(1) (a) Each local mental health authority is responsible for overseeing all public funds the local mental health authority receives, to determine that those public funds are utilized in accordance with: (i) federal and state law; (ii) the rules and policies of the department; and (iii) any contract between the local mental health authority and the department or a private provider. (b) The local mental health authority oversight includes requiring that neither a private provider that contracts with the local mental health authority to provide comprehensive mental health programs or services for the local mental health authority, nor any of the private provider's employees: (i) violate any applicable federal or state criminal law; (ii) knowingly violate: (A) any applicable department rule or policy; or (B) any provision of contract between the local mental health authority and the department or the private provider; (iii) knowingly keep any false account or make any false entry or erasure in any account of or relating to the public funds; (iv) fraudulently alter, falsify, conceal, destroy, or obliterate any account of or relating to public funds; (v) fail to ensure competent oversight for lawful disbursement of public funds; (vi) appropriate public funds for an unlawful use or for a use that is not in compliance with contract provisions; or (vii) knowingly or intentionally use public funds: (A) unlawfully; (B) in violation of a governmental contract provision; or (C) in violation of state policy. (2) A local mental health authority that knew or reasonably should have known of any of the circumstances described in Subsection (1), and that fails or refuses to take timely corrective action in good faith shall, in addition to any other penalties provided by law, be required to make full and complete repayment to the state of all public funds improperly used or expended. (3) Any public funds required to be repaid to the state by a local mental health authority in accordance with Subsection (2), based upon the actions or failure of the contract provider, may be recovered by the local mental health authority from its contract provider, in addition to the local mental health authority's costs and attorney fees. Renumbered and Amended by Chapter 14, 2025 Special Session 1
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