaints allege physical abuse, sexual abuse, neglect, serious injury, death, or immediate jeopardy to resident health or safety. Investigations are initiated within 24 hours of receipt or by the next working day.

(2) Priority two complaints allege all other types of misconduct by the licensee. Investigations are initiated within 30 days of receipt.

(h) After the investigation is complete, a final report with supporting documentation is given to the Nursing Facility Administrators Advisory Committee (NFAAC) for review and consideration.

(i) After considering the NFAAC's recommendation, DHS evaluates the evidence and makes a decision to either:

(1) impose a sanction;

(2) collect additional information; or

(3) dismiss the case.

(j) DHS notifies the licensee and, if applicable, the person filing a complaint of the status and final outcome of a complaint or referral.

§18.52.Informal Reviews.

(a) Before the Texas Department of Human Services (DHS) initiates proceedings for a sanction, DHS gives a licensee:

(1) a description of the alleged rule violation(s) warranting the proposed action;

(2) an opportunity to demonstrate compliance with all requirements of the law for retention of the license; and

(3) the option to accept the sanction.

(b) A licensee's request for an informal review must:

(1) be received by DHS within 10 calendar days after the licensee receives DHS's notice letter; and

(2) contain documentation that refutes the allegations.

(c) DHS conducts the informal review:

(1) by telephone;

(2) in person; or

(3) by reviewing the licensee's written response and supporting evidence.

(d) DHS provides the licensee with official notice of the outcome of the informal review.

§18.53.Formal Hearings.

(a) The Texas Department of Human Services (DHS) gives licensees a formal hearing notice when the following occurs:

(1) a licensee does not respond to DHS's notice letter regarding the informal review; or

(2) after the informal review, DHS upholds or modifies the proposed sanction in a manner that is unsatisfactory to the licensee.

(b) The formal hearing notice to the licensee includes:

(1) DHS's decision to continue with sanctions;

(2) an offer for the licensee to accept the sanction as proposed; and

(3) notice to request a formal hearing no later than 20 days after receiving DHS's notice letter.

(c) DHS imposes sanctions against a licensee when:

(1) a licensee accepts DHS's decision to impose the sanction; or

(2) after the formal hearing before the administrative law judge upholds DHS's proposed sanction; or

(3) the licensee does not respond to DHS's formal hearing notice.

(d) When an administrative penalty is proposed, DHS schedules a formal hearing with the State Office of Administrative Hearings if the licensee does not respond to DHS's formal hearing notice.

§18.54.Rule or Statutory Violations.

The Texas Department of Human Services initiates sanctions listed in §18.57 of this chapter (relating to Schedule of Sanctions) against licensees for the following statutory violations:

(1) the licensee willfully or repeatedly violated a provision of Texas Health and Safety Code, Chapter 242, or a rule in this chapter;

(2) the licensee willfully or repeatedly acted in a manner inconsistent with the health and safety of the residents of a facility of which the licensee is an administrator;

(3) the licensee obtained or attempted to obtain a license through misrepresentation or deceit or by making a material misstatement of fact on a license application;

(4) the licensee's use of alcohol or drugs creates a hazard to the residents of a facility;

(5) a judgment of a court of competent jurisdiction finds that the licensee is mentally incapacitated;

(6) the licensee has been convicted in a court of competent jurisdiction of a misdemeanor or felony involving moral turpitude; or

(7) the licensee has been negligent or incompetent in the licensee's duties as a nursing facility administrator.

§18.55.Violations of Standards of Conduct.

(a) The Texas Department of Human Services (DHS) initiates sanctions listed in §18.57 of this chapter (relating to Schedule of Sanctions) against licensees for violations of the following nursing facility administrator Standards of Conduct:

(1) A licensee must employ sufficient staff to adequately meet the needs of facility residents as determined by care outcomes.

(2) A licensee must ensure that sufficient resources are present to provide adequate nutrition, medications, and treatments to facility residents in accordance with physician orders as determined by care outcomes.

(3) A licensee must promote and protect the rights of facility residents and ensure that employees, contractors, and others respect the rights of residents.

(4) A licensee must ensure that residents remain free of chemical and physical restraints unless required by a physician's order to protect a resident's health and safety.

(5) A licensee must report and direct facility staff to report to the appropriate government agency any suspected case of abuse, neglect, or misappropriation of resident property as defined in §18.2 of this chapter (relating to Definitions).

(6) A licensee must ensure that the nursing facility is physically maintained in a manner that protects the health and safety of residents and the public.

(7) A licensee must notify and direct employees to notify an appropriate government agency of any suspected cases of criminal activity as defined by state and federal laws.

(8) A licensee must post in the facility where employed the notice provided by DHS that gives the Credentialing Department's address and telephone number for reporting complaints against an administrator. The notice must be posted in a conspicuous place and in clearly legible type.

(9) A licensee must not knowingly or through negligence commit, direct, or allow actions that result or could result in inadequate care, harm, or injury to a resident.

(10) A licensee must not knowingly or through negligence allow nursing facility employees to harm facility residents by coercion, threat, intimidation, solicitation, harassment, theft of personal property, or cruelty.

(11) A licensee must not knowingly or through negligence allow or direct employees to contradict or alter in any manner the orders of a physician regarding a resident's medical or therapeutic care.

(12) A licensee must not knowingly commit or through negligence allow another individual to commit an act of abuse, neglect, or misappropriation of resident property as defined in §18.2 of this chapter.

(13) A licensee must not permit another individual to use his or her license or allow a facility to falsely post his or her license.

(14) A licensee must not advertise or knowingly participate in the advertisement of nursing facility services in a manner that is fraudulent, false, deceptive, or misleading in form or content.

(15) A licensee must not knowingly allow, aid, or abet a violation by another licensed nursing facility administrator of the Texas Health and Safety Code, Chapter 242, Subchapter I, or the agency's rules adopted under that subchapter and must report such violations to DHS.

(16) A licensee must not make or allow employees, contractors, or volunteers to make misrepresentations or fraudulent statements about the operation of a nursing facility.

(17) A licensee must not allow or direct facility employees, contractors, or others in a manner that results in the harassment or intimidation of any person for purposes of coercing that person to use the services or equipment of a particular health agency or facility.

(18) A licensee must not falsely bill for goods or services or allow another person to bill for goods or services other than those that have actually been rendered.

(19) A licensee must not make or file false reports or allow an employee, contractor, or volunteer to make or file a report that the licensee knows to be false.

(20) A licensee must not intentionally fail to file a report or record required by state or federal law, impede or obstruct such filings, or induce another person to impede or obstruct such filings.

(21) A licensee must not use or knowingly allow employees or others to use alcohol, narcotics, or other drugs in a manner that interferes with the performance of the administrator's or other person's duties.

(22) A licensee must not knowingly or through negligence violate any confidentiality provisions as prescribed by state or federal law concerning a resident.

(23) A licensee must not interfere or impede an investigation by withholding or misrepresenting fact to DHS representatives, or by using threats or harassment against any person involved or participating in the investigation.

(24) A licensee must not display a license issued by DHS that is reproduced, altered, expired, suspended, or revoked.

(25) A licensee must not and must not, knowingly or through negligence, allow employees or other individuals to mismanage a resident's personal funds deposited with the facility.

(26) A licensee must not bribe, attempt to bribe, harass, or intimidate employees of DHS, other government agencies, or their representatives concerning the administration of the nursing facility.

(b) Negligence, as referenced in the Standards of Conduct in subsection (a) of this section, means the failure of a licensee to use such care as a reasonably prudent and careful licensee would use in similar circumstances, or failure to act as a reasonably prudent licensee would in similar circumstances.

§18.56.Violations by Unlicensed Persons.

(a) Persons with an expired license must not engage in activities that require a license.

(b) A person practicing as a licensed nursing facility administrator after license expiration:

(1) commits an offense punishable as a Class B misdemeanor;

(2) is subject to local criminal prosecution; and

(3) may be referred to the Office of Attorney General for civil penalties not to exceed $1,000 per violation per day for each day the violation continues.

(c) Licensees whose license expires before an investigation is complete, may still receive:

(1) a written reprimand; or

(2) an administrative penalty.

(d) Licensees allowing a license to expire instead of accepting a proposed license revocation are disqualified from licensure in Texas.

(e) All persons with expired licenses must return the license certificate to the Texas Department of Human Services.

§18.57.Schedule of Sanctions.

(a) The Texas Department of Human Services (DHS) initiates one or more of the following sanctions against licensees for violations listed in §18.54 and §18.55 of this chapter (relating to Rule or Statutory Violations; and Violations of Standards of Conduct):

(1) revocation of license;

(2) license suspension;

(3) denial of application for license renewal;

(4) assessment of an administrative penalty;

(5) written letter of reprimand;

(6) requiring a licensee to participate in continuing education;

(7) probation; or

(8) referral to the Office of Attorney General for civil penalties not to exceed $1,000 per violation per day for each day the violation continues.

(b) If a sanction is probated, DHS may require the licensee to:

(1) report regularly to DHS on matters that are the basis of the probation;

(2) limit practice to the areas prescribed by DHS;

(3) practice under the direct supervision or guidance of a DHS-certified preceptor as specified in §18.14 of this chapter (relating to Preceptor Requirements); and/or

(4) complete prescribed continuing education until the licensee attains a degree of skill satisfactory to DHS in those areas that are the basis of the probation.

(c) Administrative penalties may not exceed $1,000 per violation per day for each day the violation continues.

(d) The amount the administrative penalty is assessed is based on:

(1) the seriousness of the violation, including:

(A) the nature, circumstances, extent, and gravity of prohibited acts; and

(B) the hazard or potential hazard created to the health, safety, or economic welfare of the public;

(2) economic harm to property or environment;

(3) history of previous violations;

(4) amount necessary to deter future violations;

(5) efforts to correct the violations;

(6) the severity level of the violation:

(A) Level I--$500 to $1,000 for violations that have or had an adverse impact on resident health and/or safety that includes serious harm, permanent injury, or death to a resident;

(B) Level II--$250 to $500 for violations that have or had a potential or adverse impact on the health and/or safety of a resident, but less impact than Level I; or

(C) Level III--$250 or less for violations having minimal or no significant impact on resident health and/or safety; and

(7) any other matter that justice may require.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308835

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Chapter 19. NURSING FACILITY REQUIREMENTS FOR LICENSURE AND MEDICAID CERTIFICATION

The Texas Department of Human Services (DHS) proposes to amend §19.301, concerning applicable codes and standards; §19.334, concerning architectural space planning and utilization; §19.340, concerning mechanical requirements; §19.341, concerning electrical requirements; §19.602, concerning incidents of abuse and neglect reportable to DHS and law enforcement agencies by facilities; §19.1103, concerning sufficient staffing; and §19.1929, concerning staff development, in its Nursing Facility Requirements for Licensure and Medicaid Certification chapter.

The purpose of the amendments is to implement changes mandated by the 78th Legislature, and to revise or correct references to the Life Safety Code (LSC) of the National Fire Protection Association (NFPA) and the Penal Code. The amendment to §19.301 revises the reference to the LSC of the NFPA and corrects the address for NFPA. The amendment to §19.334 deletes the requirement that beds must have casters, and corrects the NFPA reference for the storage and use of oxygen. The amendment to §19.340 adds the requirement for nursing facilities constructed or licensed after January 1, 2004, to have a central air conditioning system, or a substantially similar air conditioning system, that is capable of maintaining a temperature suitable for resident comfort within areas used by residents. The amendment to §19.341 corrects a reference to the LSC. The amendment to §19.602 corrects a reference to the Penal Code. The amendment to §19.1103 corrects a licensing rule reference. The amendment to §19.1929 adds the requirement for nursing staff to receive at least one hour of training each year in caring for people who have dementia as required by the Health and Safety Code, §242.037.

Gordon Taylor, Chief Financial Officer, has determined that, for the first five-year period the proposed sections are in effect, there are no fiscal implications for state or local government as a result of enforcing or administering the sections.

Bettye M. Mitchell, Deputy Commissioner for Long Term Care, has determined that, for each year of the first five years the sections are in effect, the public benefit anticipated as a result of enforcing the sections is (1) to foster appropriate nursing care of individuals who have dementia by ensuring that nursing staff is knowledgeable of the disease process as well as what constitutes appropriate care; (2) ensure a comfortable environment by maintaining facility temperature at a level that is suitable for resident comfort; (3) enhance a facility's ability to provide a safe environment for residents as they are less likely to sustain injuries from a bed without casters because it is lower to the floor; (4) enhance the public's ability to locate desired information referenced in the rules; (5) ensure the accuracy of information available to the public; and (6) have rules that comply with current state law.

There is no adverse economic effect on small or micro businesses, or on businesses of any size, as a result of enforcing or administering the sections. The required one hour of dementia training for nursing staff should not generate additional costs, because nursing facilities will be able to cover the additional topic within the same number of required in-service hours that they are required to provide now. The requirement for facilities licensed or constructed after January 1, 2004, to have a central air conditioning unit or a substantially similar air conditioning system has no effect on currently licensed facilities, and this requirement for new facilities would normally be incorporated in the cost of starting a business. Removing the requirement for facilities to have beds with casters has no adverse economic effect because facilities will no longer have to purchase beds with casters to be in compliance. There is no anticipated economic cost to persons who are required to comply with the proposed sections. There is no anticipated effect on local employment in geographic areas affected by these sections.

Questions about the content of this proposal may be directed to Marcia Bowen at (512) 438-3529 in DHS's Long Term Care-Regulatory Policy section. Written comments on the proposal may be submitted to Supervisor, Rules and Handbooks Unit-040, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register .

Under §2007.003(b) of the Government Code, DHS has determined that Chapter 2007 of the Government Code does not apply to these rules. Accordingly, DHS is not required to complete a takings impact assessment regarding these rules.

These rules are promulgated by DHS. This state agency is currently scheduled to be merged into a successor agency, the Texas Health and Human Services Commission (HHSC) and one of its subordinate departments, the Texas Department of Aging and Disability Services, sometime in 2004. This change is mandated by legislation passed by the 78th Legislature.

At the time of that transition, HHSC will have complete authority for these and all related rules. This may result in these rules being changed from one chapter of the Texas Administrative Code to another or variations in the rules adoption process.

Subchapter D. FACILITY CONSTRUCTION

40 TAC §§19.301, 19.334, 19.340, 19.341

The amendments are proposed under the Health and Safety Code, Chapter 242, which authorizes DHS to license and regulate convalescent and nursing homes and related institutions.

The amendments implement the Health and Safety Code, §§242.001 - 242.852.

§19.301.Applicable Codes and Standards.

(a) The facility must meet the applicable provisions of the 2000 [ 1985 ] edition of the Life Safety Code of the National Fire Protection Association (NFPA). The Life Safety Code is available for inspection at the Office of the Federal Register Information Center, Washington, D.C. Copies may be obtained from the NFPA, 1 Batterymarch Park, Quincy, Massachusetts 02169 [ 02200 ]. The New Health Care Occupancies chapter of the Life Safety Code is applicable to new construction, conversions of existing unlicensed buildings, remodeling, and additions. The Existing Health Care Occupancies chapter of the Life Safety Code is applicable to existing nursing homes. Life safety features and equipment that have been installed in existing buildings which are now in excess of that required by the Life Safety Code must continue to be maintained or may be completely removed if prior approval is obtained from the Texas Department of Human Services (DHS).

(b) - (c) (No change.)

§19.334.Architectural Space Planning and Utilization.

(a) Resident bedrooms. Each resident bedroom must meet the following requirements:

(1) - (9) (No change.)

[(10) All beds must have castors with wheel-locking devices.]

(10) [ (11) ] Each room must open onto an exit corridor and must be arranged for convenient resident access to dining, living, and bathing areas.

(11) [ (12) ] Visual privacy (such as cubicle curtains) must be available for each resident in multi-bed rooms. Design for privacy must not restrict resident access to entry, lavatory, or toilet, nor may it restrict bed evacuation or obstruct sprinkler flow coverage.

(12) [ (13) ] At least one noncombustible wastebasket must be provided in each bedroom.

(13) [ (14) ] See the requirements in §19.341(d)(4) of this title (relating to Electrical Requirements) for nurse call systems.

(b) - (o) (No change.)

(p) Oxygen. The storage and use of oxygen and equipment must meet applicable NFPA standards for oxygen, including NFPA 99 [ 56F ].

§19.340.Mechanical Requirements.

The design of the mechanical systems must be done by or under the direction of a registered professional (mechanical) engineer approved by the Texas State Board of Registration for Professional Engineers to operate in Texas, and the parts of the plans and specifications covering mechanical design must bear the legible seal of the engineer. Building services pertaining to utilities; heating, ventilating, and air-conditioning systems; vertical conveyors; and chutes must be in accordance with the Life Safety Code. Required plumbing fixtures must be in accordance with the Life Safety Code and §19.334 of this title (relating to Architectural Space Planning and Utilization) in specific use areas.

(1) (No change.)

(2) Heating, ventilating, and air-conditioning systems.

(A) - (C) (No change.)

(D) The heating system must be designed, installed, and functioning to be able to maintain a temperature of at least 75 degrees Fahrenheit for all areas occupied by residents. For all other occupied areas, the indoor design temperature must be at least 72 degrees Fahrenheit. The cooling system must be designed, installed, and functioning to be able to maintain a temperature of not more than 78 degrees Fahrenheit. A facility constructed or licensed after January 1, 2004, must have a central air conditioning system, or a substantially similar air conditioning system, that is capable of maintaining a temperature suitable for resident comfort within areas used by residents. Occupied areas generating high heat, such as kitchens, must be provided with a sufficient cool air supply to maintain a temperature not exceeding 85 degrees Fahrenheit at the five-foot level. Supply air volume must be approximately equal to the air volume exhausted to the exterior for these areas.

(E) - (P) (No change.)

(3) - (4) (No change.)

§19.341.Electrical Requirements.

(a) The design of the electrical systems must be done by or under the direction of a registered professional electrical engineer approved by the Texas State Board of Registration for Professional Engineers to operate in Texas, and the parts of the plans and specifications covering electrical design must bear the legible seal of the engineer. Requirements pertaining to utilities, heating, ventilating, and air-conditioning systems, vertical conveyors, and chutes must be in accordance with the Life Safety Code, Chapter 9 [ 7 ], Building Service and Fire Protection Equipment.

(b) - (d) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308836

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Subchapter G. RESIDENT BEHAVIOR AND FACILITY PRACTICE

40 TAC §19.602

The amendment is proposed under the Health and Safety Code, Chapter 242, which authorizes DHS to license and regulate convalescent and nursing homes and related institutions.

The amendment implements the Health and Safety Code, §§242.001 - 242.852.

§19.602.Incidents of Abuse and Neglect Reportable to the Texas Department of Human Services (DHS) and Law Enforcement Agencies by Facilities.

(a) - (d) (No change.)

(e) A local or state law enforcement agency must be notified of reports described in subsection (a) of this section, which allege that:

(1) - (4) (No change.)

(5) a resident has suffered bodily injury, as that term is defined in the Penal Code, §1.07 [ §1.01 ], because of conduct alleged in the report of abuse or neglect or other complaint.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308837

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Subchapter L. DIETARY SERVICES

40 TAC §19.1103

The amendment is proposed under the Health and Safety Code, Chapter 242, which authorizes DHS to license and regulate convalescent and nursing homes and related institutions.

The amendment implements the Health and Safety Code, §§242.001 - 242.852.

§19.1103.Sufficient Staffing.

The facility must employ sufficient dietary support personnel who are competent to carry out the functions of the dietary service. [ See also §19.1929(2)(C) of this title (relating to Staff Development). ]

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308838

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Subchapter T. ADMINISTRATION

40 TAC §19.1929

The amendment is proposed under the Health and Safety Code, Chapter 242, which authorizes DHS to license and regulate convalescent and nursing homes and related institutions.

The amendment implements the Health and Safety Code, §§242.001 - 242.852.

§19.1929.Staff Development.

Each facility must implement and maintain programs of orientation, training, and continuing in-service education to develop the skills of its staff, as described in §19.1903 of this title (relating to Required Training of Nurse Aides).

(1) (No change.)

(2) Each registered nurse, licensed vocational nurse, and nurse aide (nurse assistant) who provides nursing services must receive at least one hour of training each year in caring for people who have dementia.

(3) [ (2) ] Nursing staff, licensed nurses, and nurse aides must receive annual in-service training which includes components, appropriate to their job responsibilities, from one or more of the following categories:

(A) communication techniques and skills useful when providing geriatric care, such as skills for communicating with the hearing impaired, visually impaired and cognitively impaired; therapeutic touch; and recognizing communication that indicates psychological abuse;

(B) assessment and nursing interventions related to the common physical and psychological changes of aging for each body system;

(C) geriatric pharmacology, including treatment for pain management and sleep disorders;

(D) common emergencies of geriatric residents and how to prevent them, for example, falls, choking on food or medicines, injuries from restraint use; recognizing sudden changes in physical condition, such as stroke, heart attack, acute abdomen, and acute glaucoma; and obtaining emergency treatment;

(E) common mental disorders with related nursing implications; and

(F) ethical and legal issues regarding advance directives, abuse and neglect, guardianship, and confidentiality.

(4) [ (3) ] Facilities with pediatric residents must comply with the following:

(A) Facility staff must be trained in the use of pediatric equipment and supplies, including emergency equipment and supplies.

(B) Facility staff should receive annual continuing education dealing with pediatric issues, including child growth and development and pediatric assessment.

(5) [ (4) ] Minimum continuing in-service education requirements are listed in subparagraphs (A) - (B) of this paragraph. Attendance at relevant outside training may be used to satisfy the in-service education requirement. The facility must keep in-service records for each employee listed. The minimum requirements are:

(A) licensed personnel--two hours per quarter; and

(B) nurse aides--12 hours annually. For the purpose of this paragraph, a medication aide is considered a nurse aide and must receive the same continuing in-service education. This in-service education does not qualify as continuing education units required for renewal of a medication aide permit.

(6) [ (5) ] A rural hospital participating in the Medicaid Swing Bed Program as specified in §19.2326 of this title (relating to Medicaid Swing Bed Program for Rural Hospitals) is not required to meet the requirements of this section, if the swing beds are used for no more than one 30-day length of stay per year, per resident.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308839

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Chapter 20. COST DETERMINATION PROCESS

40 TAC §20.110, §20.112

The Texas Department of Human Services (DHS) proposes to amend §20.110, concerning informal reviews and formal appeals, and §20.112, concerning attendant compensation rate enhancement, in its Cost Determination Process chapter.

The purpose of the amendment to §20.110 is to modify the amount of time a provider is allowed to submit a request for an informal review. The amendment grants providers an additional 15 calendar day extension beyond the 30 calendar day deadline to submit required information related to the provider's request for an informal review.

The purpose of the amendment to §20.112 is to lower the spending requirement for participating providers by amending the calculation used to determine the adjusted attendant compensation per unit of service. Beginning September 1, 2003, the attendant compensation spending per unit of service has been multiplied by 1.10 to determine the adjusted attendant compensation per unit of service.

The Texas Health and Human Services Commission (HHSC) is proposing related policy in its Chapter 355 in this issue of the Texas Register .

Gordon Taylor, Chief Financial Officer, has determined that, for the first five-year period the proposed sections are in effect, there are no fiscal implications for state or local government as a result of enforcing or administering the sections.

Bettye M. Mitchell, Deputy Commissioner for Long Term Care, has determined that, for each year of the first five years the sections are in effect, the public benefit anticipated as a result of enforcing §20.110 is that providers will be allowed additional time, if it proves necessary, to collect the necessary information and evidence to support an efficient resolution of matters in dispute. The public benefit anticipated as a result of enforcing §20.112 is that participating providers will be allowed more flexibility in spending in other cost areas of the total reimbursement rate.

There is no adverse economic effect on small or micro businesses as a result of enforcing or administering the sections, because the proposal increases flexibility for providers and does not add any new requirements for businesses. There is no anticipated economic cost to persons who are required to comply with the proposed sections. There is no anticipated effect on local employment in geographic areas affected by these sections.

Questions about the content of this proposal may be directed to Carolyn Pratt at (512) 685-3127 in HHSC's Rate Analysis Department. Written comments on the proposal may be submitted to Supervisor, Rules and Handbooks Unit-010, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register . For further information regarding the proposal or to make the proposal available for public review, contact local offices of DHS or Carolyn Pratt at (512) 685-3127 in HHSC's Rate Analysis Department.

Under §2007.003(b) of the Government Code, DHS has determined that Chapter 2007 of the Government Code does not apply to these rules. Accordingly, DHS is not required to complete a takings impact assessment regarding these rules.

These rules are promulgated by DHS. This state agency is currently scheduled to be merged into a successor agency, the Texas Health and Human Services Commission (HHSC) and one of its subordinate departments, the Texas Department of Aging and Disability Services, sometime in 2004. This change is mandated by legislation passed by the 78th Legislature.

At the time of that transition, HHSC will have complete authority for these and all related rules. This may result in these rules being changed from one chapter of the Texas Administrative Code to another or variations in the rules adoption process.

The amendments are proposed under the Human Resources Code, Chapter 22, which authorizes DHS to administer public assistance programs.

The amendments implement the Human Resources Code, §§22.0001 - 22.038.

§20.110.Informal Reviews and Formal Appeals.

(a) - (b) (No change.)

(c) Informal review.

(1) An interested party who disputes an action or determination under this chapter may request an informal review under this section. The purpose of an informal review is to provide for the informal and efficient resolution of the matters in dispute. An informal review is not a formal administrative hearing, but is a prerequisite to obtaining a formal administrative hearing and is conducted according to the following procedures:

(A) Texas Health and Human Services Commission (HHSC) Rate Analysis must receive a written request for an informal review by hand delivery, United States ( U.S. ) mail, or special mail delivery no later than 30 calendar days from the date on the written notification of the adjustments. If the 30th calendar day is a weekend day, national holiday, or state holiday, then the first business day following the 30th calendar day is the final day the receipt of the written request will be accepted. HHSC Rate Analysis will extend this deadline if it receives a written request for the extension by hand delivery, U.S. mail, or special mail delivery no later than 30 calendar days from the date of the written notice of adjustments. The extension gives the requester a total of 45 calendar days from the date of the written notice of adjustment to file a request for an informal review. If the 45th calendar day is a weekend day, national holiday, or state holiday, then the 45th day is considered the next business day following the 45th calendar day. A request for an informal review or extension that is not received by the stated deadline will not be accepted.

(B) - (C) (No change.)

(2) (No change.)

(d) - (e) (No change.)

§20.112.Attendant Compensation Rate Enhancement.

(a) - (r) (No change.)

(s) Spending requirements for participating contracts. DHS or its designee will determine from the Attendant Compensation Report, as specified in subsection (h) of this section and other appropriate data sources, the amount of attendant compensation spending per unit of service delivered. The provider's compliance with the spending requirement is determined based on the total attendant compensation spending as reported on the Attendant Compensation Report for each participating contract if the provider requested participation individually for each contract. A participating contract that has been terminated in accordance with subsection (v) of this section or that has undergone a contract assignment in accordance with subsection (w) of this section will be considered to have participated on an individual basis for compliance with the spending requirement for the owner prior to the termination or contract assignment. If the provider specified that he wished to have all participating contracts be considered as a group for purposes related to the attendant compensation rate enhancement, as specified in subsection (f) of this section, compliance with the spending requirement is based on the total attendant compensation as reported on the single aggregate Attendant Compensation Report described in subsection (h) of this section. Compliance with the spending requirement is determined separately for each program specified in subsection (a) of this section, except for providers delivering services to both RC and CBA AL/RC clients in the same facility whose compliance is determined by combining both programs. DHS or its designee will calculate recoupment, if any, as follows.

(1) For the rate year beginning September 1, 2000, the attendant compensation spending per unit of service is [ will be ] multiplied by 1.09 to determine the adjusted attendant compensation per unit of service. For the rate years [ year ] beginning September 1, 2001, and September 1, 2002 [ thereafter ], the attendant compensation spending per unit of service is [ will be ] multiplied by 1.07 to determine the adjusted attendant compensation per unit of service. For the rate year beginning September 1, 2003, and thereafter, the attendant compensation spending per unit of service is multiplied by 1.10 to determine the adjusted attendant compensation per unit of service.

(2) - (3) (No change.)

(t) - (dd) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308851

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Chapter 90. INTERMEDIATE CARE FACILITIES FOR PERSONS WITH MENTAL RETARDATION OR RELATED CONDITIONS

Subchapter D. GENERAL REQUIREMENTS FOR FACILITY CONSTRUCTION

40 TAC §§90.61, 90.65, 90.68, 90.74

The Texas Department of Human Services (DHS) proposes to amend §90.61, concerning introduction, application, and general requirements for facilities for persons with mental retardation or related conditions; §90.65, concerning fire alarms, detection systems, and sprinkler systems; §90.68, concerning architectural space planning; and §90.74, concerning safety operations, in its Intermediate Care Facilities for Persons with Mental Retardation or Related Conditions chapter. The purpose of the amendments is to update references to the National Fire Protection Association (NFPA) Life Safety Code from the 1985 edition to the 2000 edition, which reflects the recent adoption of the latter edition by the Centers for Medicare and Medicaid Services (CMS) and by the State Fire Marshal's office. The amendments update fire safety requirements for resident safety in facilities. The amendment to §90.68 also corrects the reference to the requirement for dishes and utensils sanitation.

Gordon Taylor, Chief Financial Officer, has determined that, for the first five-year period the proposed sections are in effect, there are no fiscal implications for state or local government as a result of enforcing or administering the sections.

Bettye M. Mitchell, Deputy Commissioner for Long Term Care, has determined that, for each year of the first five years the sections are in effect, the public benefit anticipated as a result of enforcing the sections is that residents within the facilities should be safer due to updated code requirements, and facility owners will have clear and concise guidance concerning the NFPA requirements. The updated reference to the correct sanitation requirements will ensure the accuracy of information provided to the public. There is no adverse economic effect on small or micro businesses as a result of enforcing or administering the sections, because the 2000 edition of the code allows facilities to continue to operate at their current location without making any significant changes that are different from changes that would have been required under the 1985 code. There is no anticipated economic cost to persons who are required to comply with the proposed sections. There is no anticipated effect on local employment in geographic areas affected by these sections.

Questions about the content of this proposal may be directed to Jeanoyce Wilson at (512) 438-2353 in DHS's Long Term Care-Regulatory Section. Written comments on the proposal may be submitted to Supervisor, Rules and Handbooks Unit-041, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register .

Under §2007.003(b) of the Government Code, DHS has determined that Chapter 2007 of the Government Code does not apply to these rules. Accordingly, DHS is not required to complete a takings impact assessment regarding these rules.

These rules are promulgated by DHS. This state agency is currently scheduled to be merged into a successor agency, the Texas Health and Human Services Commission (HHSC) and one of its subordinate departments, the Texas Department of Aging and Disability Services, sometime in 2004. This change is mandated by legislation passed by the 78th Legislature.

At the time of that transition, HHSC will have complete authority for these and all related rules. This may result in these rules being changed from one chapter of the Texas Administrative Code to another or variations in the rules adoption process.

The amendments are proposed under the Health and Safety Code, Chapter 252, which authorizes DHS to license and regulate intermediate care facilities for persons with mental retardation or related conditions.

The amendments implement the Health and Safety Code, §§252.001 - 252.209.

§90.61.Introduction, Application, and General Requirements for Facilities for Persons with Mental Retardation or Related Conditions.

(a) (No change.)

(b) Purpose.

(1) The concept of requirements for fire safety with regard to the residents is based on evacuation capability as published by National Fire Protection Association (NFPA) in NFPA 101 Life Safety Code. These standards are written with the premise that the residents will be capable of self-evacuation without continuous staff assistance. Residents that are not normally capable of self-evacuation nor capable of negotiating stairs unassisted shall not be housed above or below the floor of exit discharge unless the facility meets the construction requirements of NFPA 101, Chapter 18 [ 12 ] titled "New Health Care Occupancies" or Chapter 19 titled "Existing Health Care Occupancies" for large facilities, or the "impractical" requirements for small facilities as found in NFPA 101, Chapter 32 [ 21 ] titled " New Residential Board and Care Occupancies[ . ]" or Chapter 33 titled "Existing Residential Board and Care Occupancies." Examples of residents who may not be capable of self-evacuation are as follows:

(A) - (C) (No change.)

(2) The method of determining the evacuation capability of residents under NFPA 101, Chapter 32 or 33 [ Chapter 21 ], is by rating each resident and each staff member to determine an evacuation difficulty score (E-score). If the E-score is 1.5 or less, the evacuation capability of the facility is prompt, greater than 1.5 to five is slow, greater than five is impractical. The worksheets to be completed are located in NFPA 101A, Guide on Alternative Approaches to Life Safety, 2001 edition, Chapter 6 [ NFPA 101, 1985 Edition, Appendix F ]. Intermediate Care Facilities for Persons with Mental Retardation (ICF-MR) [ (ICFs-MR) ] with 16 beds or less must meet the evacuation requirement for their designated Chapter 32 or 33 [ Chapter 21 ] rating. The ratings and their requirements follow:

(A) - (C) (No change.)

(3) (No change.)

(c) (No change.)

(d) Construction.

(1) New construction is any construction work that [ which ] began on or after March 11, 2003 [ October 3, 1988 ]. The provisions of NFPA 101, Chapter 18 [ 12 ] are applicable for large facilities, and Chapter 32 [ 21 ] for small facilities.

(2) An existing facility is one that [ which ] was operating with a license as a facility for persons with mental retardation and related conditions before September 11, 2003 [ October 3, 1988 ], and has not subsequently become unlicensed. The provisions of NFPA 101, Chapter 19 [ 13 titled "Existing Health Care Occupancies," ] are applicable for large facilities, and Chapter 33 [ 21 ] for small facilities.

(3) - (9) (No change.)

(e) Applicable codes and standards. Facilities must meet the requirements of NFPA 101, 2000 [ 1985 ] edition, and any other codes and standards of NFPA listed in this section, except as may be otherwise approved or required by DHS.

(1) - (6) (No change.)

(f) (No change.)

§90.65.Fire Alarms, Detection Systems, and Sprinkler Systems.

(a) General. Fire alarms, detection systems, and sprinkler systems shall be as required by National Fire Protection Association (NFPA) 101 Life Safety Code, NFPA 72 National Fire Alarm Code [ 72A Standard for the Installation, Maintenance and Use of Local Protective Signaling Systems ], NFPA 13 Standard for the Installation of Sprinkler Systems, NFPA 13R Standard for the Installation of Sprinkler Systems in Residential Occupancies up to and Including Four Stories in Height, or NFPA 13D [ 13-D ] Standard for the Installation of Sprinkler Systems in One- and Two-Family Dwellings and Manufactured [ Mobile ] Homes, as specified in NFPA 101, Chapter 32 [ 21 ] titled " New Residential Board and Care Occupancies" and Chapter 33 titled "Existing Residential Board and Care Occupancies," and as modified in this section.

(1) - (5) (No change.)

(b) Fire alarm and smoke detection and sprinkler systems for small facilities.

(1) A manual alarm initiating system shall be provided and shall be supplemented by an automatic smoke detection and alarm initiation system in accordance with NFPA 101, Chapter 9 [ 7, Section 7-6 ], titled "Building Service and Fire Protection Equipment , [ . ]" Section 9-6, titled "Fire Detection, Alarm, and Communications Systems."

(2) - (6) (No change.)

(7) Facilities classified as "impractical evacuation capability , "[ , ] must be protected by a sprinkler system in compliance with NFPA 13 , NFPA 13R, [ ; ] or NFPA 13D with additional requirements for coverage in all dwelling areas and all closets as specified by NFPA 101, Chapters 32 and 33 [ Chapter 21 ].

(c) (No change.)

§90.68.Architectural Space Planning.

(a) Large facilities.

(1) - (5) (No change.)

(6) Kitchens (main/dietary).

(A) - (C) (No change.)

(D) Kitchens shall be provided with facilities for washing and sanitizing dishes and cooking utensils. Such facilities will be provided for the number of meals served and the method of serving (permanent or disposable dishes, etc.). The kitchen shall contain a compartmented sink large enough to immerse pots and pans. Separation of soiled and clean dish areas shall be maintained, including air flow.

(i) A mechanical dishwasher must be used to sanitize dishes and utensils and must meet requirements specified under 25 TAC §229.165 [ §229.166(a)(4) ] ( relating to Equipment, Utensils, and Linens); [ Cleaning, Sanitization, and Storage of Equipment and Utensils), ] or

(ii) Dishes and utensils will be manually sanitized in accordance with 25 TAC §229.165 [ §229.166(a)(3)(E) ] prior to placement in the dishwasher.

(E) - (J) (No change.)

(7) - (9) (No change.)

(b) Small facilities.

(1) Bedrooms.

(A) - (F) (No change.)

(G) Each small facility shall have at least two remotely located means of escape that do not involve windows. The arrangement shall be such that there is a primary means of escape from each sleeping room that provides a path of travel to the outside without traversing any corridor or other space exposed to unprotected vertical openings or common living spaces, such as living rooms and kitchens. Exceptions are as follows:

(i) A second means of escape or alternate protection is not required:

(I) (No change.)

(II) if the building is protected with an approved sprinkler system meeting National Fire Protection Association (NFPA) 13 Standard for the Installation of Sprinkler Systems , NFPA 13R Standard for the Installation of Sprinkler Systems in Residential Occupancies up to and Including Four Stories in Height, or NFPA 13D Standard for the Installation of Sprinkler Systems in One- and Two-family Dwellings and Manufactured [ Mobile ] Homes [ standards ].

(ii) (No change.)

(2) - (8) (No change.)

§90.74.Safety Operations.

(a) (No change.)

(b) Fire and evacuation drills.

(1) - (2) (No change.)

(3) Any direct care staff, including relief staff, must participate in the initial fire drill within ten days of their employment at the facility. An exception is that facilities meeting NFPA 101, Chapter 18 [ 12 ] titled "New Health Care Occupancies" or Chapter 19 [ 13 ] titled "Existing Health Care Occupancies," or meeting the impractical evacuation category of Chapter 32 [ 21 ] titled " New Residential Board and Care Occupancies ," and Chapter 33 titled "Existing Residential Board and Care Occupancies" are not required to conduct fire drills within ten days of employment.

(4) - (5) (No change.)

(c) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308840

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Chapter 93. EMPLOYEE MISCONDUCT REGISTRY

The Texas Department of Human Services (DHS) proposes to repeal Chapter 93, concerning its Employee Misconduct Registry (EMR), consisting of §§93.1 - 93.6. DHS proposes new Chapter 93, consisting of Subchapter A, Introduction, §§93.1 - 93.4; Subchapter B, EMR Use Requirements, §§93.11 - 93.13; Subchapter C, Process for Facility Referrals, §§93.21 - 93.23; Subchapter D, Process for Agency Referrals, §§93.31 - 93.34; Subchapter E, Determination of Reportable Conduct, Informal Review, and Formal Hearing for Facility Referrals, §§93.41 - 93.48; and Subchapter F, Recordable Information in the EMR, §§93.61 - 93.63.

The purpose of the repeals and new sections is to reorganize the rules in Chapter 93 and to rewrite them in plain English question-and-answer format. The new sections expand the definitions section, explain the requirements for use of the EMR, separate the process for facility and agency referrals, define the process once reportable conduct occurs, and provide a list of recordable information in the EMR. In addition, the new sections implement the Health and Safety Code, §253.008, by requiring persons exempt from licensing under the Health and Safety Code, §142.003(a)(19), to use the EMR. The new sections also implement the Health and Safety Code, §253.009(a), by requiring persons exempt from licensing under the Health and Safety Code, §142.003(a)(19), to notify their employees as required by that section.

Gordon Taylor, Chief Financial Officer, has determined that, for the first five-year period the proposed sections are in effect, there are no fiscal implications for state or local government as a result of enforcing or administering the sections.

Bettye M. Mitchell, Deputy Commissioner for Long Term Care, has determined that, for each year of the first five years the sections are in effect, the public benefit anticipated as a result of enforcing the sections is to have rules that facilities, agencies, and the public can more easily access and understand. The public will also benefit by having rules that comply with current laws. There is no adverse economic effect on small or micro businesses as a result of enforcing or administering the sections, because the proposal does not add any new requirements that would have a negative economic impact on businesses. There is no anticipated economic cost to persons who are required to comply with the proposed sections. There is no anticipated effect on local employment in geographic areas affected by these sections.

Questions about the content of this proposal may be directed to Lynette Sanders at (512) 231-5810 in DHS's Long Term Care-Credentialing section. Written comments on the proposal may be submitted to Supervisor, Rules and Handbooks Unit-044, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register .

Under §2007.003(b) of the Government Code, DHS has determined that Chapter 2007 of the Government Code does not apply to these rules. Accordingly, DHS is not required to complete a takings impact assessment regarding these rules.

These rules are promulgated by DHS. This state agency is currently scheduled to be merged into a successor agency, the Texas Health and Human Services Commission (HHSC) and one of its subordinate departments, the Texas Department of Aging and Disability Services, sometime in 2004. This change is mandated by legislation passed by the 78th Legislature.

At the time of that transition, HHSC will have complete authority for these and all related rules. This may result in these rules being changed from one chapter of the Texas Administrative Code to another or variations in the rules adoption process.

40 TAC §§93.1 - 93.6

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Texas Department of Human Services or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The repeals are proposed under the Health and Safety Code, Chapter 253, which authorizes DHS to administer the employee misconduct registry.

The repeals implement the Health and Safety Code, §§253.001 - 253.010.

§93.1.Purpose.

§93.2.Definitions.

§93.3.Texas Department of Human Services' (DHS's) Requirements for Facilities.

§93.4.Employee Misconduct Registry Requirements.

§93.5.Texas Department of Protective and Regulatory Services' (PRS's) Requirements for Agencies.

§93.6.Facility and Agency Responsibilities.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308841

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Chapter 93. EMPLOYEE MISCONDUCT REGISTRY (EMR)

Subchapter A. INTRODUCTION

40 TAC §§93.1 - 93.4

The new sections are proposed under the Health and Safety Code, Chapter 253, which authorizes DHS to administer the employee misconduct registry.

The new sections implement the Health and Safety Code, §§253.001 - 253.010.

§93.1.What is the purpose of this chapter?

This chapter implements the Health and Safety Code, Chapter 253, Employee Misconduct Registry, to track findings of reportable conduct by unlicensed employees of Texas Department of Human Services-regulated facilities and agencies, and persons exempt from licensing under the Health and Safety Code, §142.003(a)(19).

§93.2.What do certain words and terms in this chapter mean?

The following words and terms in this chapter have the following meanings, unless the context clearly indicates otherwise:

(1) Administrative law judge (ALJ)--A State Office of Administrative Hearings (SOAH) attorney who conducts formal hearings for the Texas Department of Human Services (DHS).

(2) Agency--An entity that is licensed by DHS under the Health and Safety Code, Chapter 142, Home and Community Support Services, or persons exempt from licensing under the Health and Safety Code, §142.003(a)(19), which include Home and Community-Based Services Program providers at the Texas Department of Mental Health and Mental Retardation.

(3) Commissioner--The commissioner of DHS.

(4) Employee--

(A) a person who works for an agency or facility;

(B) a person who provides personal services to a client, resident, or consumer of the agency or facility;

(C) a person who performs services at an agency or facility and is not licensed or certified to perform those services; and

(D) a person who is not a certified nurse aide working at a nursing facility.

(5) EMR--Employee Misconduct Registry.

(6) Facility--A facility licensed by DHS or an adult foster care provider that contracts with DHS.

(7) Formal hearing--A hearing held by SOAH to determine whether an employee has committed reportable conduct in a DHS-regulated long term care facility.

(8) Informal review (IR)--An opportunity for an employee to dispute the finding(s) of reportable conduct by providing testimony and supporting documentation to an impartial DHS staff person.

(9) Reportable conduct--

(A) abuse or neglect that causes or may cause death or harm to a client, resident, or consumer of a facility or agency;

(B) sexual abuse of a client, resident, or consumer of a facility or agency;

(C) financial exploitation of a client, resident, or consumer of a facility or agency in the amount of $25 or more; or

(D) emotional, verbal, or psychological abuse that causes harm to a client, resident, or consumer of a facility or agency.

(10) State Office of Administrative Hearings (SOAH)--A state agency responsible for conducting formal hearings for other state agencies, including DHS.

(11) Texas Department of Human Services (DHS)--The licensing authority of long term care facilities and agencies in Texas.

§93.3.What is the EMR?

The EMR is a tool to track findings of reportable conduct by unlicensed employees of DHS-regulated long term care facilities; agencies licensed under the Health and Safety Code, Chapter 142; and persons exempt from licensing under the Health and Safety Code, §142.003(a)(19).

§93.4.To whom does the EMR apply?

The EMR applies to employees of DHS-regulated long term care facilities; agencies licensed under the Health and Safety Code, Chapter 142; and persons exempt from licensing under the Health and Safety Code, §142.003(a)(19), including:

(1) nursing facilities;

(2) intermediate care facilities for persons with mental retardation or related conditions;

(3) assisted living facilities;

(4) adult foster care facilities;

(5) adult day care facilities;

(6) home and community support services agencies, which include hospice and home health agencies; and

(7) persons exempt from licensing under the Health and Safety Code, §142.003(a)(19), which include Home and Community-Based Services Program providers at the Texas Department of Mental Health and Mental Retardation.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308842

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Subchapter B. EMR USE REQUIREMENTS

40 TAC §§93.11 - 93.13

The new sections are proposed under the Health and Safety Code, Chapter 253, which authorizes DHS to administer the employee misconduct registry.

The new sections implement the Health and Safety Code, §§253.001 - 253.010.

§93.11.What are facilities and agencies required to do before hiring a new employee?

Facilities and agencies must check the EMR and the Nurse Aide Registry (maintained under the Omnibus Budget Reconciliation Act of 1987) to see if the person is listed as unemployable.

§93.12.Can facilities and agencies employ a person who is listed on the EMR or the Nurse Aide Registry as unemployable?

No.

§93.13.What information are facilities and agencies required to provide to employees?

Facilities and agencies must provide information about the EMR to all employees. The information must:

(1) be in writing; and

(2) state that persons listed on the EMR are not employable.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308843

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Subchapter C. PROCESS FOR FACILITY REFERRALS

40 TAC §§93.21 - 93.23

The new sections are proposed under the Health and Safety Code, Chapter 253, which authorizes DHS to administer the employee misconduct registry.

The new sections implement the Health and Safety Code, §§253.001 - 253.010.

§93.21.How does the process begin for a facility employee referred to the EMR?

DHS requires facilities to make an incident report for any allegation of reportable conduct of an employee against a resident of the facility.

§93.22.Who is responsible for the investigation and provision of due process to facility employees referred to the EMR?

DHS is responsible for the investigation and provision of due process to facility employees, as provided in Subchapter E of this chapter (relating to Determination of Reportable Conduct, Informal Review, and Formal Hearing for Facility Referrals).

§93.23.What happens when DHS receives a report that a facility employee has committed reportable conduct?

The following actions occur:

(1) The local DHS regional office investigates the report to determine whether the employee committed reportable conduct. The standards that apply to these investigations are the standards that apply to the type of facility where the investigation takes place.

(2) If DHS determines reportable conduct, the DHS surveyor makes the appropriate referral(s) to the EMR.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308844

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Subchapter D. PROCESS FOR AGENCY REFERRALS

40 TAC §§93.31 - 93.34

The new sections are proposed under the Health and Safety Code, Chapter 253, which authorizes DHS to administer the employee misconduct registry.

The new sections implement the Health and Safety Code, §§253.001 - 253.010.

§93.31.How does the process begin for an agency employee referred to the EMR?

The Texas Department of Protective and Regulatory Services and DHS require agencies to make an incident report for any allegation of reportable conduct of an employee against a client of the agency.

§93.32.Who is responsible for the investigation and due process of agency employees referred to the EMR?

The Texas Department of Protective and Regulatory Services is responsible for the investigation and due process of agency employees.

§93.33.What happens when the Texas Department of Protective and Regulatory Services receives a report that an agency employee has committed reportable conduct?

The Texas Department of Protective and Regulatory Services:

(1) investigates the report to determine whether the employee committed reportable conduct;

(2) notifies the employee and completes all due process procedures; and

(3) forwards substantiated findings of reportable conduct to DHS state office after completion of all due process procedures.

§93.34.What happens when DHS receives a notice of substantiated findings of reportable conduct from the Texas Department of Protective and Regulatory Services?

DHS records the reportable conduct in the EMR, as required by the Health and Safety Code, §253.007.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308845

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Subchapter E. DETERMINATION OF REPORTABLE CONDUCT, INFORMAL REVIEW, AND FORMAL HEARING FOR FACILITY REFERRALS

40 TAC §§93.41 - 93.48

The new sections are proposed under the Health and Safety Code, Chapter 253, which authorizes DHS to administer the employee misconduct registry.

The new sections implement the Health and Safety Code, §§253.001 - 253.010.

§93.41.What happens once reportable conduct is determined and the facility employee is referred to the EMR?

DHS staff send the employee a written notice that includes:

(1) a brief summary of the findings and facts on which the findings are based;

(2) the employee's right to an informal review (IR) to dispute the findings; and

(3) notice that the request for an IR must be made no later than 10 days after the day the employee receives the written notice. This written notice to the employee provides the address and contact information for the local DHS regional office.

§93.42.How does a facility employee dispute DHS's finding of reportable conduct?

An employee may dispute these findings by responding to the notice letter within the required time frame to request an informal review.

§93.43.What happens when a facility employee requests an informal review?

(a) If the employee requests an informal review (IR), DHS sets a date to allow the employee to dispute the findings by providing testimony, in person or by telephone, to an impartial Long Term Care Regulatory staff person at the local DHS regional office.

(b) If the IR is conducted and the findings are not upheld, DHS dismisses the referral.

(c) If the IR is conducted and the findings are upheld, DHS sends a second written notice of findings to the employee and the referral process continues.

§93.44.What happens if the facility employee does not respond to the notice letter and does not request an informal review?

DHS sends a second written notice of findings to the employee and the referral process continues.

§93.45.Is the facility employee offered any further opportunities to dispute the finding(s) of reportable conduct?

After the informal review process is completed, DHS staff review the referral and supporting documentation and send the employee a third written notice that includes:

(1) a brief summary of the findings;

(2) the employee's right to a formal hearing on the reportable conduct; and

(3) notice that the request for hearing must be made in writing no later than 30 days after the day the employee receives the written notice. This written notice to the employee provides the address and contact information for the DHS Hearings Division.

§93.46.What happens if the facility employee does not respond to the notice letter and does not request a formal hearing?

The reportable conduct is recorded in the EMR.

§93.47.What happens when a facility employee requests a formal hearing?

DHS handles the request in accordance with its formal hearing procedures in Chapter 79 of this title (relating to Legal Services). The employee is granted a formal hearing on the incident of reportable conduct before an administrative law judge at the State Office of Administrative Hearings.

§93.48.What happens if the administrative law judge finds that the facility employee committed reportable conduct?

An order is issued approving the findings and directing DHS to record the act of reportable conduct in the EMR. DHS gives final notice of the order to the employee.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308846

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Subchapter F. RECORDABLE INFORMATION IN THE EMR

40 TAC §§93.61 - 93.63

The new sections are proposed under the Health and Safety Code, Chapter 253, which authorizes DHS to administer the employee misconduct registry.

The new sections implement the Health and Safety Code, §§253.001 - 253.010.

§93.61.What must occur before DHS may record an employee's name in the EMR?

Before DHS records an employee's name in the EMR, all due process procedures must be completed and the finding(s) of reportable conduct must be substantiated.

§93.62.What information is recorded in the EMR?

DHS records the following information in the EMR:

(1) the employee's name;

(2) the employee's address;

(3) the employee's social security number;

(4) the name of the facility, agency, or person exempt from licensure under the Health and Safety Code, §142.003(a)(19);

(5) the address of the facility, agency, or person exempt from licensure under the Health and Safety Code, §142.003(a)(19);

(6) the date of the act of reportable conduct; and

(7) a description of the act of reportable conduct.

§93.63.Is it possible to remove an employee's name from the EMR once it is listed?

Yes, if the employee requests that the referral be reconsidered, and DHS determines that the employee does not meet the requirements to be listed on the EMR.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308847

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Chapter 97. LICENSING STANDARDS FOR HOME AND COMMUNITY SUPPORT SERVICES AGENCIES

The Texas Department of Human Services (DHS) proposes to amend §97.249, concerning reportable conduct; §97.282, concerning client conduct and responsibility and client rights; and §97.403, concerning standards specific to agencies licensed to provide hospice services, in its Licensing Standards for Home and Community Support Services Agencies chapter.

The purpose of the amendments to §97.249 and §97.282 is to provide the new telephone number for reporting general complaints and complaints of abuse, exploitation, or neglect involving an employee of a home and community support services agency to DHS. In addition, §97.249(3) is amended to remove "upon discovery" from the sentence instructing an agency when it must report information concerning employee abuse.

The purpose of the amendment to §97.403 is to require a hospice employee providing medical social services to be a licensed social worker in the state of Texas, and to update code references in the construction standards for freestanding hospices.

Gordon Taylor, Chief Financial Officer, has determined that, for the first five-year period the proposed sections are in effect, there are no fiscal implications for state or local government as a result of enforcing or administering the sections.

Bettye M. Mitchell, Deputy Commissioner for Long Term Care, has determined that, for each year of the first five years the sections are in effect, the public benefits anticipated as a result of enforcing the amendments to §97.249 and §97.282 is that the public will have the correct toll-free number for reporting complaints. The public benefits anticipated as a result of enforcing the amendment to §97.403 are as follows: (1) There will be more social workers who meet the qualifications for providing medical social services in a hospice, which will give hospices more staffing sources for this required service; and (2) the higher standards for construction in inpatient hospice agencies will result in improved public safety, helping to ensure the best possible service for clients. There is no adverse economic effect on small or micro businesses as a result of enforcing or administering the amendments to §97.249 and §97.282, because the amendments do not add any new requirements for businesses. There is little, if any, adverse economic effect on small, micro, or other businesses as a result of enforcing or administering the amendment to §97.403. The freestanding hospices in Texas that provide inpatient care directly currently meet the existing health care occupancy chapter of the 2000 Life Safety Code with rare, if any, exceptions. There is no anticipated economic cost to persons who are required to comply with the proposed sections. There is no anticipated effect on local employment in geographic areas affected by these sections.

Questions about the content of this proposal may be directed to Linda Kotek at (512) 438-3158 in DHS's Long Term Care-Policy section. Written comments on the proposal may be submitted to Supervisor, Rules and Handbooks Unit-046, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register .

Under §2007.003(b) of the Government Code, DHS has determined that Chapter 2007 of the Government Code does not apply to these rules. Accordingly, DHS is not required to complete a takings impact assessment regarding these rules.

These rules are promulgated by DHS. This state agency is currently scheduled to be merged into a successor agency, the Texas Health and Human Services Commission (HHSC) and one of its subordinate departments, the Texas Department of Aging and Disability Services, sometime in 2004. This change is mandated by legislation passed by the 78th Legislature.

At the time of that transition, HHSC will have complete authority for these and all related rules. This may result in these rules being changed from one chapter of the Texas Administrative Code to another or variations in the rules adoption process.

Subchapter C. MINIMUM STANDARDS FOR ALL HOME AND COMMUNITY SUPPORT SERVICES AGENCIES

3. AGENCY ADMINISTRATION

40 TAC §97.249

The amendment is proposed under the Health and Safety Code, Chapter 142, which provides DHS with the authority to adopt rules for the licensing and regulation of home and community support services agencies.

The amendment implements the Health and Safety Code, §§142.001 - 142.030.

§97.249.Reportable Conduct.

An agency must adopt and enforce a written policy relating to reporting acts of abuse, neglect, or exploitation of clients and reportable conduct by an employee(s) of the agency.

(1) - (2) (No change.)

(3) An agency that has cause to believe that an employee has abused, exploited, or neglected a client of the agency must report the information [ upon discovery ] to:

(A) the Texas Department of Human Services at 1-800-458-9858 [ 1-800-228-1570 ]; and

(B) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308848

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


4. PROVISION AND COORDINATION OF TREATMENT AND SERVICES

40 TAC §97.282

The amendment is proposed under the Health and Safety Code, Chapter 142, which provides DHS with the authority to adopt rules for the licensing and regulation of home and community support services agencies.

The amendment implements the Health and Safety Code, §§142.001 - 142.030.

§97.282.Client Conduct and Responsibility and Client Rights.

An agency must adopt and enforce a written policy governing client conduct and responsibility and client rights in accordance with this section.

(1) - (10) (No change.)

(11) The client has the right to voice grievances regarding treatment or care that is or fails to be furnished, or regarding the lack of respect for property by anyone who is furnishing services on behalf of the agency and must not be subjected to discrimination or reprisal for doing so.

(A) (No change.)

(B) At the time of admission, an agency must provide each person who receives home health, hospice, or personal assistance services with a written statement that informs the client that a complaint against the agency may be directed to the director, Texas Department of Human Services (DHS), P.O. Box 149030, Austin, Texas 78714-9030, toll free 1-800-458-9858 [ 1-800-228-1570 ]. The statement also may inform each client that a complaint against the agency may be directed to the administrator of the agency. Information about complaints directed to the administrator also must include the timeframe for the agency's review and resolution.

(12) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308849

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Subchapter D. ADDITIONAL STANDARDS SPECIFIC TO LICENSE CATEGORY AND SPECIFIC TO SPECIAL SERVICES

40 TAC §97.403

The amendment is proposed under the Health and Safety Code, Chapter 142, which provides DHS with the authority to adopt rules for the licensing and regulation of home and community support services agencies.

The amendment implements the Health and Safety Code, §§142.001 - 142.030.

§97.403.Standards Specific to Agencies Licensed to Provide Hospice Services.

(a) - (n) (No change.)

(o) Medical social services must be provided by a social worker who is licensed in the state of Texas to provide social work services [ with a bachelor's degree in social work from an accredited college or university ] and must be under the direction of a physician.

(p) - (v) (No change.)

(w) A freestanding hospice that provides inpatient care directly must comply with the following standards in addition to the standards in subsections (a) - (v) of this section.

(1) The hospice [ A freestanding hospice that provides inpatient care directly ] must have on-site 24-hour nursing service provided by registered nurses and licensed vocational nurses[ . ]

[ (A) ] [ The facility must provide 24-hour nursing services that are ] sufficient in number to meet total nursing needs and [ which are ] in accordance with the client's plan of care.

(A) Each client must receive treatments, medications, and diet as prescribed, and must be kept comfortable, clean, well groomed, and protected from accident, injury, and infection.

(B) Each shift must include a registered nurse that provides and supervises direct client care.

(2) - (3) (No change.)

(4) Except as provided in this subsection, the hospice must meet National Fire Protection Association 101, Life Safety Code, 2000 [ Code for Safety to Life from Fire in Buildings and Structures, 1994 ] Edition (NFPA 101), Chapter 18 [ 12 ] (concerning new health care occupancies) and Chapter 19 [ 13 ] (concerning existing health care occupancies), published by the National Fire Protection Association (NFPA). All documents published by the NFPA as referenced in this subsection may be obtained by writing the National Fire Protection Association, [ Post Office Box 9101, ] 1 Batterymarch Park, Quincy, Massachusetts 02169, or calling 1-800-344-3555.

(A) (No change.)

(B) Any existing facility of two or more stories that is not of fire-resistive construction and is participating on the basis of a waiver of construction type or height, may not house blind, nonambulatory, or physically disabled clients above the street-level floor unless the facility is one of the following construction types (as defined in the NFPA 101):

(i) - (iv) (No change.)

(v) a facility that achieves a passing score on the Fire Safety Evaluation System (FSES) for Health Care Occupancies, [ National Fire Codes, Volume 10, ] NFPA 101A, Guide on Alternative Approaches to Life Safety, Chapter 4, Fire Safety Evaluation System for Health Care Occupancies, 2001 [ 3, 1995 ] Edition published by the NFPA.

(5) - (12) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 22, 2003.

TRD-200308850

Paul Leche

General Counsel, Legal Services

Texas Department of Human Services

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 438-3734


Part 20. TEXAS WORKFORCE COMMISSION

Chapter 801. LOCAL WORKFORCE DEVELOPMENT BOARDS

Subchapter C. BOARD CONTRACTING GUIDELINES

40 TAC §§801.51 - 801.60

The Texas Workforce Commission (Commission) proposes new Subchapter C, Board Contracting Guidelines and new §§801.51 - 801.60 regarding Board Contracting Guidelines.

PART I. PURPOSE, BACKGROUND, AND AUTHORITY

A. Purpose

B. Background and Authority

C. Coordination Activities

PART II. EXPLANATION OF INDIVIDUAL PROVISIONS

PART III. IMPACT STATEMENTS

PART IV. PROPOSED RULES

PART I. PURPOSE, BACKGROUND, AND AUTHORITY

A. Purpose. The purpose of the proposed new Subchapter C and rules is to set forth contracting guidelines that apply to Local Workforce Development Boards (Boards) and the Boards' contracted service providers of one-stop services as required by Texas Government Code §§2308.264 and 2308.267 (as amended by Senate Bill 280, 78th Texas Legislature, Regular Session (2003)).

Texas Government Code, Chapter 2308, Texas Labor Code, Title 4, and federal statutes and regulations have made Boards responsible for a number of duties related to the administration of Commission-funded employment and training activities, including:

* contracting with service providers;

* ensuring that training and eligibility determinations relating to employment and training services are delivered by contracted workforce service providers;

* maintaining adequate fiscal systems;

* complying with the uniform rules for administration of grants and agreements;

* meeting the contract performance targets; and

* complying with all applicable federal and state statutes and regulations.

B. Background and Authority. The 74th Texas Legislature enacted Texas' landmark law, which is codified in part in Texas Labor Code, Chapter 302, and Texas Government Code, Chapter 2308. This state law reformed both the welfare and workforce systems and moved Texas into a leadership position among reform-minded states. State law provided local elected officials the opportunity to form Boards that oversee the delivery of workforce development services that meet the needs of local employers and workers. Rules relating to the Boards' roles and responsibilities are set forth in 40 T.A.C. Chapter 801.

The 78th Texas Legislature amended portions of the Texas Government Code regarding Boards' contracted providers of one-stop workforce services. Specifically, §2308.264 was amended to require that, in consultation with the Boards, the Commission by rule establish contracting guidelines for Boards applicable to Board contracted providers of one-stop workforce services. The law requires that the guidelines:

(1) ensure that each independent contractor that contracts to provide one-stop workforce services under this section has sufficient insurance bonding and liability coverage for the overall financial security of one-stop workforce services funds and operations;

(2) prevent potential conflicts of interest between Boards and entities that contract with Boards under this section; and

(3) ensure that if a Board acts as a fiscal agent for an entity that contracts with the Boards to provide one-stop workforce services, the Board does not deliver the services or determine eligibility for the services.

The Legislature also amended §2308.267, Texas Government Code, to state that a Board's staff may not direct or control the staffing of any entity providing one-stop workforce services. This would include Boards' contracted workforce service providers that provide one-stop workforce services through the Texas Workforce Centers as set out in 40 T.A.C. §801.28. They are:

(a) core services, as defined in the Workforce Investment Act (WIA) §134(d)(2) (29 U.S.C.A. §2864 (d)(2)) and Texas Government Code, Chapter 2308, including:

(1) outreach;

(2) intake, which may include worker profiling and orientation to the information and services available through the One-Stop Service Delivery Network;

(3) determinations of whether the individuals are eligible for programs funded through the Commission that are available through the One-Stop Service Delivery Network;

(4) initial assessment of skill levels, aptitudes, abilities, and supportive service needs;

(5) job search and placement assistance and, when appropriate, career counseling;

(6) provision of performance information and program cost information on eligible providers of training services as described in §§841.31-841.47 of this chapter (relating to Training Provider Certification), provided by program, and eligible providers of youth activities described in WIA §123 (29 U.S.C.A. §2843), providers of adult education described in Title II of WIA, providers of post-secondary vocational education activities and vocational education activities available to school dropouts under the Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C.A. §2301 et seq.), and providers of vocational rehabilitation program activities described in Title I of the Rehabilitation Act of 1973 (29 U.S.C.A. §720 et seq.);

(7) provision of information regarding how the local workforce development area (workforce area) is performing on the local performance measures and any additional performance information with respect to the One-Stop Service Delivery Network in the local area;

(8) provision of information regarding filing claims for unemployment compensation;

(9) provision of employment statistics information, including the provision of accurate information relating to local, regional, and national labor market areas, including job vacancy listings in such labor market areas, information on job skills necessary to obtain the jobs listed, and information related to local occupations in demand and the earnings and skill requirements for such occupations;

(10) provision of accurate information relating to the availability of supportive services, including child care and transportation, available in the workforce area, and referral to such services, as appropriate;

(11) assistance in establishing eligibility for Welfare-to-Work activities, Choices, Food Stamp Employment and Training, and programs of financial aid assistance for training and education that are available in the local area; and

(12) follow-up services, including counseling regarding the workplace, for participants in workforce investment activities authorized under Chapter 841 of this Title, relating to Workforce Investment Act, who are placed in unsubsidized employment, for not less than 12 months after the first day of employment, as appropriate.

(b) intensive services, as described in the Texas Government Code, Chapter 2308, and as described in the WIA §134(d)(3) (29 U.S.C.A. §2864(d)(3)), which may include the following:

(1) comprehensive and specialized assessments of the skill levels and service needs of adults and dislocated workers, such as diagnostic testing and use of other assessment tools, in-depth interviewing, and evaluation to identify employment barriers and employment goals;

(2) development of an individual employment plan and service strategy to identify the employment goals, appropriate achievement objectives, and appropriate combination of services for the participant to achieve employment goals and objectives;

(3) group counseling;

(4) individual counseling and career planning;

(5) centralized and continuous case management; and

(6) short-term pre-vocational services, including learning skills, communication skills, interviewing skills, punctuality, personal maintenance skills, and professional conduct to prepare individuals for unsubsidized employment or training.

(c) training services as described in WIA §134(d)(4) (29 U.S.C.A. §2864(d)(4)) and the Texas Government Code, Chapter 2308, which may include the following:

(1) occupational skills training, including training for nontraditional employment;

(2) on-the-job training;

(3) programs that combine workplace training with related instruction;

(4) training programs operated by the private sector;

(5) skills upgrading and retraining;

(6) entrepreneurial training;

(7) job readiness training;

(8) adult education and literacy activities in combination with services and with activities described in (1)-(7) of this section; and

(9) customized training conducted with a commitment by an employer or group of employers to employ an individual upon successful completion of training.

(d) other services including

(1) all other permissible local employment and training activities included in the local workforce development plan, which may include discretionary one-stop activities, supportive services, and needs-related payments as outlined in WIA §134(e) (29 U.S.C.A. §2864(e));

(2) all programs and activities administered by the Texas Workforce Center Partners; and

(3) the information described in the Wagner-Peyser Act, §15, and all job search, placement, recruitment and other labor exchange services authorized under the Wagner-Peyser Act (29 U.S.C.A. §49 et seq.).

Workforce Service Providers. The Commission encourages entities to become providers of workforce services. The Commission also assists providers in building the knowledge and skills necessary to deliver services effectively by:

* providing quarterly, annual, and regional conferences/workshops among Boards and their service providers for sharing of information and building relationships to identify best practices and improve service delivery including, but not limited to, improvements of services for universal customers and integration of all workforce services;

* sponsoring conferences that focus on service providers, such as the conference for faith-based organizations, that encourage entities to provide services and fulfill contracted service provider roles within the one-stop service delivery system and to leverage resources through the Boards to assist with the delivery of services; and

* working with the Texas Association of Workforce Boards (TAWB) in researching the concept of developing a credentials program for one-stop professionals as well as workforce professionals in general.

C. Coordination Activities. On September 30, 2003, the Commission considered the methods of developing the rules, including negotiated rulemaking. The Commission selected a method that would afford the greatest amount of flexibility for interchange and dialogue. The Commission directed staff to convene a workgroup comprised of Boards, Boards' contracted workforce service providers, and any interested persons to develop draft rules for consideration by the Commission. Two public meetings were held. On October 18, 2003, the workgroup discussed concepts and basic principles to be included in the rule language, and at the second workgroup meeting held on November 14, 2003, the workgroup discussed draft rule language. The workgroup was attended by a number of representatives from both public and private sector entities, including nonprofit and for-profit contractors. It was also attended by entities that represented various Board contracting structures. The participants provided written and verbal feedback in person and via teleconference. The public was also able to monitor the workgroup's development by viewing materials on the Commission Internet page. The page serves as a clearinghouse for information on the rules' development. The work sessions involved discussions of each of the individual provisions of the proposed rules discussed below.

PART II. EXPLANATION OF INDIVIDUAL PROVISIONS

New Subchapter C is added as the location for rules that comprise the Board contracting guidelines.

Section 801.51 sets forth the purpose and general provisions for the Board contracting guideline rules. The scope of the rules covers all Board contracted workforce service providers of one-stop services, including those that provide services listed in §801.28 and under contract with the Boards. Service providers that are state agencies are not subject to the guidelines proposed in these rules. The rule also clarifies that the rules in the subchapter are separate and distinct from the monitoring rules contained in Chapter 800, Subchapters H and I.

Section 801.52 adds a provision to set forth definitions for use in the subchapter for Boards' contracted workforce service provider, the Commission, and one-stop workforce service.

Section 801.53 adds a provision to set forth general standards of conduct and conflicts of interest provisions. These provisions are based in part on the Texas Ethics Commission guidelines for determining conflicts of interest and state requirements placed on state employees to avoid conflicts of interest. The rules are also based in part on the proposed rules by the Texas Commission on Environmental Quality for governing contracts for financial advisors, and standard practices used by the Commission and Boards in the past to ensure compliance with federal and state statutory requirements. The statutory requirements placed on state employees are also used as a benchmark for Boards' staff, and Boards' contracted service providers conduct. The provisions contained in the Texas Government Code, Chapter 572, the Texas Penal Code, Chapters 36 and 39 and 29 C.F.R. 97.36(b)(3) are utilized for the benchmark for Board and Boards' contracted service provider conduct.

The conflict of interest provisions are intended to ensure that perceptions of conflict do not arise at the Board level. The guidelines seek to:

* avoid personal, employment, or business relationships that create conflicts of interest;

* not use non-public information gained through a relationship with the Commission or Boards to seek or obtain monetary gain; and

* require disclosure of conflicts of interests.

Section 801.54 sets out the fiscal integrity requirements based in part on the methods already used by the Commission and other state and federal grantees to protect state and federal funds that are contracted to subcontractors. The Commission uses a key control measures checklist for reviewing potential contractors before awarding contracts. The key control measures checklist used by the Commission is set out in the Texas Workforce Commission Financial Manual for Grants and Contracts , which is available to the Boards, and includes indicators of fiscal quality controls. The key control checklist system is a method used by other entities awarding contracts to check for indicators of fiscal stability.

Section 801.55 sets out elements relating to fiscal integrity provisions. This includes the requirement that Boards develop a key control certification system for verifying the financial integrity of Boards' contracted workforce service providers. The Boards shall verify that the Boards' contracted workforce service providers meet the Board's key control measures. The specific schedule is designed to be consistent with standard risk assessment and varies based on the amount of funds under the control of the Boards' contracted workforce service provider. The assessment of risk is tied to the monetary amount that is covered by the contract and designed to apply in a manner that will be consistent with reasonable procurement requirements, standard grants and contracts management practices, and Board customized monitoring plans as required under 40 T.A.C. Subchapter I. The provisions in this section are modeled after the standard fiscal integrity provisions currently contained in the contracts between the Commission and the Boards and based on federal and state contract management principles and best practices. Flexibility is built into the rule to recognize that contracts may vary significantly in monetary amount, performance requirements, scope and breadth of customers to be served as well as other factors. For that reason, the Commission is requiring the Boards to tailor their key control system to meet the needs of employers and job seekers in the individual workforce areas. The intent of the Commission is to emphasize the importance of strong financial planning. In this context, Boards must ensure that funds are not over-expended by Boards' contracted workforce service providers.

Section 801.56 sets out the provisions relating to bonding, insurance and other methods of securing funds to cover possible contract losses. The provisions are based in part on the principles of local decisions and ensuring that the most cost effective methods are used by each Board. The current contracts between the Commission and the Boards require that bonds be in place to protect funds under the control of the Boards. In turn, Boards must determine the appropriate methods of protecting the funds under the control of the Board's contractors.

While the Commission recognizes that less than one-tenth of one percent of funds has been categorized as disallowed costs over the past eight years, including workforce areas that use individuals as the managing directors, the new provisions in Chapter 2308, Texas Government Code, must be effectuated. The successes of the Boards present the issue of whether it is cost effective for Boards to bond at the local level or require contractors to bond the funds under their control. The successes of the Boards are attributable to good local business practices in terms of contract management, monitoring practices and other efforts by the Boards to ensure financial safeguards. In light of these existing business practices and the history of Board management, the Commission finds that a minimum threshold of insurance or bonding should be set. The amount reviewed with the workgroup began at 100% and was revised to at least 10% of the funds the Boards place under the control of the Boards' contracted workforce service providers. The 10% threshold is a recognition of the Boards' strong history of financial successes. The Boards, however, may set a higher amount if they find it appropriate, either on a contract-by-contract basis or as a general rule.

Section 801.57 sets out provisions relating to contracting with former Commission, Board, or Boards' contracted workforce service provider employees. These provisions mirror the revolving door policies that already apply to many state employees.

Section 801.58 sets out provisions relating to restrictions on employing former employees of the Board, Commission or Boards' contracted workforce service providers. These provisions also mirror the revolving door policies that already apply to many state employees.

Section 801.59 sets out provisions relating the exemptions for requirements in the subchapter. The Commission may allow for exceptions where specific circumstances warrant.

Section 801.60 sets out provisions for enforcement of the requirements in the subchapter. The section explains consequences for failing to comply with the rules.

PART III. IMPACT STATEMENTS

Randy Townsend, Chief Financial Officer, has determined that for each year of the first five years the rule will be in effect, the following statements will apply:

There are no additional estimated costs to the state and to local governments expected as a result of enforcing or administering the rule;

There are no estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rule;

There are no estimated losses or increases in revenue to the state or to local governments as a result of enforcing or administering the rule;

There are no foreseeable implications relating to costs or revenue of the state or local governments as a result of enforcing or administering the rule; and

There is no anticipated impact on small businesses because the Boards are provided local funds to implement the program locally and the reasonable and necessary costs of performing under a contract by a contracted workforce service provider would be paid through the contract.

Mark Hughes, Acting Director of Labor Market Information, has determined that there is no foreseeable negative impact upon employment conditions in this state as a result of the proposed rule amendments and new rules.

Joann Benton, Director of Contract Monitoring Services, has determined that for each year of the first five years the rules are in effect, the public benefit anticipated as a result of enforcing the sections will be a comprehensive process used by the Commission, its Boards, subrecipients, and contract service providers to help ensure the accountability of program funds and outcomes. The Commission anticipates that the rules will make contract management processes inclusive of a more comprehensive key control system. The financial safeguards will be locally designed and provide the Boards with the flexibility to make local decisions based on state policy.

Comments on the proposed section may be submitted to John Moore, General Counsel, Texas Workforce Commission, 101 East 15th Street, Room 608, Austin, Texas 78778; Fax Number 512-463-2220; or e-mailed to john.moore@twc.state.tx.us. Comments must be received by the Agency no later than thirty (30) days from the date this proposal is published in the Texas Register.

The new rules are proposed in response to and under the authority of the following sections:

Sections 2308.264 and 2308.267, Texas Government Code, as amended by §§4.01, 4.02 and 4.09 of SB 280, 78th Texas Legislature, Regular Session, 2003. These laws require the Commission to adopt rules not later than March 1, 2004, regarding Board contracting guidelines and related provisions referenced in the legislation.

Additionally, §301.0015, Texas Labor Code, provides that the Commission has authority to adopt rules necessary to administer the Commission's policies, including rules necessary for the administration of Title 4, Texas Labor Code, relating to employment services and unemployment.

Section 302.002(d), Texas Labor Code, authorizes the Commission to adopt, amend, or repeal such rules in accordance with Chapter 2001, Texas Government Code, as necessary for the proper administration of the Workforce Development Division.

Section 302.021, Texas Labor Code, which consolidated under the jurisdiction of the Commission job-training, employment, and employment-related educational programs and other functions listed in the section (including, but not limited to, the programs funded under the Workforce Investment Act of 1998 as amended (29 U.S.C. §§2801 et seq.).

Texas Labor Code, Title 4, and primarily Chapters 301 and 302, and Chapter 2308, Texas Government Code, will be affected by the proposed new rules.

§801.51.Purpose and General Provisions.

(a) The purpose of the rules contained in this subchapter is to implement Texas Government Code, §§2308.264 and 2308.267, by setting out the Board contracting guidelines applicable to Boards' contracted workforce service providers, including those who provide one-stop workforce services.

(b) The Board contracting guidelines shall be applied by the Boards to ensure that contracts with workforce service providers that deliver one-stop services are reviewed for financial safeguards through utilizing a locally designed key control system based on the provisions in this subchapter. Boards shall ensure compliance with this subchapter through development of local policies and procedures to oversee and manage the Boards' contracted workforce service providers. Notwithstanding the provisions in this subchapter, Boards and Boards' contracted workforce service providers shall ensure compliance with monitoring requirements set out in Subchapters H and I of Chapter 800 of this title.

§801.52.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Boards' Contracted Workforce Service Provider--A business entity or person, except a state agency, who contracts with a Board to provide one-stop workforce services.

(2) Commission--The Texas Workforce Commission, which is the body of governance composed of three members appointed by the Governor and includes the unit of state government established under Texas Labor Code Chapter 301 presided over by the Commission and administered by the Executive Director to operate the integrated workforce development system.

(3) One-Stop Workforce Services--The workforce employment and training services as listed in 40 T.A.C. §801.28, which are made available through the Texas Workforce Centers.

§801.53.Standards of Conduct and Conflicts of Interest Provisions.

(a) Standards of Conduct. Boards shall ensure that Boards' staff and Boards' contracted workforce service providers:

(1) comply with federal and state statutes and regulations regarding standards of conduct and conflicts of interest provisions including, but not limited to, the following:

(A) Texas Government Code, Chapter 572;

(B) Texas Penal Code, Chapters 36 and 39, in the same manner as applicable to a state officer or employee;

(C) 29 C.F.R. §97.36(b)(3); and

(D) professional licensing requirements, when applicable;

(2) avoid personal, employment, or business relationships that create conflicts of interest or the appearance of conflicts of interest; and

(3) refrain from using non-public information gained through a relationship with the Commission or Board or Board staff to seek or obtain monetary gains (including gain to an individual, partnership, corporation or other business entity) that would be in conflict with the use of funds.

(b) Conflicts of Interest.

(1) Boards shall ensure that Boards' contracted workforce service providers comply with:

(A) federal and state statutes and regulations; and

(B) Office of Management and Budget (OMB) circular requirements as applicable, which are available through the Commission and the Governor's Office in the Governor's Uniform Grant Management Standards (UGMS).

(2) Boards shall ensure that Boards' contracted workforce service providers do not give advice or provide services relating to a matter where a real, appearance of, or possible conflict of interest exists unless the applicable Board or Board's designee waives this prohibition in writing.

(A) A conflict of interest exists whenever a Board member or Board staff and contracted workforce service provider have a personal, private, commercial, or business relationship that could reasonably be expected to diminish the independence of judgment of the Board or Board staff in the performance of their responsibilities.

(B) An appearance of a conflict exists if:

(i) an action taken by the Board's contracted workforce service provider reasonably appears to be influenced by considerations of personal gain, gain to an entity or organization for which the person has an employment or other interest, whether direct or indirect (other than those consistent with the terms of the contract); or

(ii) an action is motivated by a design to gain an improper influence over the Commission or the Board.

(C) Boards shall ensure, through the oversight and management of Board policies, that the following persons do not directly deliver one-stop workforce services or determine eligibility for one-stop workforce services:

(i) Board members;

(ii) Board staff; and

(iii) the Board's fiscal agent, if the Board does not act as its fiscal agent consistent with Chapter 2308, Texas Government Code.

(c) Disclosures.

(1) Boards shall ensure that Boards' contracted workforce service providers promptly disclose in writing to the Boards:

(A) any relationship the Boards' contracted workforce service providers have with any party to a transaction with the Commission or the Board other than a relationship necessary to the services performed for the Commission or the Board when a reasonable person may consider a conflict of interest to exist because of that relationship;

(B) all direct or indirect pecuniary interests the Boards' contracted workforce service providers have in any transaction with the Commission or the Board if the transaction is connected with any services and advice provided to the Commission or the Board;

(C) at least annually a statement disclosing each relationship and pecuniary interest described by subsections (b) and (c) of this section, or a statement that no such relationships or pecuniary interests existed during the disclosure period; and

(D) any other potential conflicts of interest, including any business or financial transaction with a member of the Commission or Board or staff of the Commission or Board that is greater than $50 in value within 10 days of the transaction. This obligation does not apply to a financial transaction performed in the course of a contract with the Commission or Board. An account or benefit that is provided to a member of the Commission or Board or staff of the Commission or Board shall be under the same terms and conditions as are provided to members of the general public.

(2) Boards shall ensure that the written disclosures submitted under this subchapter shall also contain actions proposed by the Boards' contract service providers to avoid conflicts of interest.

(3) Boards shall ensure that Boards' contracted workforce service providers submit a revised statement as necessary for promptly updating disclosure information where there are changes in relationships or pecuniary interests.

§801.54.Fiscal Integrity Provisions.

(a) Boards shall develop a Key Control Certification System (Key Control System) for periodically evaluating the financial integrity of contracted workforce service providers and certifying that the contractor has met the minimum requirements of the Board. Boards shall adopt the Key Control System in an open meeting and include Board-approved key control measures designed to evaluate the financial integrity of Boards' contracted workforce service providers.

(b) Boards shall evaluate the Boards' contracted workforce service providers to ensure they meet the requirements of the Boards' key control measures based on the following schedule:

(1) for contracts under $100,000, the key control measures must be verified prior to the award of the contract and at each renewal of the contract;

(2) for contracts between $100,000 and $500,000, the key control measures must be verified prior to the award of the contract, at each renewal of the contract, and not less than biennially; and

(3) for contracts over $500,000, the key control measures must be verified prior to award of the contract, at each renewal of the contract, and not less than once annually.

(c) Along with any Board requirements, the key control measures shall include the following provisions for ensuring that Boards' contracted workforce service providers are meeting performance measures in compliance with requirements contained in:

(1) federal and state statutes and regulations and directives of the Commission;

(2) OMB circulars applicable to the entity, such as OMB Circular A-21, A-87 or A-122, and as supplemented by the Rules promulgated by the Office of the Governor under the Uniform Grant Management Standards (UGMS); and

(3) review and consideration of the contracted workforce service provider's history during the four-year period before the contract with the Board of adverse judgments or any adverse finding (such as administrative findings from an audit or sanction by the Commission, a Board, or a court of law).

(4) any other safeguards chosen by the Boards that are designed to ensure, through oversight and management by the Board, the proper and effective use of funds placed under the control of the Boards' contracted workforce service providers.

(d) The Boards' key control measures may include provisions such as those used by the Commission and located in the Texas Workforce Commission's Financial Manual for Grants and Contracts , as may be amended, such as the review of the Boards' contracted service provider's demonstrated capability to:

(1) account for program income in accordance with Federal regulations;

(2) budget and appropriately allocate resources and revenues;

(3) use and monitor encumbrances;

(4) maintain proper cash management;

(5) properly record, credit, deposit or disburse in a timely manner cash and cash equivalents;

(6) maintain collateral agreements in place that are sufficient to protect balances in excess of Federal Deposit Insurance Corporation (FDIC) coverage;

(7) timely resolve questioned costs and the repayment of disallowed costs by the Boards' contracted workforce service providers;

(8) safeguard fixed assets;

(9) ensure that all purchases are reasonable and necessary;

(10) maintain separate duties as they relate to cash, fixed assets, property, and other Board and Board contracted workforce service provider resources;

(11) properly record fixed assets in the accounting system;

(12) properly authorize payroll expenditures, accurately recording payroll expenditures in a timely manner, and properly classifying those in the correct accounting period;

(13) properly manage, authorize and record travel expenditures that are reasonable and necessary;

(14) retain sufficient supporting documentation regarding authorization of all purchases;

(15) enter only authorized, accurate transactions in the accounting system;

(16) separate the duties of authorizing source documents and the duties of entering records into the accounting system;

(17) retain records in accordance with the applicable rules and regulations; and

(18) conduct audits in accordance with applicable federal circulars and state policies.

(e) Boards shall ensure that Boards' contracted service providers are

(1) required to verify based on the schedule stated in 801.54(b)(1)-(3), or more often as determined appropriate by the Board, that the method of securing or protecting the funds under the control of the Boards' contracted service providers are in force. The appropriate verification processes may include such activities as follows:

(A) verifying that the insurance or bond policy is valid, premiums are paid to date, the company is authorized to provide the bonding or insurance, the company is not in receivership, bankruptcy or some other status that would jeopardize the ability to draw upon the policy,

(B) verifying that escrow account balances are at an appropriate level;

(C) the method of securing the funds has not been withdrawn, drawn upon, obligated for another purpose or no longer valid for use as the method of security, and

(D) other such protections as are applicable and relied upon by the Board are verified as in force;

(2) disclosing to Boards when a change in financial structure or circumstances alters the ability of the Board to rely upon the method of securing or protecting the funds. Examples include:

(A) failure or inability of the Boards' contracted service provider to pay premiums;

(B) the bonding or insurance company is going in receivership, bankruptcy, or insolvency; or

(C) escrow accounts, letters of credit, or other financial security methods being withdrawn, drawn upon, or otherwise used for other purposes or becoming invalid for use as the method of security.

§801.55.Bonding, Insurance and Other Methods of Securing Funds to Cover Losses.

(a) Boards shall ensure that the funds subject to the control of the Boards' contracted workforce service providers are protected through bonds, insurance, escrow accounts, cash on deposit, or other methods to secure the funds consistent with this subchapter. Boards and Boards' contract service providers may, consistent with this section, utilize any method or combination of methods to meet this requirement. At the Board's discretion, the Boards may pay for the bonding, insurance or other protection method directly or require the Boards' contracted workforce service providers, to the extent allowable under state and federal law, to pay for such protections.

(b) The Boards shall ensure that the method of securing funds is available to cover a loss of at least 10% of the funds placed under the control of the Boards' contracted workforce service providers. Funds subject to security include, but are not limited to, funds allocated, granted, distributed, awarded or otherwise provided to the Boards from the Commission and the value of any assets or placed under the control of the Boards' contracted workforce service provider. The Board may set a higher percentage to ensure security of the funds.

(c) In setting the amount, the Board shall evaluate the cost of the bonding, insurance or other protection and the Boards' determination of the risk to be assigned to the Boards' contracted workforce service providers. Boards shall consider such factors as a reasonably prudent Board would consider to ensure the fiscal integrity of the funds placed under the control of the contractor including, but not limited to, the following:

(1) the contractor's history of disallowed costs;

(2) the experience, education, history, and other factors the Board determines are relevant to the evaluation of the principal person in control of the contractor, whether that is an individual sole proprietorship, principal partner in a partnership, chief operating officer of a corporation, or other principal in control of the funds placed under the control of the Boards' contracted workforce service provider; and

(3) any other factor determined appropriate by the Board.

(d) Escrow of funds may also be utilized provided that:

(1) the funds placed in escrow require the signature of persons other than the person with signatory authority for the Boards' contracted workforce service provider;

(2) the funds do not lapse due to requirements for timely expenditure of funds; and

(3) this provision does not conflict with any provision in contract, rule or statute for timely expenditure of workforce funds.

(e) If a bond is used, the Board shall ensure that the bond is executed by a corporate surety or sureties holding certificates of authority, authorized to do business in the State of Texas, and acceptable to the Commission.

§801.56.Prohibition of Directly Delivering Services.

(a) Boards shall not provide direct services or determine eligibility for one-stop workforce services. The Commission shall review a Board's compliance through an examination of the Board's exercise of direction and control over the Board's contract service providers. The Commission may use the factors for testing the employment status as set out in §821.5 of this title. Notwithstanding the provisions contained in §821.5, the Commission shall review compliance on the totality of the circumstances as they exist. The Commission shall also consider any federal and statutory requirements for the performance of certain duties by the Boards and the Boards' contracted workforce service providers.

(b) Boards shall ensure that the Boards' contracted workforce service providers are not employees of the Boards, and Boards' contracted workforce service providers must take appropriate steps to maintain the separation of the authority between the Boards and the Boards' contracted workforce service providers that is consistent with the terms of the applicable contract.

§801.57.Restriction on Contracting with Former Employee.

A Board shall not contract for one-stop workforce services with a former Board member, executive or employee of the Board, or with any person, as defined under Texas Government Code §311.005 (2), business entity, or nonprofit organization, who employs a former Board member, or executive or other employee of the Board, who at any time during the 12 months before the date of the contract was in a position that:

(1) involved decision making regarding the contracting process including, but not limited to, the content of the statement of work, the development of the method of scoring the responses to the request for proposal or otherwise involved in the management of the contract development;

(2) involved developing the substance of the recommendations of or implementation of policy established by the Board; or

(3) creates an appearance of undue influence or conflict of interest.

§801.58.Restrictions on Employing Former Employee of Board, Commission or Board Contracted Workforce Service Provider.

(a) Twelve-month prohibition. Unless otherwise authorized under this subchapter,

(1) a Board shall not employ any individual previously employed by the Commission or a Board's contracted workforce service provider for a period of 12 months following the individual's date of voluntary or involuntary separation from employment with the Commission or a Boards' contracted workforce service provider; and

(2) a Board's contracted workforce service provider shall not employ any individual previously employed by the Commission or a Board for a period of 12 months following the individual's date of voluntary or involuntary separation from employment with the Commission or a Board.

(b) Permanent prohibition related to a particular matter. Any individual who has previously been employed by a Board or the Commission may not:

(1) represent any of the following in any matter before the Board or the Commission:

(A) a person, as defined under Texas Government Code §311.005(2),

(B) a business entity, or

(C) a nonprofit entity; or

(2) receive compensation for services rendered on behalf of any person, business entity or nonprofit entity regarding a "particular matter" in which the individual participated during the period of employment with a Board, a Board's contracted workforce service provider, or the Commission either through personal involvement or because the case or proceeding was a matter within the individual's responsibility.

(d) For purposes of subsection (b),

(1) "participated" means to have taken action as a Board or Commission employee through decision, approval, disapproval, recommendation, giving advice, investigation, or similar action; and

(2) "particular matter" means a specific investigation, application, request for a ruling or determination, rulemaking proceeding, administrative proceeding, contract, claim, or judicial proceeding or other proceeding.

(c) Local policies. A Board shall ensure that the Boards' contracted service providers establish a revolving door personnel policy consistent with this section.

§801.59.Exceptions.

(a) Notwithstanding the provisions in this subchapter, the Commission may provide for exceptions to this subchapter to the extent necessary to address one or more of the following:

(1) requests from a Board or former employee of a Board or the Commission in order that a sufficient number of providers and qualified staff is available in the workforce area to provide workforce services;

(2) requests from a Board due to emergency situations to resolve contracting for emergency services to ensure full and efficient utilization of Commission funds;

(3) circumstances that were unforeseen or beyond the control of the Board or Board's contracted workforce service provider, such as flooding, natural disaster, or other weather-related breakdowns in services; or

(4) any other act that the Commission determines may jeopardize the fiscal integrity of a Board or contracted workforce service provider.

(b) Notwithstanding the provisions in this subchapter, the Commission may waive one or more of the provisions in this subchapter if the Commission determines that no conflict of interest exists.

§801.60.Enforcement.

The Commission may impose corrective actions, up to and including sanctions upon the Boards and the Boards' contracted workforce service providers, for failing to adhere to provisions of the contract or this subchapter.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 23, 2003.

TRD-200308891

John D. Moore

General Counsel

Texas Workforce Commission

Earliest possible date of adoption: February 8, 2004

For further information, please call: (512) 463-2238