Relating to peace officers commissioned by the Health and Human Services Commission's office of inspector general.
LowStandard timeline
Low Cost
Effective:2025-09-01
Enforcing Agencies
Health and Human Services Commission (HHSC) Office of Inspector General • State Auditor's Office
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: September 1, 2025
Compliance Deadline:August 1, 2025 (Recommended internal deadline to update Site Visit Protocols before the law goes live).
Agency Rulemaking: While no external rulemaking is mandated for providers, the agency will undergo internal restructuring in late 2025. Expect a "regulatory gray zone" between Sept 2025 and Sept 2026 as the OIG recruits more aggressive, law-enforcement-oriented personnel.
Immediate Action Plan
1.Update Site Visit Protocols: Revise your crisis management plan to include specific procedures for law enforcement interactions (search warrants/subpoenas) by August 1, 2025.
2.Audit Insurance Coverage: Contact your broker to verify that your D&O and Cyber liability policies cover defense costs for criminal proceedings initiated by state agencies.
3.Train Key Personnel: Conduct role-specific training for receptionists and facility managers on how to interact with armed state agents.
4.Review Billing Vendor Contracts: Ensure your third-party billers indemnify you for errors that could be construed as criminal fraud.
Operational Changes Required
Contracts
Vendor Agreements: Review indemnification clauses with third-party billing companies. Ensure protections are in place if a vendor's error triggers a criminal fraud investigation by the OIG.
Insurance Policies: Immediately review Directors and Officers (D&O) liability coverage. Ensure the policy covers defense costs for criminal investigations, not just civil regulatory matters, as OIG inquiries may now carry criminal weight.
Hiring/Training
Front Desk Protocols: Reception staff must be retrained to distinguish between civilian auditors and commissioned peace officers. They must know how to identify a badge/commission and whom to notify immediately.
Legal Escalation: Establish a "Dawn Raid" protocol. If an OIG officer presents a badge or search warrant, General Counsel must be notified instantly. Staff must understand their rights regarding interviews with law enforcement versus administrative auditors.
Reporting & Record-Keeping
Privilege Logs: Maintain rigorous attorney-client privilege designations on internal compliance audits. If OIG executes a search warrant, clear privilege logs are your primary defense against total data seizure.
Audit Trails: Ensure Electronic Health Records (EHR) and billing systems maintain unalterable audit trails to prove data integrity during a criminal probe.
Fees & Costs
No Direct Fees: The bill does not impose new filing fees.
Indirect Costs: Anticipate potential increases in liability insurance premiums due to the heightened enforcement environment.
Strategic Ambiguities & Considerations
Scope of Authority: The law does not clearly delineate when OIG officers should use police powers (arrests/warrants) versus administrative powers. Watch for "scope creep" where OIG uses the threat of criminal sanction to force settlements in administrative billing disputes.
Jurisdictional Overlap: It is unclear how the emboldened OIG will coordinate with the Attorney General’s Medicaid Fraud Control Unit (MFCU). Businesses should watch for potential duplicative investigations from both agencies.
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The duties of Office of Inspector General (OIG) peace officers include conducting criminal investigations related to abuse, neglect, and exploitation at state hospitals and state supported living centers. They also investigate allegations of misuse, or trafficking of Supplemental Nutrition Assistance Program benefits, and work jointly with other law enforcement agencies across the state to apprehend and prosecute individuals attempting to defraud state health and human service programs.
The OIG employs 37 peace officers. They are required to have a minimum of 10 years of experience, with the current average being 27 years. Most OIG peace officers hold a college degree and a master peace officer license. There is inequality in the compensation of peace officers employed by the OIG and officers employed by other state law enforcement agencies.
On average, OIG peace officers are compensated at approximately 42% less than the equivalent rank of other state peace officers.
S.B. 502 ensures that commissioned peace officers employed by the OIG are paid according to Schedule C, which governs commissioned law enforcement positions. The bill provides OIG peace officers hazardous duty pay and injury leave consistent with benefits provided to other state law enforcement officers.
Additionally, S.B. 502 amends the Code of Criminal Procedure to add OIG peace officers to the list of peace officers in Article 2A.001. This is a technical change and does not impact OIG operations.
S.B. 502 will improve the OIG's ability to offer competitive salaries and to attract and retain qualified professionals in these positions. The bill does not grant any additional rulemaking authority to peace officers.
As proposed, S.B. 502 amends current law relating to peace officers commissioned by the Health and Human Services Commission's office of inspector general.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Article 2A.001, Code of Criminal Procedure, to include an officer commissioned and employed by the Health and Human Services Commission's (HHSC) office of inspector general among the persons who are peace officers.
SECTION 2. Amends Section 544.0107, Government Code, as effective April 1, 2025, by adding Subsection (d), to require the office of inspector general to ensure a peace officer employed under Section 544.0107 (Employment of Peace Officers) is compensated according to Schedule C of the position classification salary schedule prescribed by the General Appropriations Act.
SECTION 3. Amends Section 659.301(5), Government Code, to redefine "state employee."
SECTION 4. Amends Section 661.918(a), Government Code, to provide that Section 661.918 (Injury Leave for Certain Peace Officers) applies to a peace officer under Article 2A.001 (Peace Officers Generally), Code of Criminal Procedure, who is commissioned as a law enforcement officer or agent, including a ranger, by certain entities, including HHSC's office of inspector general.
SECTION 5. (a) Requires the classification officer in the office of the state auditor to classify the position of commissioned peace officer employed as an investigator by HHSC's office of inspector general as a Schedule C position under the position classification plan maintained under Chapter 654 (Position Classification), Government Code.
(b) Provides that the change made by the classification officer as required by this section applies beginning with the state fiscal biennium beginning September 1, 2025.
(c) Provides that this section expires September 1, 2027.
SECTION 6. Makes application of Section 661.918(a), Government Code, as amended by this Act, prospective.
Honorable Lois W. Kolkhorst, Chair, Senate Committee on Health & Human Services
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
SB502 by Perry (Relating to peace officers commissioned by the Health and Human Services Commission's office of inspector general.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB502, As Introduced: a negative impact of ($3,584,686) through the biennium ending August 31, 2027.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
($2,062,631)
2027
($1,522,055)
2028
($1,522,055)
2029
($1,522,055)
2030
($1,522,055)
All Funds, Five-Year Impact:
Fiscal Year
Probable Savings/(Cost) from General Revenue Fund 1
Probable Savings/(Cost) from GR Match For Medicaid 758
Probable Savings/(Cost) from Federal Funds 555
2026
($1,823,252)
($239,379)
($240,960)
2027
($1,352,938)
($169,117)
($169,117)
2028
($1,352,938)
($169,117)
($169,117)
2029
($1,352,938)
($169,117)
($169,117)
2030
($1,352,938)
($169,117)
($169,117)
Fiscal Analysis
The bill would require the Health and Human Services Commission's (HHSC) Office of Inspector General (OIG) to compensate peace officers according to Schedule C of the position classification salary schedule included in the General Appropriations Act. The bill would take effect September 1, 2025.
Methodology
According to HHSC, additional funding is needed to provide for increased salaries for current positions at OIG that would be reclassed to the Schedule C Classification Salary Schedule. Based on information provided by the agency compared to the maximum salary permitted by the Schedule C Classification Salary Schedule in Senate Bill 1, as introduced, this analysis assumes an additional $1,691,172 in All Funds is needed each fiscal year to reclassify 37 current positions from the Schedule B Classification Salary Schedule to the Schedule C Classification Salary Schedule, including employee benefits and related salary pay.
Technology
The total technology cost is estimated to be $612,419 in All Funds in fiscal year 2026. Costs are primarily related to one-time upgrades to the Centralized Accounting and Payroll/Personnel System (CAPPS).
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies:
529 Health and Human Services Commission
LBB Staff:
JMc, NPe, ER, NT, NV
Related Legislation
Explore more bills from this author and on related topics
SB502 transforms the HHSC Office of Inspector General (OIG) from an administrative auditing body into a professionalized law enforcement agency by granting investigators full peace officer status and "Schedule C" law enforcement pay. This change affects all Medicaid/CHIP providers, signaling a shift toward criminal prosecution over civil recoupment and requiring immediate updates to corporate incident response protocols. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: August 1, 2025 (Recommended internal deadline to update Site Visit Protocols before the law goes live).
Q
Who authored SB502?
SB502 was authored by Texas Senator Charles Perry during the Regular Session.
Q
When was SB502 signed into law?
SB502 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce SB502?
SB502 is enforced by Health and Human Services Commission (HHSC) Office of Inspector General and State Auditor's Office.
Q
How urgent is compliance with SB502?
The compliance urgency for SB502 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of SB502?
The cost impact of SB502 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does SB502 address?
SB502 addresses topics including health, health--general, law enforcement, peace officers and health & human services commission.
Legislative data provided by LegiScanLast updated: November 25, 2025
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