(a) The commissioner and the chief administrative law judge of the State Office of Administrative Hearings by rule shall adopt a memorandum of understanding under which the State Office of Administrative Hearings conducts hearings for the department under this code. The memorandum of understanding shall require the chief administrative law judge, the department, and the commissioner to cooperate in connection with the hearings under this code and may authorize the State Office of Administrative Hearings to perform any administrative act, including giving of notice, that is required to be performed by the department or the commissioner under this code. The memorandum of understanding shall also require that hearings under this section be held at a location agreed upon by the State Office of Administrative Hearings and the department.
(b) For a hearing conducted by the State Office of Administrative Hearings under this code, the department and the commissioner retain the authority to decide whether the administrative law judge conducting the hearing for the State Office of Administrative Hearings shall:
(1) enter the final decision in the case after completion of the hearing; or
(2) propose a decision to the department or the commissioner for final consideration.

(c) Any provision of this code that provides that the department or the commissioner take an action at a hearing means:
(1) that the department or the commissioner shall take the action after the receipt of a proposal for decision from the State Office of Administrative Hearings regarding the hearing conducted by that office; or
(2) if so directed by the department or the commissioner, the State Office of Administrative Hearings shall enter the final decision in the case after completion of the hearing.
(d) The department shall prescribe rules of procedure for any cases not heard by the State Office of Administrative Hearings.
(e) The department by interagency contract shall reimburse the State Office of Administrative Hearings for the costs incurred in conducting administrative hearings for the department. The department may pay an hourly fee for the costs of conducting these hearings or a fixed annual fee negotiated biennially by the department and the State Office of Administrative Hearings to coincide with the department’s legislative appropriations request.
(f) This section does not apply to hearings held under Chapter 103.