Campbell’s AI Discrimination Ban Exempts Algorithms That ‘Appropriately’ Decide

The text as introduced · 1,596 words

89R849 SCL-F

By: Campbell
S.B. No. 1411

A BILL TO BE ENTITLED

AN ACT

relating to the use of artificial intelligence-based algorithms by

health benefit plan issuers, utilization review agents, health care

providers, and physicians.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 544, Insurance Code, is amended by

adding Subchapter O to read as follows:

SUBCHAPTER O. ARTIFICIAL INTELLIGENCE USE

Sec. 544.701. DEFINITIONS. In this subchapter:

(1) "Adverse determination" has the meaning assigned

by Section 4201.002.

(2) "Artificial intelligence-based algorithm" means

any artificial system that:

(A) performs tasks under varying and

unpredictable circumstances without significant human oversight;

or

(B) is able to learn from experience and improve

performance when exposed to data sets.

(3) "Enrollee" means an individual entitled to

coverage under a health benefit plan.

(4) "Health benefit plan" means a plan that provides

benefits for medical, surgical, or other treatment expenses

incurred as a result of a health condition, a mental health

condition, an accident, sickness, or substance abuse, including an

individual, group, blanket, or franchise insurance policy or

insurance agreement, a group hospital service contract, or an

individual or group evidence of coverage or similar coverage

document.

(5) "Health benefit plan issuer" means an insurance

company, association, organization, group hospital service

corporation, or health maintenance organization that delivers or

issues for delivery a health benefit plan. The term includes:

(A) a life, health, and accident insurance

company operating under Chapter 841 or 982;

(B) a general casualty insurance company

operating under Chapter 861;

(C) a statewide mutual assessment company

operating under Chapter 881;

(D) a mutual life insurance company operating

under Chapter 882;

(E) a mutual insurance company operating under

Chapter 883 that writes coverage other than life insurance;

(F) a stipulated premium company operating under

Chapter 884;

(G) a fraternal benefit society operating under

Chapter 885;

(H) a local mutual aid association operating

under Chapter 886;

(I) a mutual assessment company or mutual

assessment life, health, and accident association operating under

Chapter 887;

(J) a Lloyd's plan operating under Chapter 941;

and

(K) a reciprocal exchange operating under

Chapter 942.

(6) "Health care," "health care provider," "medical

care," and "physician" have the meanings assigned by Section

74.001, Civil Practice and Remedies Code.

(7) "Specialist" means a physician or health care

provider whose practice is not limited to primary medical or health

care services and who has additional postgraduate or specialized

training, has board certification, or practices in a licensed

specialized area of medicine or health care.

(8) "Utilization review" and "utilization review

agent" have the meanings assigned by Section 4201.002.

Sec. 544.702. PROHIBITED DISCRIMINATION. (a) A health

benefit plan issuer may not discriminate on the basis of race,

color, national origin, gender, age, vaccination status, or

disability through the use of clinical artificial

intelligence-based algorithms in the issuer's decision making.

(b) This section does not prohibit the use of clinical

artificial intelligence-based algorithms that rely on variables to

appropriately make decisions, including to identify, evaluate, and

address medical or health care.

Sec. 544.703. DISCLOSURE OF UTILIZATION REVIEW USE. A

health benefit plan issuer shall publish on a publicly accessible

part of the issuer's Internet website and provide in writing to each

enrollee, and any physician or health care provider contracting

with the issuer or providing services to an enrollee, a disclosure

regarding whether the issuer uses or may use artificial

intelligence-based algorithms in the issuer's utilization review

process.

Sec. 544.704. SUBMISSION OF ALGORITHM AND TRAINING DATA TO

DEPARTMENT. (a) A health benefit plan issuer shall submit an

artificial intelligence-based algorithm and training data sets

that are used or may be used in the issuer's utilization review

process to the department in the form and manner prescribed by the

commissioner.

(b) The commissioner shall develop and implement a process

for the department to certify that an artificial intelligence-based

algorithm and related data sets submitted to the department under

Subsection (a) have minimized the risk of discrimination prohibited

by Section 544.702 and adhere to evidence-based clinical

guidelines.

Sec. 544.705. UTILIZATION REVIEW BY SPECIALIST REQUIRED. A

utilization review agent that uses artificial intelligence-based

algorithms to perform an initial review shall require that a

specialist open and document the utilization review of an

individual's clinical records or data before making an adverse

determination against that individual.

Sec. 544.706. ANNUAL CONSUMER REPORT CARDS. (a) The office

of public insurance counsel shall include in the office's annual

consumer report cards developed and issued under Section 501.252

information identifying and comparing, on an objective basis, the

use of artificial intelligence-based algorithms by health benefit

plan issuers and utilization review agents in this state.

(b) The department and the Health and Human Services

Commission shall collaborate with and provide assistance to the

office of public insurance counsel in developing the information

required by this section to be included in the annual consumer

report cards.

SECTION 2. Subtitle A, Title 3, Occupations Code, is

amended by adding Chapter 117 to read as follows:

CHAPTER 117. USE OF ARTIFICIAL INTELLIGENCE

Sec. 117.001. DEFINITIONS. In this chapter:

(1) "Artificial intelligence-based algorithm" has the

meaning assigned by Section 544.701, Insurance Code.

(2) "Commission" means the Health and Human Services

Commission.

(3) "Health care," "health care provider," "medical

care," and "physician" have the meanings assigned by Section

74.001, Civil Practice and Remedies Code.

Sec. 117.002. PROHIBITED DISCRIMINATION. (a) A physician

or health care provider may not discriminate on the basis of race,

color, national origin, gender, age, vaccination status, or

disability through the use of clinical artificial

intelligence-based algorithms when providing a medical or health

care service.

(b) This section does not prohibit the use of clinical

artificial intelligence-based algorithms that rely on variables to

appropriately make decisions, including to identify, evaluate, and

address medical or health care.

Sec. 117.003. OVERSIGHT. The office of inspector general

for the commission shall conduct investigations into fraud and

abuse related to use of artificial intelligence-based algorithms in

medical or health care and violations of this chapter.

Sec. 117.004. NOTICE OF VIOLATION OR UNSUBSTANTIATED

COMPLAINT. (a) Not later than the 15th day after the date the

inspector general determines that a violation of this chapter has

occurred, the inspector general shall provide written notice by

certified mail to the affected physician or health care provider

that:

(1) includes:

(A) a brief summary of the alleged violation; and

(B) a statement of the recommended penalty and

administrative action; and

(2) informs the physician or provider of the

physician's or provider's right to a hearing.

(b) A physician or health care provider must submit a

written request for a hearing not later than the 30th business day

after the date the physician or provider receives the notice

described by Subsection (a).

(c) Not later than the 10th day after the date the inspector

general determines that a violation of this chapter has not

occurred after receiving a complaint, the inspector general shall

provide written notice to the affected physician or health care

provider of findings that the allegations in the complaint are not

substantiated.

Sec. 117.005. ENFORCEMENT. (a) Subject to this section, a

physician or health care provider who violates this chapter is

subject to:

(1) suspension or revocation of the physician's or

provider's license, certificate, or other authority to provide

medical or health care services in this state;

(2) refusal, for a period not to exceed one year, to

issue a new license, certificate, or other authority to provide

medical or health care services in this state to the physician or

provider;

(3) a fine of not more than $5,000 for each violation;

(4) a fine of not more than $10,000 for each

intentional violation; or

(5) a combination of the penalties described by

Subdivisions (1), (2), (3), and (4).

(b) A fine imposed under Subsection (a) may not exceed

$50,000 in the aggregate during a single calendar year.

(c) Sanctions provided by this section are in addition to

any other sanction provided by this code or other applicable laws,

including:

(1) Chapter 106, Civil Practice and Remedies Code;

(2) Chapter 81D, Health and Safety Code; or

(3) a civil rights law.

Sec. 117.006. PUBLIC AWARENESS AND EDUCATION CAMPAIGN. (a)

The commission, in consultation with the Texas Department of

Insurance, shall develop and implement a public awareness and

education campaign designed to educate the public on:

(1) a person's rights with respect to the use of, and

the limits on the use of, artificial intelligence-based algorithms

in connection with medical and health care and health benefits;

(2) the value and availability of artificial

intelligence-based algorithms, and their limitations, in

connection with medical and health care and health benefits; and

(3) the method for reporting allegations of wrongdoing

related to the use of artificial intelligence-based algorithms in

connection with medical and health care and health benefits.

(b) The commission may coordinate the implementation of the

campaign with any other state outreach campaign or activity

relating to artificial intelligence-based algorithms.

SECTION 3. The provisions of this Act are severable, and if

any provision of this Act or the application of the provision to any

person or circumstance is declared invalid for any reason, the

declaration does not affect the validity of the remaining portions

of this Act.

SECTION 4. (a) Subchapter O, Chapter 544, Insurance Code,

as added by this Act, applies only to a health benefit plan

delivered, issued for delivery, or renewed on or after January 1,

2026.

(b) Chapter 117, Occupations Code, as added by this Act,

applies only to a medical or health care service provided on or

after January 1, 2026.

SECTION 5. This Act takes effect September 1, 2025.