Regular Session
Government Affairs & Regulatory Compliance Analysis
Senate Bill 1038 fundamentally alters Texas Medicaid liability by removing the "specific intent" requirement for fraud, replacing it with a lower standard of "reckless disregard" or "conscious indifference. " Effective September 1, 2025, this legislation exposes all Medicaid-connected entities—including MCOs, direct providers, and billing vendors—to treble damages and administrative penalties of up to $15,000 per violation for errors previously considered clerical.
Sen. Kevin Sparks·Senate Bill·Regular Session
HHSC Office of Inspector General (OIG) • Texas Attorney General (for collection/enforcement) • Texas Health and Human Services Commission (HHSC)
This legislation has regulatory implications for the following Texas businesses and organizations:
Significant regulatory changes (effective 2025-09-01). Review with your legal and compliance teams to understand implications.
Affected business types:
highSignificant operational investment may be required.
JD Key Consulting provides government affairs and regulatory strategy services. We help businesses navigate Texas agencies, understand legislative impacts, and advocate for their interests.
JD Key Consulting provides strategic guidance on Texas regulatory compliance and legislative impact for your business.
Key implementation requirements and action items for compliance with this legislation
JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.
Schedule a ConsultationInformation presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.
This bill's path through the Texas Legislature
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Common questions about SB1038
Senate Bill 1038 fundamentally alters Texas Medicaid liability by removing the "specific intent" requirement for fraud, replacing it with a lower standard of "reckless disregard" or "conscious indifference. " Effective September 1, 2025, this legislation exposes all Medicaid-connected entities—including MCOs, direct providers, and billing vendors—to treble damages and administrative penalties of up to $15,000 per violation for errors previously considered clerical.
SB1038 was authored by Texas Senator Kevin Sparks during the Regular Session.
SB1038 was signed into law by Governor Greg Abbott on May 13, 2025.
SB1038 is enforced by HHSC Office of Inspector General (OIG), Texas Attorney General (for collection/enforcement) and Texas Health and Human Services Commission (HHSC).
The regulatory priority for SB1038 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.
The cost impact of SB1038 is estimated as "high". This may vary based on industry and implementation requirements.
SB1038 addresses topics including civil remedies & liabilities, human services, human services--medical assistance, fraud and medicaid.
Key dates for SB1038: Effective date is 2025-09-01. Rulemaking: Adopt rules establishing a grace period for correcting errors in commission-prepared vouchers without penalty. (Prior to enforcement (implied)). Consult with legal counsel regarding applicability.
SB1038 establishes the following penalties: administrative penalty of Recoupment + Interest + 2x Damages + $5,000-$15,000 per violation for Medicaid fraud/abuse resulting in injury to an elderly person, person with a disability, or minor.; administrative penalty of Recoupment + Interest + 2x Damages + Up to $10,000 per violation for Medicaid fraud/abuse violations not resulting in injury to vulnerable populations.; administrative penalty of Recoupment of claim OR up to $500 per violation for Failure to maintain documentation to support a claim (technical/clerical violations).. Consult with legal counsel for specific applicability to your situation.
SB1038 primarily affects healthcare providers and medical facilities. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.
JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.
