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TO ENACT THE "SOUTH CAROLINA HEALTH AND HUMAN SERVICES REORGANIZATION AND ACCOUNTABILITY ACT OF 2003"; TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 3 TO CHAPTER 30, TITLE 1 SO AS TO ESTABLISH THE OFFICE OF CHILDREN'S SERVICES WITHIN THE DEPARTMENT OF HEALTH AND HUMAN SERVICES AND TO TRANSFER TO THIS OFFICE THE CHILDREN'S CASE RESOLUTION SYSTEM, CERTAIN SECTIONS OF THE CONTINUUM OF CARE FOR EMOTIONALLY DISTURBED CHILDREN TO THE DEPARTMENT OF ALCOHOL AND OTHER DRUG ABUSE SERVICES, INPATIENT ALCOHOL AND DRUG SERVICES FROM THE DEPARTMENT OF MENTAL HEALTH AND CERTAIN ALCOHOL AND DRUG TREATMENT FACILITIES OPERATED BY THE STATE AGENCY OF VOCATIONAL REHABILITATION UPON APPROVAL OF A PLAN, TO TRANSFER THOSE SECTIONS OF THE CONTINUUM OF CARE FOR EMOTIONALLY DISTURBED CHILDREN RESPONSIBLE FOR CLIENT AND FAMILY SERVICES TO THE DEPARTMENT OF MENTAL HEALTH, TO TRANSFER THE SOUTH CAROLINA COMMISSION FOR THE BLIND TO THE STATE AGENCY OF VOCATIONAL REHABILITATION, TO ABOLISH THE BOARD OF THE COMMISSION FOR THE BLIND AND TO TRANSFER ITS DUTIES TO THE STATE AGENCY FOR VOCATIONAL REHABILITATION, AND TO ABOLISH THE SOUTH CAROLINA MENTAL HEALTH COMMISSION AND TO TRANSFER ITS DUTIES TO THE DEPARTMENT OF MENTAL HEALTH AND TO PROVIDE TRANSFER AND TRANSITION PROVISIONS; TO ADD ARTICLE 5 TO CHAPTER 30, TITLE 1 SO AS TO ESTABLISH THE DEPARTMENT OF INFORMATION TECHNOLOGY FOR HEALTH AND HUMAN SERVICES AGENCIES AND TO PROVIDE FOR ITS POWERS AND DUTIES, INCLUDING THE MANAGEMENT AND ADMINISTRATION FOR ALL INFORMATION TECHNOLOGIES ASSOCIATED WITH THESE AGENCIES AND THE APPROVAL OF INFORMATION TECHNOLOGIES EXPENDITURES; TO ADD CHAPTER 64 TO TITLE 2 SO AS TO ESTABLISH THE JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON MEDICAID AND HEALTH AND TO PROVIDE FOR ITS MEMBERSHIP, FUNCTIONS, DUTIES, AND RESPONSIBILITIES INCLUDING, AMONG OTHER THINGS, TO APPROVE REORGANIZATION PLANS AND TO REVIEW THE STATE MEDICAID PLAN; TO ADD ARTICLE 8 TO CHAPTER 6, TITLE 44 SO AS TO ESTABLISH THE STATE OFFICE OF MEDICAID AND HEALTH CARE AUDITS FOR THE DEPARTMENT OF HEALTH AND HUMAN SERVICES, TO PROVIDE THAT THE AUDIT DIRECTOR MUST BE APPOINTED BY AND UNDER THE DIRECTION OF THE JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON MEDICAID AND HEALTH CARE, AND TO FURTHER PROVIDE FOR THE POWERS AND DUTIES OF THE AUDIT DIRECTOR, INCLUDING CONDUCTING AUDITS, PREVENTING WASTE, AND PROMOTING ACCOUNTABILITY; TO ADD SECTION 12-2-100 SO AS TO REQUIRE THE DEPARTMENT OF REVENUE TO PROVIDE THE DEPARTMENT OF HEALTH AND HUMAN SERVICES ELECTRONIC ACCESS TO TAXPAYER INFORMATION TO USE IN DETERMINING MEDICAID ELIGIBILITY; TO ADD SECTION 44-6-105 SO AS TO REQUIRE THE STATE LEGISLATIVE OVERSIGHT COMMITTEE ON MEDICAID AND HEALTH CARE TO REVIEW CHANGES TO MEDICAID ELIGIBILITY REQUIREMENTS; TO ADD SECTION 44-6-108 SO AS TO REQUIRE THE DEPARTMENT OF HEALTH AND HUMAN SERVICES TO REPORT MEDICAID BENEFICIARIES NOT MAKING REQUIRED PAYMENTS TO THE STATE LEGISLATIVE OVERSIGHT COMMITTEE ON MEDICAID AND HEALTH CARE; TO ADD SECTION 38-71-270 SO AS TO REQUIRE HEALTH INSURERS TO PROVIDE NAMES AND IDENTIFYING INFORMATION ON THEIR INSUREDS TO BE USED BY THE DEPARTMENT OF HEALTH AND HUMAN SERVICES IN DETERMINING MEDICAID ELIGIBILITY; TO ADD SECTION 44-6-75 SO AS TO PROVIDE FOR A MEDICAID COST CONTAINMENT ACTION PLAN FOR THE PROJECTED EXPENDITURES FOR THE STATE MEDICAID PROGRAM FOR THE NEXT FISCAL YEAR AND TO PROVIDE FOR THE CONTENTS OF THE PLAN AND FOR ALTERNATIVE MEASURES WHEN REVENUE IS NOT SUFFICIENT TO ADEQUATELY FUND THE MEDICAID PROGRAM; TO ADD SECTION 44-6-120 SO AS TO ESTABLISH THE SOUTH CAROLINA MEDICAID MANDATORY MANAGED CARE PILOT PROGRAM TO BE IMPLEMENTED BY THE DEPARTMENT OF HEALTH AND HUMAN SERVICES IN CHARLESTON, FLORENCE, GREENVILLE, HORRY, AND RICHLAND COUNTIES AND ONE RURAL COUNTY TO BE DESIGNATED BY THE DEPARTMENT FOR FIVE YEARS TO ENROLL MEDICAID RECIPIENTS IN A HEALTH MAINTENANCE ORGANIZATION OR WITH PRIMARY CARE CASE MANAGEMENT PROVIDERS AND TO INCLUDE PROVISIONS TO ENSURE COMPETITION, ACCOUNTABILITY, AND ACTUARIAL SOUNDNESS; TO ADD SECTION 44-6-125 SO AS TO REQUIRE THE DEPARTMENT OF HEALTH AND HUMAN SERVICES TO IMPLEMENT A PILOT PROJECT TO EVALUATE THE VIABILITY OF PRIVATIZING THE MEDICAID ELIGIBILITY PROCESS; TO ESTABLISH THE TASK FORCE ON EMERGENCY ROOM DIVERSION TO STUDY INAPPROPRIATE EMERGENCY ROOM USE AND TO MAKE RECOMMENDATIONS TO REDUCE SUCH USE; TO ADD SECTION 44-7-75 SO AS TO REQUIRE THE DEPARTMENT OF HEALTH AND HUMAN SERVICES TO CONTRACT FOR THE MANAGEMENT AND OPERATION OF CERTAIN NURSING HOMES FORMERLY UNDER THE DEPARTMENT OF MENTAL HEALTH; TO ADD SECTION 12-21-625 SO AS TO IMPOSE A SURTAX ON CIGARETTES IN AN AMOUNT EQUAL TO 2.1 CENTS PER PACKAGE, TO CREDIT THIS TAX TO THE MEDICAID SERVICES FUND, TO PROVIDE FOR THE USE OF THESE FUNDS, AND TO FURTHER PROVIDE THAT FIFTY PERCENT OF THESE FUNDS MUST BE USED TO OFFSET REDUCTIONS IN OTHER STAT-IMPOSED TAXES AND FEES INCLUDING, BUT NOT LIMITED TO, OFFSETTING REDUCTIONS IN STATE INDIVIDUAL INCOME TAXES; TO REQUIRE THE DIRECTOR OF THE LEGISLATIVE AUDIT COUNCIL TO EMPLOY AUDITORS NECESSARY TO PERFORM AUDITS ON DEPARTMENTS AFFECTED IN THIS ACT; AND TO DESIGNATE SECTIONS 1-30-10 THROUGH 1-30-120 AS ARTICLE 1, CHAPTER 30, TITLE 1 AND NAMED "DEPARTMENTS OF STATE GOVERNMENT". TO ADD SUBARTICLES 2, 3, AND 4 SO AS TO PROVIDE FOR TAX STAMPS ON CIGARETTE PACKAGES AS INDICIA OF TAX PAYMENT, TO DEFINE CERTAIN TERMS, TO PROVIDE FOR TAXING OF CIGARETTES SOLD TO OR RECEIVED BY NONTRIBAL MEMBERS ON INDIAN LANDS, TO REQUIRE LICENSING TO OPERATE AS A CIGARETTE MANUFACTURER, IMPORTER, DISTRIBUTOR OR RETAILER, AND TO PROVIDE CRITERIA FOR LICENSING, TO CONTINUE THE LICENSING REQUIREMENTS FOR A PERSON DEALING IN OTHER TOBACCO PRODUCTS, TO REQUIRE THE APPLICATION OF A TAX STAMP TO A CIGARETTE PACKAGE INTENDED FOR SALE AND A TAX-EXEMPT STAMP ON OTHER CIGARETTE PACKAGES, TO PROVIDE TIME, REPORTING, AND SHIPPING REQUIREMENTS FOR STAMPED CIGARETTE PACKAGES, ALLOW WARRANTLESS INSPECTIONS BY THE DEPARTMENT OF REVENUE TO DETERMINE COMPLIANCE, TO PROVIDE FOR ADMINISTRATIVE FINES AND FORFEITURE OF CIGARETTES FOR DEFRAUDING THE STATE OR OTHERWISE FAILING TO COMPLY WITH THE SUBARTICLE, AND TO PROVIDE FOR CRIMINAL PENALTIES INCLUDING FINES, IMPRISONMENT, LICENSE REVOCATION, AND FORFEITURE FOR DEALING IN COUNTERFEIT CIGARETTES; TO PROVIDE PROCEDURES TO PREVENT VIOLATIONS AND ASSIST ENFORCEMENT OF THE TOBACCO ESCROW FUND ACT AND ADD SAFEGUARDS TO THE COMPLIANCE WITH THE MASTER SETTLEMENT AGREEMENT, INCLUDING CERTIFIED REPORTING REQUIREMENTS FOR PARTICIPATING AND NONPARTICIPATING MANUFACTURERS, PRODUCTION OF A WEBSITE FOR PUBLIC ACCESS TO NAMES AND BRAND FAMILIES OF MANUFACTURERS MEETING THE CERTIFICATION CRITERIA, PROHIBITION OF THE APPLICATION OF TAX STAMPS TO A PRODUCT WHOSE BRAND FAMILY DOES NOT APPEAR ON THE LIST, REQUIREMENT OF SALES REPORTS BY BRAND FAMILY, PROVISION OF LICENSE REVOCATION, FINES, INJUNCTIVE RELIEF, AND FORFEITURE FOR NONCOMPLIANCE, AND MAKING NONCOMPLIANCE AN UNFAIR AND DECEPTIVE TRADE PRACTICE; TO REGULATE THE DELIVERY SALES OF CIGARETTES BY PROVIDING AGE VERIFICATION, DISCLOSURE, SHIPPING, REGISTRATION, REPORTING, AND TAX COLLECTION REQUIREMENTS IN CONNECTION WITH A CIGARETTE SALE TO A CONSUMER AS THE RESULT OF A TELECOMMUNICATED ORDER OR DELIVERY BY THE MAILS OR OTHER DELIVERY SERVICE, AND TO PROVIDE FOR FINES AND INJUNCTIVE RELIEF FOR NONCOMPLIANCE; TO AMEND SECTION 12-21-2975, RELATING TO CONFISCATED PRODUCTS DONATED TO THE DEPARTMENT OF MENTAL HEALTH FOR PATIENT USE, SO AS TO DELETE CIGARETTES; TO DESIGNATE SECTIONS 1-30-10 THROUGH 1-30-120 AS ARTICLE 1, CHAPTER 30, TITLE 1 ENTITLED "DEPARTMENTS OF STATE GOVERNMENT" AND TO DESIGNATE SECTIONS 12-21-610 THROUGH 12-21-810 AS SUBARTICLE 1, ARTICLE 5, CHAPTER 21, TITLE 12 AND TO REPEAL SECTIONS 12-21-2870, RELATING TO CONFISCATION AND SALE OF UNSTAMPED CIGARETTES, AND 44-9-30.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. This act may be cited as the "Health and Human Services Reorganization and Accountability Act of 2003".
SECTION 2. Chapter 30, Title 1 of the 1976 Code is amended by adding:
Section 1-30-310. (A) Notwithstanding any other provision of law, and after approval, pursuant to Section 1-30-330, of plans required by this article to be submitted to the Joint Legislative Oversight Committee on Medicaid and Health Care, the following agencies, boards, and commissions, including all of the allied, advisory, affiliated, or related entities as well as the employees, funds, property, and all contractual rights and obligations associated with these agencies, except for those subdivisions or sections of agencies not specifically transferred to another department, are transferred in accordance with the following:
(1) There is established within the Department of Health and Human Services the Office of Children's Services. The director of the department shall employ a director for this office who shall serve at the pleasure of the director of the department. This office is responsible for policy, development, planning, and licensing and monitoring of children's services of those programs within it's jurisdiction. The Director of the Office of Children's Services is responsible for licensing, monitoring, providing technical assistance, and training for all providers of public and private group homes, residential treatment facilities, and other out of home therapeutic placements for children in the State. The director is responsible for providing for an effective and efficient system of services for emotionally disturbed children. The director shall provide for streamlined systems of licensing and monitoring providers while not compromising safety and quality of programs. The director is responsible for a direct billing system between providers and the department for all Medicaid residential, room, and board, and 'WRAP' services for children in the State. The following are transferred to the Office of Children's Services:
(a) the Governor's Office, Children's Case Resolution System, as provided for in Article 19, Chapter 7, Title 20;
(b) those sections of the Governor's Office, Continuum of Care For Emotionally Disturbed Children responsible for the program's policy development and oversight;
(c) those sections of the Department of Social Services responsible for licensing and monitoring group homes and other out of home placements for children;
(d) those sections of the Department of Health and Environmental Control responsible for licensing residential treatment facilities and other out of home placement for children.
(2) There is established within the Department of Health and Human Services the Office of Alcohol and Other Drug Abuse Services. The director of the department shall employ a director for this office who shall serve at the pleasure of the director of the department. The following are transferred to the Office of Alcohol and Other Drug Abuse Services:
(a) the Department of Alcohol and other Drug Abuse Services, as provided for in Chapter 49, Title 44;
(b) the inpatient alcohol and drug treatment facility operated by the Department of Mental Health;
(c) The alcohol and treatment facilities of the South Carolina State Agency of Vocational Rehabilitation upon the Joint Legislative Oversight Committee on Medicaid and Health Care approving a plan pursuant to Section 1-30-330, which must be submitted by the South Carolina State Agency of Vocational Rehabilitation before November 1, 2003. The plan must address the management, operations, and funding realignment of these facilities, including how this transfer would affect the continued receipt of federal funds currently received by these facilities. The transfer provided for in this subitem is not intended to negatively impact federal funds currently received by the South Carolina State Agency of Vocational Rehabilitation for these facilities.
(3) Those sections of the Governor's Office, Continuum of Care for Emotionally Disturbed Children responsible for client and family services are transferred to the Department of Mental Health to be located within the department as determined by the Director of Mental Health.
(4) The South Carolina Commission for the Blind, as provided for in Chapter 25, Title 43 is transferred to the South Carolina State Agency of Vocational Rehabilitation as the Division of Services for the Blind. Twelve percent of Section 110, federal Grant (Basic Support) appropriations is allocated to the Division of services for the Blind to provide a vocational rehabilitation program for South Carolina's eligible blind citizens. The current Commissioner of the South Carolina Commission for the Blind and the Chief of Consumer Services are transferred with the commission to the Division of Services for the Blind. The following services and programs must continue to be administered under the Division of Services for the Blind:
(a) Vocational Rehabilitation for the Blind;
(b) Prevention, Independent Living;
(c) Services for the Older Blind;
(d) Business Enterprise Program;
(e) Rehabilitation Center for the Blind;
(f) Technical Services;
(g) Telecommunication Center,
(h) Children Services;
(i) Radio Reading Services.
Other programmatic and administrative functions must be merged into corresponding functions within the South Carolina State Agency of Vocational Rehabilitation. The Division of Services for the Blind shall operate under programmatic and administrative policies established by the State Agency of Vocational Rehabilitation. The Director of the Division of Services for the Blind shall recruit, hire, retain, and evaluate employees of the Division of Services for the Blind, with the Commissioner of the State Agency of Vocational Rehabilitation having final authority in these matters. The board for the South Carolina Commission for the Blind is abolished and its powers, duties, and responsibilities are transferred to the South Carolina State Agency of Vocational Rehabilitation.
(B) The South Carolina Mental Health Commission is abolished and its powers, duties, and responsibilities are transferred to the Department of Mental Health. The Director of the Department of Mental Health must be appointed by the Governor and the director shall serve at the pleasure of the Governor. Directors of mental health facilities and directors of the community mental health centers share serve at the pleasure of the state director.
(C) Managed Treatment Services within the Department of Social Services shall remain at the department pending approval of a plan to reorganize these services. The department shall submit the plan to the Joint Legislative Oversight Committee on Medicaid and Health Care for approval pursuant to subsection (D).
(D) Nothing in this section may be construed to affect the authority, duties, and responsibilities of the boards for the local commissions on alcohol and other drug abuse services.
Section 1-30-320.(A) The Executive Director of the State Budget and Control Board shall submit an implementation plan for approval pursuant to Section 1-30-330 to the Joint Legislative Oversight Committee on Medicaid and Health Care for the transfer and reorganization of the entities affected by this article and their personnel, funds, property and all other matters of transfer, including the impact of this reorganization on all general funds, federal funds, and other sources of funds of the entities affected by the reorganization. The plan must be submitted before September 1, 2003, and must take effect as soon as practicable, in a manner and on a schedule as prescribed by the State Budget and Control Board, but no later than January 1, 2004.
(B) The Executive Director of the Budget and Control Board shall provide for the orderly transfer of appropriated funds for the entities affected by this reorganization consistent with the provisions of this article. The executive director, in consultation with the affected agencies, and following approval of the Joint Legislative Oversight Committee on Medicaid and Health Care pursuant to Section 1-30-330, has final decision-making authority regarding the realignment of appropriations to carry out the provisions of this article
(C) The Executive Director of the State Budget and Control Board and the agencies reporting to the executive director shall assist with the implementation of the reorganization provided for in this article, and the affected agencies shall cooperate with the executive director in the implementation of this reorganization.
Section 1-30-330. The Joint Legislative Oversight Committee on Medicaid and Health Care may approve or disapprove a plan required to be submitted pursuant to this article either in whole or in part, and the committee may require the entity submitting the plan to revise and resubmit all or a portion of the plan in accordance with changes requested by the committee.
Section 1-30-340. (A) The state directors of all health and human service agencies, which include the Department of Social Services, the Department of Health and Human Services, the Department of Disabilities and Special Needs, the Department of Mental Health, the South Carolina State Agency of Vocational Rehabilitation, and the Department of Health and Environmental Control annually shall submit information pertaining to all amounts and sources of funding received by the agency, including general funds, federal funds, and all other sources of funds.
(B) The state directors of the health and human services agencies may require offices under their respective jurisdiction to:
(1) locate all or a portion of the agency's employees and programs in the same building as another office or at a location near or adjacent to the location of another health and human services office;
(2) ensure that the agency's location is accessible to disabled employees and agency clients; and
(3) consolidate agency support services, including clerical and administrative support services and information resources support services, with support services provided to or by another health and human services office. The state directors of all health and human service agencies are directed to post on the agency's respective web sites, the agency's progress in meeting these objectives.
(C) The state director of each health and human services agencies shall require the main number of the agency to be answered by an employee during the hours of 8:30 a.m. to 5:30 p.m."
Section 1-30-350. (A) It is the intent of the General Assembly in reorganizing and consolidating the health and human services agencies enumerated in Section 1-30-340(A) to improve the communication, coordination, and cooperation of the personnel employed by these agencies in order to provide accessible, quality services. In keeping with this purpose, the state directors of these agencies must be evaluated annually on their leadership and accomplishments including, but not limited to whether they have established and maintained clear lines of authority, the availability, relevance, and effectiveness of staff training, the efficiency and competence of the agency's staff, the, the overall results of staff evaluations, and a cost benefit analysis of all of the agency's programs. This article is not intended to alter the means by which agency heads are evaluated annually.
(B) It is also the intent of the General Assembly in reorganizing these agencies that:
(1) minimal disruption of services to the public occurs;
(2) duplication of operations will be eliminated;
(3) appropriate services and programs will be consolidated;
(4) lines of authority will be clearly established;
(5) cost efficiency will be achieved;
(6) program application and eligibility determination processes will be integrated to the fullest extent possible.
SECTION 3. Chapter 30, Title 1 of the 1976 Code is amended by adding:
Section 1-30-510. There is created the Department of Information Technology for Health and Human Services Agencies. The Governor shall appoint the director of the department with the advice and consent of the Senate and the House of Representatives. The director shall have training and experience in the field of information technology planning, administration, and operations.
Section 1-30-520. (A) The department is responsible for the management and administration of all information technologies, including information technology appropriations, other funding, and contracting, for the:
(1) Department of Social Services, including the Office of Child Support Enforcement and Managed Treatment Services;
(2) Department of Health and Human Services, including the Office of Children's Services and the Office of Alcohol and Other Drug Abuse Services;
(3) Department of Disabilities and Special Needs;
(4) Department of Mental Health, including those sections of the Governor's Office, Continuum of Care for Emotionally Disturbed Children responsible for family and client services were transferred to the department pursuant to Section 1-30-310(A)(3);
(5) South Carolina State Agency of Vocational Rehabilitation, including those programs transferred to the agency pursuant to Section 1-30-310; and
(6) Department of Health and Environmental Control.
(B) The director has final approval for all proposed information technologies expenditures of the agencies enumerated in subsection (A). An agency director may appeal a decision of the director concerning information technologies to the Joint Legislative Oversight Committee on Medicaid and Health Care. Decisions of the committee on these matters are final.
(C) Annually the director shall submit a report to the Joint Legislative Oversight Committee on Medicaid and Health Care containing the proposed information technologies expenditures of the agencies enumerated in subsection (A).
Section 1-30-530. In carrying out the responsibilities of this article the director shall:
(1) develop a coordinated strategic plan for information resources management that;
(a) covers a multi-year period;
(b) defines objectives for information resources management at each health and human services agency;
(c) prioritizes information resources projects and implementation of new technology for all health and human services agencies;
(d) integrates planning and development of each information resources system used by a health and human services agency, including those funded with federal funds or other funds, or both, into a coordinated information resources management planning and development system established by the commission;
(e) establishes standards for information resources system security and that promotes the ability of information resources systems to operate with each other; and
(f) achieves economies of scale and related benefits in purchasing for health and human services information resources systems;
(2) establish information resources management policies, procedures, and technical standards and ensure compliance with those policies, procedures, and standards; and
(3) review and submit to the Joint Legislative Oversight Committee on Medicaid and Health Care for approval, pursuant to Section 1-30-330, the information resources management and operating plans and proposed consolidation of each health and human services agency. Following approval of the committee and no later than December 15 of each year, the director shall post each agency's plan on the department's web site.
Section 1-30-540. (A) The director may appoint an information technology advisory committee composed of information resources managers for state agencies and for private employers which may advise the director regarding:
(1) overall goals and objectives for information resources management for all health and human services agencies;
(2) coordination of agency information resources management plans;
(3) development of short-term and long-term strategies for:
(a) implementing information resources management policies, procedures, and technical standards;
(b) ensuring compatibility of information resources systems across health and human services agencies as technology changes;
(4) information resources training and skill development for health and human services agency employees and policies to facilitate recruitment and retention of trained employees;
(5) standards for determining:
(a) the circumstances in which obtaining information resources services under contract is appropriate;
(b) the information resources services functions that must be performed by health and human services agency information resources services employees; and
(c) the information resources services skills that must be maintained by health and human services agency information resources services employees;
(6) optimization of the use of information resources technology that is in place at health and human services agencies; (7) existing and potential future information resources technologies and practices and the usefulness of those technologies and practices to health and human services agencies.
(B) The committee shall review and make recommendations to the director concerning the consolidation and improved efficiency of information resources management functions, including:
(a) cooperative leasing of information resources systems equipment;
(b) consolidation of data centers;
(c) improved network operations;
(d) technical support functions, including help desk services, call centers, and data warehouses;
(e) administrative applications;
(f) purchases of standard software;
(g) joint training efforts;
(h) recruitment and retention of trained agency employees;
(i) video conferencing; and
(j) other related opportunities for improved efficiency.
(C) The members of the advisory committee appointed pursuant to subsection (A) may not receive mileage, perdiem, subsistence, or any form of compensation for their serviceon the committee."
SECTION 4. Title 2 of the 1976 Code is amended by adding:
Section 2-64-10. There is established the Joint Legislative Oversight Committee on Medicaid and Health Care composed of seven members, three of whom must be members of the Senate appointed by the Chairman of the Senate Finance Committee, three of whom must be members of the House of Representatives appointed by the Chairman of the House Ways and Means Committee, and one of whom must be appointed by the Governor and who must be a nonvoting member of the committee. The committee shall elect a chairman and vice chairman.
Section 2-64-20. (A) In carrying out its responsibilities under this chapter, the committee shall:
(1) make a detailed and careful study of the:
(a) State Medicaid Plan annually, and the committee must be notified of any amendments to the plan;
(b) federal laws pertaining to the Medicaid program; and
(c) laws that have a bearing upon the Medicaid program;
(2) review the state Medicaid program's compliance with state and federal laws, regulations, and other requirements.
(3) compare the state Medicaid program with the Medicaid program structures of other states;
(4) recommend changes, and introduce legislation when appropriate, regarding the structure of Medicaid eligibility, and the type, scope, and duration of services, together with predicted General Fund revenue, to make the State Medicaid Plan more stable and affordable for the taxpayers of this State;
(5) provide for the revision of state laws and the State Medicaid Plan to develop a more easily understood, financially manageable, and stable system;
(6) review efforts of the state Medicaid agency such as:
(a) cost containment measures;
(b) fiscal and program accountability;
(c) quality of care;
(d) effective coordination of all health care providers and payers;
(e) performance measurement and reporting; and
(f) detection of fraud and abuse.
(7) submit reports and recommendations annually to the Governor and the General Assembly for improving state health care policy and financing and other recommendations as may be appropriate.
(B) In carrying out its responsibilities under this chapter, the committee may:
(1) hold public hearings;
(2) receive testimony of any employee of the State or any other witness who may assist the committee in its duties;
(3) call for assistance in the performance of its duties from any employee or agency of the State or any of its political subdivisions;
(4) contract with consultants to assist the committee in accomplishing its duties.
(C) The committee shall review reorganization plans as provided for in Article 3, Chapter 30, Title 1 and shall perform other such functions as may be provided by law.
Section 2-64-30. The committee may adopt by majority vote rules not inconsistent with this chapter that it considers proper with respect to matters relating to the discharge of its duties under this section. Professional and clerical services for the committee must be made available from the staffs of the General Assembly, the Budget and Control Board, and the Department of Health and Human Services.
Section 2-64-40. Expenses of the committee may be paid from appropriated funds of the office of Health Care Audits, established pursuant to Article 8, Chapter 6 of Title 44."
SECTION 5. Chapter 6, Title 44 of the 1976 Code is amended by adding:
Section 44-6-1010. (A) There is established the State Office of Medicaid and Health Care Audits for the Department of Health and Human Services for the purpose of:
(1) conducting independent and objective audits, reviews, investigations, and inspections;
(2) preventing and detecting waste, fraud, and abuse;
(3) promoting accountability, economy, effectiveness, and efficiency.
(B) Agencies under the purview of this office are the:
(1) Department of Social Services;
(2) Department of Health and Humans Services;
(3) Department of Disabilities and Special Needs;
(4) Department of Mental health;
(5) South Carolina State Agency of Vocational Rehabilitation;
(6) Department of Health and Environmental Control;
(7) Department of Information Technology.
(C) The audit director must be appointed by and is under the direction of the Joint Legislative Oversight Committee on Medicaid and Health Care, established pursuant to Section 2-64-10. The director must be appointed without regard to political affiliation and solely on the basis of integrity, related experience, and demonstrated ability in accounting, auditing, financial analysis, and management analysis. Employees of the office serve at the pleasure of the director.
Section 44-6-1020. In carrying out the duties of the office the audit director may:
(1) conduct audits, reviews, analyses, investigations, and inspections relating to the administration and operation of all programs administered by the department;
(2) conduct audits, reviews, analyses, investigations, and inspections of providers, recipients, and other entities doing business with the department to determine compliance with applicable departmental contracts and regulations and to detect related fraud and abuse, if any;
(3) receive and investigate complaints concerning possible violations of regulations or law, gross mismanagement, fraud, waste, or abuse. The office may not disclose the identity of an individual submitting a complaint unless the disclosure is unavoidable during the course of an investigation;
(4) issue evaluation and audit reports in accordance with professional standards;
(5) have direct access to all systems, records, reports, reviews, files, documents, papers, and similar information related to the programs and operations of the department and entities doing business with the department;
(6) request information and assistance as necessary from any state, federal, or local agency;
(7) enter into contracts and make payments for necessary staff and resources to the extent, and in such amounts as provided under this section and the annual general appropriations act;
(8) instruct the department to collect or withhold amounts related to fraud and abuse findings.
Section 44-6-1030. The audit director shall report findings of fraud or abuse to the Director of the Department of Health and Human Services, the State Attorney General, and the Joint Legislative Oversight Committee on Medicaid and Health Care.
Section 44-6-1040. If the audit director enters into a contract for services to assist the audit director in carrying out his responsibilities under this chapter, the contract must contain a provision authorizing the audit director, or his designee, to obtain records in accordance with applicable federal laws concerning confidentiality and the release of information.
Section 44-6-1050. At least semi-annually, and more frequently at the request of the Joint Legislative Oversight Committee on Medicaid and Health Care, the audit director shall provide to the committee:
(1) a description of significant problems, abuses, and deficiencies encountered in the administration and operation of departmental programs and recommendations for corrective action;
(2) a listing of each audit report issued during the period and estimates for the dollar value of costs questioned in the report;
(3) a report on each recommendation issued in an audit report over six months old, to which the appropriate entity has not complied;
(4) a status report on fraud and abuse activity, including case volumes, collections, results of reviews and investigations, and referrals to the Attorney General or other prosecutorial and law enforcement authorities;
(5) a status report on the annual audit plan that provides progress on current reviews and on known intended reviews and their completion dates;
(6) other information as requested by the committee.
Section 44-6-1060. The audit director, in carrying out the duties and responsibilities of this chapter, shall make every attempt to avoid duplication and ensure effective coordination and cooperation. Nothing in this section is intended to duplicate the activity of the State Auditor, the Attorney General's Medicaid Fraud Control Unit, or the Legislative Audit Council.
Section 44-6-1070. (A) The audit director shall establish a budget, and seek additional funding sources, to carry out the responsibilities of the office.
(B) Of the general funds appropriated to the agencies under the purview of this office, as provided for pursuant to Section 44-6-1010, .004 percent of these funds must be transferred annually by the State Treasurer from the general fund accounts of these agencies to be deposited in a separate and distinct account entitled 'State Office of Medicaid and Health Care Audits'."
SECTION 6. Chapter 2, Title 12 of the 1976 Code is amended by adding:
"Section 12-2-100. By July 1, 2003, the Department of Revenue shall implement electronic interface between information systems to enable the Department of Health and Human Services to electronically obtain income and related financial information of residents of the State from the department for the purpose of assisting the Department of Health and Human Services in making eligibility determinations of persons applying for Medicaid coverage."
SECTION 7. Chapter 6, Title 44 of the 1976 Code, is amended by adding:
"Section 44-6-105. Before the department announces, in it's published bulletin or other written communication, a change in eligibility requirements, coverage, duration or scope of services, reimbursement rates of provider, or any other changes that would affect Medicaid spending, an agency receiving appropriated funds that are used as matching funds for Medicaid programs shall submit a fiscal impact statement to the Chairman of the Joint Legislative Oversight Committee on Medicaid and Health Care to be distributed to each member of the committee. This fiscal impact statement must identify the providers, services, and sources of funds affected and the method of calculating the fiscal impact."
SECTION 8. Chapter 6, Title 44 of the 1976 Code is amended by adding:
"Section 44-6-108. The Department of Health and Human Services annually shall report to the Joint Legislative Oversight Committee on Medicaid Health Care the number of beneficiaries on Medicaid who do not pay for services as required by state law."
SECTION 9. Article 1, Chapter 71, Title 38 of the 1976 Code is amended by adding:
"Section 38-71-270. An insurer, including a health maintenance organization, providing health insurance to residents of this State shall submit the names and other identifying information of its insureds to the Department of Insurance in the manner and time prescribed by the department. The department shall submit this information to the Department of Health and Human Services to be used to identify Medicaid applicants who have other health insurance coverage."
SECTION 10. Article 1, Chapter 6, Title 44 of the 1976 Code is amended by adding:
"Section 44-6-75. (A) By December 15 of each year, the Director of the Department of Health and Human Services shall submit in writing to each member of the Budget and Control Board, a 'Medicaid Cost Containment Action Plan' on the projected expenditures for the state Medicaid program for the next fiscal year. The action plan must include:
(1) a description of each action to be taken;
(2) the number of individuals affected;
(3) the Medicaid services or programs affected;
(4) an estimate of the financial impact on the Medicaid program for the fiscal year in question; and
(5) other information as requested by the board.
(B) Upon receipt of the report, and if the report calls for actions to reduce projected spending within this limitation, the action plan must be implemented by the director. However, the action plan must not be implemented if, by separate legislation, the General Assembly enacts legislation with a two-thirds vote in each body, specifically calling for a suspension of the Medicaid Cost Containment Action Plan that would reduce Medicaid expenditures.
(C) If the director informs the Budget and Control Board that general fund expenditures that match federal Medicaid dollars are projected to increase over the current fiscal year by a percentage greater than projected percentage growth of the state's total general fund, the director shall inform the board, in priority order, of the actions to be taken by the department to reduce expenditures in the Medicaid program for the following fiscal year so as to not exceed an amount equal to the percentage growth of the state's general fund revenue for that fiscal year as estimated by the Board of Economic Advisors."
SECTION 11. Article 1, Chapter 6, Title 44 of the 1976 Code is amended by adding:
"Section 44-6-120. (A) This section may be known as the 'South Carolina Medicaid Mandatory Managed Care Pilot Program'.
(B) The Department of Health and Human Services shall implement a mandatory managed care enrollment pilot program in Charleston, Florence, Greenville, Horry, and Richland Counties, and in one rural county to be designated by the department, before June 1, 2004. The pilot program shall operate for a five-year period unless the program fails to demonstrate budget neutrality over the life of the project.
(C) The department shall provide for a health care delivery system that includes, but is not limited to, Health Maintenance Organizations (HMOs) and Primary Care Case Management (PCCM) Providers who can deliver health care services and provide options to state Medicaid recipients, including all individuals who fall under the Temporary Assistance to Needy Families (TANF) and Supplemental Omnibus Budget Reconciliation Act (SOBRA) categories.
(D) To ensure competition, accountability, and the actuarial soundness of this pilot program, the Joint Legislative Oversight Committee on Medicaid and Health Care shall require the department to designate a third-party actuary to establish the HMO and PCCM rates effective January 2004, with annual updates based on actuarially sound business methods and projected cost savings to the State. The committee shall evaluate the project and shall engage a nationally recognized organization to evaluate the project annually. The department also shall contract with a third party actuary to conduct project evaluations and for other purposes as the department and this actuary may agree upon. These evaluation must include, but is not limited to, state specific and cross-state analyses of the impact on utilization, cost trends, recipient coverage, public and private expenditures, quality, access, and satisfaction.
(E) The department shall enroll Medicaid recipients into either a participating HMO fully licensed by the Department of Insurance or the state's Physicians Enhancement Program (PEP) in the designated pilot counties. Recipients in the counties served by the pilot program must be notified by the department about enrollment options and must be given sixty days to choose a medical home through either a HMO or PCCM delivery system. After sixty days, those not responding must be auto-assigned by the department. HMO's participating in the waiver program must meet all network requirements.
(F) In order to ensure accountability, all HMO and PCCM participants must be held to the same nationally recognized standards, including credentialing, quality improvement, network adequacy, outreach, and education. The South Carolina Department of Insurance, consistent with community standards, shall conduct all network adequacy monitoring, and the department shall rely on the South Carolina Department of Insurance to avoid duplication of oversight cost.
(G) The department shall provide for a health care delivery system that includes, but is not limited to, Health Maintenance Organizations (HMOs) and Primary Care Case Management (PCCM) Providers who can deliver health care services and provide options to state Medicaid recipients including all individuals who fall under the Temporary Assistance to Needy Families and Supplemental Omnibus Budget Reconciliation Act categories.
SECTION 12. Article 1, Chapter 6, Title 44 of the 1976 Code is amended by adding:
Section 44-6-125. (A) Before November 1, 2003, the Department of Health and Human Services shall implement a pilot project to assess the viability of privatizing the determination and redetermination of Medicaid eligibility. This pilot project must be implemented in at least four major metropolitan areas of the State and may test both partial and total privatization of the eligibility process. The data must be collected and analyzed to evaluate the integrity of a privatized process.
(B) The department shall explore limiting coverage groups to more essential services rather than a full coverage plan. The department shall continue to improve eligibility determination integrity measures and the accuracy and integrity of the eligibility determination program. Where there is no medical or physical hindrance the eligibility determination measures must:
(1) require applicants, family members, or third parties to apply in person with an eligibility worker;
(2) require a face to face re-mail-in application;
(3) require documented proof of citizenship or legal alien status;
(4) require a face to fact reapplication every twelve months, except for the elderly and persons with handicapping conditions;
(5) require applicants parents, the responsible party, or persons holding a power of attorney for the applicant to sign the application, thereby attesting to the accuracy of the information provided and granting the consent of the applicant for an eligibility search;
(6) provide for the termination of enrollees who have provided false information;
(7) include an annual report to the General Assembly regarding the implementation of these measures.
(C) The department shall develop, publish, and implement a plan for improving the eligibility determination process by October 30, 2003. The plan must address:
(1) auditing and testing measures that are statistically valid;
(2) recommendations for streamlining the eligibility process;
(3) automation for efficiency and cost-savings;
(4) on-line cross checks with the Department of Revenue, the Social Security Administration, and state databases;
(5) verification of employer sponsored insurance;
(6) termination of eligibility of employees who fail to provide complete and truthful information;
(7) annual reporting to the General Assembly of applicants enrollment, utilization, and the statistically valid auditing of the determination program.
Changes to the plan must be submitted the Joint Legislative Oversight Committee on Medicaid and Health Care for approval, pursuant to Section 1-30-330.
(D) The department shall maximize the use of managed care and explore privatization of the eligibility unit."
SECTION 13. There is established a 'Task Force on Emergency Room Diversion' to be led by the Department of Health and Environmental Control to develop a plan for community service alternatives for persons who currently use emergency rooms inappropriately. The task force shall submit a plan and budget to reduce inappropriate utilization of the emergency room and to provide more appropriate services. Membership must include, but is not limited to, representatives of the following organizations: South Carolina Medical Association, the South Carolina Hospital Association, the Emergency Medical Services Association, the South Carolina Sheriff's Association, Partners in Crisis, the Probate Court Judges Association, and the South Carolina Psychiatric Association. A report and budget must be submitted to the Joint Legislative Oversight Committee on Medicaid Health Care by January 1, 2004. Upon approval by the committee, the Department of Health and Human Services shall provide support for a pilot project to be administered by the department of Health and Environmental Control which shall monitor and provide regular evaluations of the pilot project.
SECTION 14. Article 1, Chapter 7, Title 44 of the 1976 Code is amended by adding:
"Section 44-7-75. The Department of Health and Human Services shall enter into contractual agreements for the management and operation of skilled nursing facilities formerly under the jurisdiction of the Department of Mental Health."
SECTION 15. Article 5, Chapter 21, Title 12 of the 1976 Code is amended by adding:
"Section 12-21-625. (A) There is imposed a surtax on cigarettes subject to the tax imposed pursuant to Section 12-21-620(1) in an amount equal to 2.1 cents on each cigarette.
(B) Notwithstanding any other provision of law providing for crediting revenues by license or other taxes and except as provided for in subsection (H), the revenue of the surtax imposed by this section must be credited to the Medicaid Services Fund established pursuant to subsection (C) and used only for the purposes prescribed in subsection (C).
(C)(1) There is created the Medicaid Services Fund into which must be deposited funds collected pursuant to subsection (A). The fund must be separate and distinct from the general fund and must be used only for the purposes prescribed in this subsection. The funds are supplementary and must not be used to replace general funds appropriated by the General Assembly or other funds used to support Medicaid or other specified programs, operations, initiatives, or activities. The funds, programs, operations, initiatives, and other activities specified in this subsection are exempt from budgetary cuts, reductions, or eliminations caused by the lack of general fund revenues. Earnings on investments from this fund must remain part of the separate fund and must not be deposited in the general fund.
(2) Monies in the fund must be used as follows:
(a) the first five hundred twenty five thousand dollars of revenue from the surtax, must be used for the responsibilities assigned to the following entities:
(i) twenty five thousand dollars for funding the Joint Legislative Committee on Health and Human Services;
(ii) three hundred thousand dollars for the new Department of Information Technology for Health and Human Service Agencies establish pursuant to Section 1-30-510; and
(iii) two hundred thousand dollars for additional audit services from the Legislative Audit Council;
(b) five percent of the revenue remaining after the expenditures in item (a), for funding grants dedicated for community agencies and organizations for 'Healthy People 2010', the promotion of public health, and targeted only toward the following objectives:
(i) increasing the proportion of adults and adolescents participating in exercise;
(ii) reducing the proportion of obese adults;
(iii) reducing cigarette use by adults and adolescents;
(iv) increasing the proportion of adolescents who do not use alcohol or illicit drugs;
(v) reducing the proportion of adults engaging in the 'bingeing' use of alcoholic beverages;
(vi) reducing motor vehicle fatalities;
(vii) increasing the proportion of young children who receive vaccinations and immunizations;
(viii) increasing the proportion of noninstitutionalized adults, sixty-five years of age and older, who receive vaccinations and immunizations;
(ix) increasing the proportion of noninstitutionalized adults, sixty-five years of age and older, who have ever been vaccinated against pneumococcal disease; and
(x) increasing the number of pregnant women who begin prenatal care in the first trimester of pregnancy.
(3) The remaining revenue of the surtax imposed by this section, must be credited to a separate and distinct fund, apart from all other funds, designated as the Medicaid Match Fund. The Department of Health and Human Services must use revenue collected pursuant to this section as the director determines. Expenditures must be reported annually to the General Assembly. Revenues in this fund not expended during a fiscal year are carried forward to the succeeding fiscal year and must be used for the same purposes.
(D) The Director of the Department of Health and Human Services shall plan, administer, and monitor the use of the monies as prescribed in subsection (C).
(E) Monies must be transferred by the State Treasurer upon written request and justification from an authorized official for the purposes prescribed in subsection (C).
(F) Unexpended revenues distributed from the Medicaid Services Fund not expended during a fiscal year are carried forward from year to year and must be used for the prescribed purposes.
(G) For all purposes of reporting, payment, collection, and enforcement, the surtax imposed by this section is deemed to be imposed pursuant to Section 12-21-620(1).
(H) Fifty percent of the revenue generated pursuant to the surtax imposed pursuant to this section, must be used to offset reductions in other state imposed taxes and fees, which may include, but are not limited to offsetting reductions in state individual income taxes.
SECTION 16. The Director of the Legislative Audit Council shall employ auditors as necessary to perform regular audits of the operations of the departments and offices affected in this act to determine their performance in complying with all applicable provisions of law.
SECTION 17. Article 5, Chapter 21, Title 12 of the 1976 Code is amended by adding:
Section 12-21-825. (A) The department shall produce or procure stamps in accordance with the requirements of this section.
(B) Stamps must be applied by a licensed cigarette distributor to each package of cigarettes sold or distributed within the borders of South Carolina.
(C) Each roll of stamps, or group of sheets, must have a separate serial number, which must be legible at the point of sale. The department shall keep records of which cigarette distributor purchases each roll or group of sheets identified by serial number. If the department permits cigarette distributors to purchase partial rolls or sheets, stamps bearing the same serial number must not be sold to more than one cigarette distributor. The remainder of the roll or sheet either must be retained for later purchases by the same distributor or destroyed.
Section 12-21-830. (A) A person who knowingly omits, neglects, or refuses to comply with a duty imposed upon him by this article, or to do, or cause to be done, an act required by this article, or does anything prohibited by this article, in addition to another penalty provided in this article, is liable to a penalty of one thousand dollars, or five times the retail value of the cigarettes involved, whichever is greater, to be recovered, with costs of suit, in a civil action.
(B) A person who fails to pay a tax imposed by this article at the time prescribed by law or regulations, in addition to another penalty provided in this article, is liable to a penalty of five times the tax due but unpaid.
(C)(1) All cigarettes held for sale or distribution within the borders of South Carolina in violation of the requirements of this article must be forfeited to the State of South Carolina. Cigarettes forfeited to South Carolina pursuant to this item must be destroyed.
(2) All fixtures, equipment, and other materials and personal property on the premises of a cigarette distributor or cigarette retailer must be forfeited to the State of South Carolina if he, with intent to defraud the state:
(a) fails to keep or make any record, return, report, or inventory;
(b) keeps or makes a false or fraudulent record, return, report, or inventory required by this article;
(c) refuses to pay a tax imposed by this article; or
(d) attempts in any manner to evade or defeat the requirements of this article.
Section 12-21-835. (A) A person, upon conviction for each such offense, must be fined ten thousand dollars or five times the retail value of the cigarettes involved, whichever is greater, or imprisoned not more than five years, or both, if he with intent to defraud the State of South Carolina:
(1) fails to keep or make any record, return, report, or inventory, or keeps or makes a false or fraudulent record, return, report, or inventory, required by this article or regulations under it;
(2) refuses to pay a tax imposed by this article, or attempts in any manner to evade or defeat the tax or the payment of it; or
(3) fails to comply with a requirement of this article.
(B)(1) Notwithstanding another provision of law, the sale or possession for sale of counterfeit cigarettes by a cigarette manufacturer, cigarette importer, cigarette distributor, or cigarette retailer must result in the seizure of the product and related machinery by the department or any law enforcement agency and must be punishable as follows:
(a) a first violation with a total quantity of fewer than two cartons of cigarettes, by a fine of one thousand dollars or five times the retail value of the cigarettes involved, whichever is greater, or imprisonment not to exceed five years, or both;
(b) a subsequent violation with a total quantity of fewer than two cartons of cigarettes, by a fine of five thousand dollars or five times the retail value of the cigarettes involved, whichever is greater, or imprisonment not to exceed five years, or both the fine and imprisonment, and the revocation by the department of the license of the cigarette manufacturer, cigarette importer, cigarette distributor, or cigarette retailer;
(c) a first violation with a total quantity of two cartons of cigarettes or more shall be punishable by a fine of two thousand dollars or five times the retail value of the cigarettes involved, whichever is greater, or imprisonment not to exceed five years, or both; or
(d) a subsequent violation with a quantity of two cartons of cigarettes or more by a fine of fifty thousand dollars or five times the retail value of the cigarettes involved, whichever is greater, or imprisonment not to exceed five years, or both the fine and imprisonment, and revocation by the department of the license of the cigarette manufacturer, cigarette importer, cigarette distributor, or cigarette retailer license.
(2) For purposes of this section, counterfeit cigarettes includes cigarettes with false manufacturing labels or packages of cigarettes bearing counterfeit tax stamps. A counterfeit cigarette seized by the board must be destroyed.
(C) A person who violates a provision of this article, or of regulations prescribed under it, other than as provided in subsections (A) and (B), upon conviction for each offense, must be fined not more than one thousand dollars, or imprisoned not more than one year, or both."
Section 12-21-840. The General Assembly finds that:
(1) violations of Sections 11-47-10 through 11-47-30, The Tobacco Escrow Fund Act, threaten the integrity of the tobacco Master Settlement Agreement, the fiscal soundness of the State, and the public health; and
(2) enacting procedural enhancements helps prevent violations and aids the enforcement of the Tobacco Escrow Fund Act, safeguards the Master Settlement Agreement, the fiscal soundness of the State, and the public health; and
(3) this subarticle is not intended to and must not be interpreted to amend Chapter 47 of Title 11, The Tobacco Escrow Fund Act.
Section 12-21-845. (A) 'Brand family' means all styles of cigarettes sold under the same trade mark and differentiated from one another by means of additional modifiers or descriptors, including, but not limited to, menthol, lights, kings, and 100s and includes the use of a brand name alone or in conjunction with another word, trademark, logo, symbol, motto, selling message, recognizable pattern of colors, or any other indicia of product identification identical or similar to, or identifiable with, a previously known brand of cigarettes.
(B) 'Cigarette' has the same meaning as in Section 11-47-20(d).
(C) 'Director' means the Director of the Department of Revenue.
(D) 'Nonparticipating manufacturer" means a tobacco product manufacturer that is not a participating manufacturer.
(E) 'Participating manufacturer' has the meaning given that term in Section II(jj) of the Master Settlement Agreement and all amendments to it.
(F) 'Qualified escrow fund' has the same meaning as that term is defined in Section 11-47-20(f).
(G) 'Cigarette distributor' means a person authorized to affix tax stamps to cigarette packages pursuant to Section 12-21-735.
(H) 'Tobacco product manufacturer' has the same meaning as that term is defined in Section 11-47-20(i).
(I) 'Units sold' has the same meaning as that term is defined in Section 11-47-20(j).
Section 12-21-850. (A) Each tobacco product manufacturer whose cigarettes are sold in this State, whether directly or through a distributor, retailer, or similar intermediary or intermediaries shall execute and deliver on a form or in the manner prescribed by the director a certification to the director and Attorney General no later than the thirtieth day of April each year, certifying under penalty of perjury that, as of the date of such certification, such tobacco product manufacturer either is a participating manufacturer or is in full compliance with Section 11-47-30.
(1) A participating manufacturer shall include in its certification a list of its brand families. The participating manufacturer shall update the list thirty days before any addition to or modification of its brand families by executing and delivering a supplemental certification to the director.
(2) A nonparticipating manufacturer shall include in its certification a complete list of all of its brand families (i) separately listing brand families of cigarettes and the number of units sold for each brand family in the State during the preceding calendar year, (ii) listing all of its brand families that have been sold in the State at any time during the current calendar year, (iii) indicating by an asterisk a brand family sold in the State during the preceding calendar year that is no longer being sold in the State as of the date of such certification, and (iv) identifying by name and address any other manufacturer of the brand families in the preceding calendar year. The nonparticipating manufacturer shall update the list thirty days before any addition to or modification of its brand families by executing and delivering a supplemental certification to the director.
(3) In the case of a nonparticipating manufacturer, the certification must certify that:
(a) it is registered to do business in the State or has appointed an agent resident within South Carolina for service of process and provided notice of the appointment.
(b) it has established and continues to maintain a qualified escrow fund, and executed escrow agreement that has been reviewed and approved by the director;
(c) it is in full compliance with Section 11-47-30 and this section and regulations promulgated pursuant to them; and
(d) the following information is accurate and complete:
(i) name, address, and telephone number of the financial institution where the nonparticipating manufacturer has established the qualified escrow fund required pursuant to Section 11-47-30(b) and its regulations;
(ii) the account number of the qualified escrow fund and sub-account number for the State of South Carolina;
(iii) amount the nonparticipating manufacturer placed in the fund for cigarettes sold in the State during the preceding calendar year, the date, and amount of each deposit, and evidence or verification considered necessary by the director to confirm that information; and
(iv) amounts of and dates of a withdrawal or transfer of funds the nonparticipating manufacturer made at any time from the fund or from another qualified escrow fund into which it made escrow payments pursuant to Section 11-47-30(b) and its regulations.
(4)(a) A tobacco product manufacturer may not include a brand family in its certification unless:
(i) in the case of a participating manufacturer, affirms that the brand family is to considered its cigarettes for purposes of calculating its payments under the Master Settlement Agreement for the relevant year, in the volume and shares determined pursuant to the Master Settlement Agreement; and
(ii) in the case of a nonparticipating manufacturer, it affirms that the brand family is considered cigarettes for purposes of Chapter 47 of Title 11.
(b) This item does not limit or otherwise affect the State's right to maintain that a brand family constitutes cigarettes of a different tobacco product manufacturer for purposes of calculating payments under the Master Settlement Agreement or for purposes of Chapter 47 of Title 11.
(5) The tobacco product manufacturers shall maintain all invoices and documentation of sales and other information relied upon for the certification for a period of five years, unless otherwise required by law to maintain them for a greater period of time.
(B) The director shall develop and make available for public inspection or publish on its website a directory listing all tobacco product manufacturers that have provided current and accurate certifications conforming to the requirements of subsection (A) and all brand families that are listed in the certifications except:
(1) The director shall not include or retain in the directory the name or brand families of a nonparticipating manufacturer that fails to provide the required certification or whose certification the director determines is not in compliance with items (2) and (3) of subsection (A), unless the director determines that the violation is cured to his satisfaction.
(2) Neither a tobacco product manufacturer nor brand family may be included or retained in the directory if the director concludes that:
(a) in the case of a nonparticipating manufacturer, all escrow payments required pursuant to Section 11-47-30(b) for any period for a brand family, whether or not listed by the nonparticipating manufacturer, have not been paid fully into a qualified escrow fund governed by a qualified escrow agreement approved by the Attorney General; or
(b) all outstanding final judgments, including interest on them, for violations of Section 11-47-30 have not been fully satisfied for the brand family and the manufacturer.
(3) The director shall update the directory as necessary to correct mistakes, to add or remove a tobacco product manufacturer or brand families, and to keep the directory in conformity with the requirements of this subarticle.
(4) A cigarette distributor shall provide and update as necessary an electronic mail address to the director for the purpose of receiving notifications required by this subarticle.
(5) Notwithstanding the provisions of items (1) and (2) of this subsection, in the case of any nonparticipating manufacturer who has established a qualified escrow account pursuant to Section 12-21-840 that has been approved by the Attorney General may not remove the manufacturer or its brand families from the directory unless the manufacturer has been given at least thirty days notice of the intended action. For the purposes of this section, notice is considered sufficient if it is sent either electronically to an electronic-mail address or by first class to a postal mailing address, provided by the manufacturer in its most recent certification filed pursuant to Section 2. The notified nonparticipating manufacturer shall have thirty days from the receipt of the invoice to comply. At the time that the Attorney General sends notice of its intent to remove the manufacturer from the directory the Attorney General shall post the notice directly.
(C) It is unlawful for any person to:
(1) affix a stamp to a package or other container of cigarettes of a tobacco product manufacturer or brand family not included in the directory; or
(2) sell, offer, or possess for sale in this State, or import for personal consumption in this State, cigarettes of a tobacco product manufacturer or brand family not included in the directory.
Section 12-21-855. (A) A nonresident or foreign nonparticipating manufacturer that has not registered to do business in the State as a foreign corporation or business entity, as a condition precedent to having its brand families listed or retained in the directory, shall appoint and continually engage without interruption the services of an agent in this State to act as agent for the service of process on whom all process and action or proceeding against it concerning or arising out of the enforcement of Chapter 47 of Title 11, may be served in a manner authorized by law. That service is legal and valid service of process on the nonparticipating manufacturer. The nonparticipating manufacturer shall provide the name, address, phone number, and proof of the appointment and availability of the agent to, and to the satisfaction of, the director and Attorney General.
(B) The nonparticipating manufacturer shall provide notice to the director and Attorney General thirty calendar days before termination of the authority of an agent and proof to the satisfaction of the Attorney General of the appointment of a new agent no fewer than five calendar days before the termination of an existing agent appointment. If an agent terminates an agency appointment, the nonparticipating manufacturer shall notify the director and Attorney General of the termination within five calendar days and shall include proof to the satisfaction of the Attorney General of the appointment of a new agent.
(C) A nonparticipating manufacturer whose products are sold in this State without appointing or designating an agent as required by this section is deemed to have appointed the Secretary of State as the agent and may be proceeded against in courts of this State by service of process upon the Secretary of State; except that, appointment of the Secretary of State as the agent does not satisfy the condition precedent to having its brand families listed or retained in the directory.
Section 12-21-860. (A) No later than twenty days after the end of each calendar quarter, and more frequently if so directed by the director, a cigarette distributor shall submit information the director requires to facilitate compliance with this section including, but not limited to, a list by brand family of the total number of cigarettes or in the case of roll your own, the equivalent stick count for which the cigarette distributor affixed stamps during the previous calendar quarter or otherwise paid the tax due for the cigarettes. The cigarette distributor shall maintain, and make available to the director, all invoices and documentation of sales of all nonparticipating manufacturer cigarettes and other information relied upon in reporting to the director for a period of five years.
(B) The director is authorized to disclose to the Attorney General any information received under this subarticle and requested by the Attorney General for purposes of determining compliance with and enforcing the provisions of this subarticle. The director and Attorney General shall share with each other the information received under this subarticle, and may share such information with other federal, State, or local agencies only for purposes of enforcement of this subarticle, Chapter 47 of Title 11, or corresponding laws of other states. The Attorney General is further authorized to disclose to a cigarette manufacturer any information that has been provided by a cigarette distributor as required by this act regarding the purchases from that manufacturer.
(C) The Attorney General may require at any time from the nonparticipating manufacturer, proof from the financial institution in which the manufacturer has established a qualified escrow fund for the purpose of compliance with Chapter 47 of Title 11 of the amount of money in the fund held on behalf of the State, the dates of deposits, and the amounts and dates of all withdrawals from the fund.
(D) In addition to the information required to be submitted pursuant to Section 12-21-850, the director may require a cigarette distributor or tobacco product manufacturer to submit additional information including, but not limited to, samples of the packaging or labeling of each brand family, as is necessary to enable the Attorney General to determine if a tobacco product manufacturer is in compliance with this subarticle.
Section 12-21-865. (A) In addition to or instead of another civil or criminal remedy provided by law, upon a determination that a cigarette distributor has violated Section 12-21-850(C) or a regulation adopted pursuant to it, the director may revoke or suspend the license of a cigarette distributor in the manner provided by Sections 12-60-1310 through 12-60-1350. Each stamp affixed and each offer to sell cigarettes in violation of Section 12-21-850(C) constitutes a separate violation. The director also may impose a civil penalty for each violation in an amount not to exceed the greater of five times the retail value of the cigarettes sold or five thousand dollars upon a determination of violation of Section 12-21-850(C) or regulations adopted pursuant to it.
(B) Cigarettes that have been sold, offered for sale or possessed in this State, or imported for personal consumption in this State in violation of Section 12-21-850(C) must be forfeited as defined in Section 12-21-830(C) and the cigarettes are subject to seizure and forfeiture as provided in that section, and all cigarettes so seized and forfeited must be destroyed and not resold.
(C) The Attorney General, on behalf of the director, may seek an injunction to restrain a threatened or actual violation of Sections 12-21-850(C), 12-21-860(A), or 12-21-860(D) by a cigarette distributor and to compel the cigarette distributor to comply with the sections. In an action brought pursuant to this section, the State may recover the costs of investigation, costs of the action, and reasonable attorney's fees.
(D) It is unlawful and a Class A misdemeanor for a person to:
(1) sell or distribute cigarettes; or
(2) acquire, hold, own, possess, transport, import, or cause to be imported cigarettes that the person knows or should know are intended for distribution or sale in the State in violation of Section 12-21-850(C).
(E) A person who violates Section 12-21-850(C) engages in an unfair and deceptive trade practice in violation of Chapter 5, Title 39.
Section 12-21-868. A determination of the director to not list in, or to remove from, the directory a brand family or tobacco product manufacturer is subject to review in the manner prescribed by Sections 1-23-310 through 1-23-400.
Section 12-21-870. (A) A person must not be issued a license or granted a renewal of a license to act as a stamping agent unless the person has certified in writing, under penalty of perjury, that he intends to comply fully with this section.
(B) For the year 2003, if the effective date of this act is later than March 16, 2003, the first report of cigarette distributors required by Section 12-21-860 (A) must be due thirty days after such effective date; the certifications by a tobacco product manufacturer described in Section 12-21-850(C) must be due forty-five days after such effective date; and the directory described in Section 12-21-850(B) must be published or made available within ninety days after such effective date.
(C) The director may promulgate regulations necessary to effect the purposes of this statute.
(D) In any action brought by the State to enforce this subarticle, the State is entitled to recover the costs of investigation, expert witness fees, costs of the action, and reasonable attorney fees for a successful investigation or action.
(E) Unless otherwise expressly provided, the remedies or penalties provided by this subarticle are cumulative to each other and to the remedies or penalties available under all other laws of this State.
(F) If a court of competent jurisdiction finds that the provisions of this subarticle and Chapter 47 of Title 11 conflict and cannot be harmonized, then the provisions of Chapter 47 of Title 11 must control. If any section, paragraph, item, or subitem, subsubitem, sentence, clause or phrase of this subarticle causes Chapter 47 of Title 11 to no longer constitute a Qualifying or Model Statute, as those terms are defined in the Master Settlement Agreement, then that portion of this subarticle is invalid. If any section, paragraph, item, subitem, subsubitem, sentence, clause, or phrase of this subarticle is held to be invalid, unlawful, or unconstitutional, that decision does not affect the validity of the remaining portions of this subarticle or any part of it.
Section 12-21-910. (A) For purposes of this subarticle:
(1)(a) 'Delivery sale' means a sale of cigarettes to a consumer in South Carolina if the:
(i) the purchaser submits the order for sale by means of a telephonic or other method of voice transmission, the mails or other delivery service, or the Internet or other online service; or
(ii) cigarettes are delivered by use of the mails or other delivery service.
(b) A sale of cigarettes that satisfies subitem (a) is a delivery sale regardless of the location of the seller within Indian Country or within or outside of South Carolina. For purposes of this subsection a sale of cigarettes to an individual in South Carolina must be treated like a sale to a consumer unless the individual is licensed as a distributor or retailer of cigarettes by the department.
(2) 'Delivery service' means a person, including the U.S. Postal Service, engaged in the commercial delivery of letters, packages, or other containers.
(3) 'Minor' means an individual to whom the sale of cigarettes is prohibited by Section 16-17-500.
(4) 'Shipping container' means a container in which cigarettes are shipped in connection with a delivery sale.
(5) 'Shipping documents' means bills of lading, airbills, U.S. Postal Service forms, or other documents used to evidence the undertaking by a delivery service to deliver letters, packages, or other containers.
(B) A person may not make a delivery sale of cigarettes to a minor.
(C) A person taking a delivery sale order shall comply with:
(1) age verification requirements in Section 12-21-920;
(2) disclosure requirements in Section 12-21-930;
(3) shipping requirements in Section 12-21-940;
(4) registration and reporting requirements in Section 12-21-950;
(5) tax collection requirements in Section 12-21-960; and
(6) all other laws of South Carolina generally applicable to sales of cigarettes occurring entirely within South Carolina including, but not limited to, those laws imposing excise taxes, sales taxes, licensing and tax-stamping requirements, and escrow or other payment obligations.
Section 12-21-920.&NBSP; &NBSP; (A) A person may not mail or ship cigarettes in connection with a delivery sale order unless before mailing or shipping the cigarettes the person accepting the delivery sale order:
(1) obtains from the prospective customer a certification that includes:
(a) reliable confirmation that the purchaser is not a minor; and
(b) a written statement signed by the prospective purchaser under penalty of perjury which:
(i) certifies the prospective purchaser's address and date of birth; and
(ii) confirms that the prospective purchaser understands that signing another person's name to the certification is illegal, and that the sale of cigarettes to a minor is illegal;
(2) makes a good-faith effort to verify the information contained in the certification provided by the prospective purchaser against a federal database established for that purpose, if one exists, or a commercially available database;
(3) sends to the prospective purchaser, by e-mail or other means, a notice meeting the requirements of Section 12-21-930 and requests confirmation that the delivery sale order was placed by the prospective purchaser;
(4) receives from the prospective purchaser confirmation, in response to the request described in item (3), that the individual placed the delivery sale order; and
(5) receives payment for the delivery sale from the prospective purchaser by a credit or debit card issued in the purchaser's name.
(B) A person taking a delivery sale order may request that the prospective purchaser provide his e-mail address.
Section 12-21-930.&NBSP; &NBSP; The notice required pursuant to Section 12-21-920(A)(3) must include a prominent and clearly legible statement that:
(1) cigarette sales to minors are illegal;
(2) consists of one of the warnings set forth in Section 4(a)(1) of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. Section 1333(a)(1)) rotated on a quarterly basis;
(3) sales of cigarettes are restricted to those individuals who provide verifiable proof of age in accordance with Section 12-21-920; and
(4) cigarette sales are taxable pursuant to Section 12-21-620, and an explanation of how such tax has been, or is to be, paid with respect to such delivery sale.
Section 12-21-940.&NBSP; &NBSP; (A) A person who mails or ships cigarettes in connection with a delivery sale order shall:
(1) include as part of the shipping documents a clear and conspicuous statement as follows:
'CIGARETTES: SOUTH CAROLINA LAW PROHIBITS SHIPPING TO INDIVIDUALS UNDER 18 AND REQUIRES THE PAYMENT OF ALL APPLICABLE TAXES';
(2) use a method of mailing or shipping that obligates the delivery service to require:
(a) the purchaser placing the delivery sale order, or an adult designated by the customer, to sign to accept delivery of the shipping container; and
(b) proof, in the form of a valid, government-issued identification bearing a photograph of the individual who signs to accept delivery of the shipping container, demonstrating that:
(i) he is either the addressee or the adult designated by the addressee; and
(ii) he is not a minor, except that this proof is required only if the individual appears to be younger than twenty-seven years of age; and
(3) provide to the delivery service retained to deliver the delivery sale evidence of full compliance with Section 12-21-960.
(B)&NBSP; &NBSP; A delivery service is in violation of this article if it ships or delivers cigarettes in connection with a delivery sale without first receiving the evidence of compliance with Section 12-21-960 as described in subsection (A)(3), or if it fails to comply with subsection (A)(2) or Section 12-21-950 when:
(1) obligated to do so under a method of shipping;
(2) delivering a container pursuant to shipping documents containing the statement described in subsection (A)(1); or
(3) delivering a container the delivery service otherwise has reason to know contains cigarettes.
(C) If the person taking a delivery sale order delivers the cigarettes without using a third-party delivery service, the person shall comply with all requirements of this article applicable to a delivery service and is in violation of this article if it fails to comply with a requirement.
Section 12-21-950.&NBSP; &NBSP; (A) Before making delivery sales or shipping cigarettes in connection with those sales, a person shall file with the department a statement including the person's name, trade name, and the address of his principal place of business and any other place of business.
(B) Not later than the tenth day of each calendar month, a person who has made a delivery sale or shipped or delivered cigarettes in connection with such a sale during the previous calendar month shall file with the department a memorandum or a copy of the invoice, providing for each and every such delivery sale the:
(1) name and address of the individual to whom the delivery sale was made;
(2) brand or brands of the cigarettes sold in the delivery sale; and
(3) quantity of cigarettes sold in the delivery sale.
Section 12-21-960.&NBSP; &NBSP; A person making a delivery sale shall collect and remit to the department taxes levied by South Carolina with respect to the delivery sale, except that the collection and remission is not required if the person has obtained proof, in the form of the presence of applicable tax stamps or otherwise, that the taxes already have been paid to South Carolina.
Section 12-21-970.&NBSP; &NBSP; (A)(1) Except as otherwise provided in this section, the first time a person violates a provision of this subarticle, the person must be fined one thousand dollars or five times the retail value of the cigarettes involved, whichever is greater.
(2) In the case of a second or subsequent violation of this subarticle, the person must be fined five thousand dollars or five times the retail value of the cigarettes involved, whichever is greater.
(B) A person who knowingly violates a provision of this subarticle, or who knowingly and falsely submits a certification pursuant to Section 12-21-920(A)(1) in another person's name, for each offense, shall be fined ten thousand dollars or five times the retail value of the cigarettes involved, whichever is greater, or imprisoned not more than five years, or both.
(C) A person fails to pay tax required in connection with a delivery sale shall pay, in addition to other penalties, a penalty of five times the amount of the tax due but unpaid.
(D)(1) Cigarettes sold or attempted to be sold in a delivery sale that does not comply with this subarticle must be forfeited to South Carolina and destroyed.
(2) Fixtures, equipment, and other materials and personal property on the premises of a person who, with the intent to defraud South Carolina, fails to comply with this subarticle must be forfeited to South Carolina.
Section 12-21-980.&NBSP; &NBSP; The Attorney General or his designee, or a person who holds a permit under Section 5712 of Title 26 of the United States Code, may bring an action in the appropriate court in South Carolina to prevent or restrain violations of this title by any person or any person controlling the person."
SECTION 18. Section 12-21-2975 of the 1976 Code is amended to read:
"Section 12-21-2975. All soft drinks, playing cards,
cigarettes and tobacco products confiscated under pursuant to this chapter shall must be donated to the Department of Mental Health for patient use. The items listed in this section shall are not be subject to the advertisement and sale provisions as provided for in this chapter."
SECTION 19.A. Sections 1-30-10 through 1-30-120 of the 1976 Code are designated as Article 1, Chapter 30, Title 1 of the 1976 Code and named "Departments of State Government".
B. Sections 12-21-610 through 12-21-810, as contained in Article 5, Chapter 21, Title 12 of the 1976 Code, entitled "Tobacco, Ammunition, and Playing Cards are designated as Subarticle 1 of Article 5, Chapter 21, Title 12 of the 1976 Code.
SECTION 20. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
SECTION 21. Section 12-21-2870 and Section 44-9-30 of the 1976 Code are repealed.
SECTION 22. This act takes effect upon approval by the Governor, except Subarticle 2, Article 5, Chapter 21, Title 12 of the 1976 Code, as added by SECTION 17 of this act, which takes effect ninety days after approval by the Governor.
This web page was last updated on Thursday, June 25, 2009 at 9:41 A.M.