53-2-612. Lien of department upon third-party recoveries. (1) Upon notice by the department or the recipient to a third party or the third party's insurer as provided in subsection (5)(b), the department has a lien upon money paid by a third party or the third party's insurer in satisfaction of a judgment or settlement arising from a recipient's claim for damages or compensation for personal injury, disease, illness, or disability to the extent that the department has paid medical assistance on behalf of the recipient for the same personal injury, disease, illness, or disability and to the extent that the money represents payment for medical expenses.

(2) The department may, in the name of the recipient on whose behalf medical assistance has been paid by the department, commence and prosecute to final conclusion any action that may be necessary to recover from a third party or the third party's insurer compensation or damages for medical assistance paid by the department on behalf of the recipient. This section does not affect the right of the recipient to initiate and prosecute to final conclusion an action for damages or compensation in the recipient's own name in accordance with the provisions of this section.

(3) (a) The lien is subordinate to the lien of an attorney under 37-61-420.

(b) Unless specifically provided by law, the recipient's right to recover damages or compensation from a third party or a third party's insurer may not be reduced or denied on the ground that the recipient's costs of medical treatment and medical-related services have been paid by the department under any public assistance program.

(c) From the amount collected by the department or recipient from legal proceedings or as a result of settlement, reasonable attorney fees and costs must be first deducted and paid. Unless the department and the recipient agree to a different settlement, the amount previously paid as medical assistance by the department, less a pro rata share of attorney fees and costs, must be deducted next and paid to the department, but only to the extent that the amount paid as medical assistance does not exceed the portion of the amount collected that represents payment of medical expenses. The remainder, if any, must be paid to the recipient.

(d) In all cases of payment to the department out of an amount collected from a third party or insurer on a recipient's claim, the amount of the lien must be reduced by a pro rata share of attorney fees and costs as provided in subsection (3)(c), but the department may not be required to participate in payment of attorney fees and costs unless the recipient's claim results in recovery out of which the department receives full or partial payment of its lien.

(e) (i) Except as provided in subsections (3)(e)(ii) and (3)(e)(iii), the department may not impose a lien under this section upon a self-sufficiency trust established pursuant to Title 53, chapter 18, part 1, or upon the assets of a self-sufficiency trust established pursuant to Title 53, chapter 18, part 1.

(ii) The department may impose a lien under this section upon a self-sufficiency trust or upon the assets of a self-sufficiency trust established pursuant to Title 53, chapter 18, part 1, if the department is required by federal law to recover or collect from the trust or its assets as a condition of receiving federal financial participation for the medicaid program.

(iii) To the extent otherwise permitted by this section, the department is not precluded from asserting a claim or imposing a lien upon real or personal property prior to transfer of the property to the trust. If the department imposes a lien upon property prior to transfer to a self-sufficiency trust, any transfer of the property to the trust is subject to the lien.

(4) (a) A recipient of medical assistance or the recipient's legal representative shall notify the department by certified letter within 30 days if the recipient or the recipient's legal representative asserts a claim against a third party or a third party's insurer for damages or compensation for a personal injury, disease, illness, or disability for which the department paid medical assistance in whole or in part or for which the recipient has applied for medical assistance. The notice must be mailed to the director of the department. At the same time, a copy must be sent by certified mail to the third party or the third party's insurer.

(b) The notice must contain the following information:

(i) the name and address of the recipient and the recipient's legal representative, if any;

(ii) the name and address of the third party alleged to be liable to the recipient;

(iii) the name and address of any known insurer of the third party; and

(iv) the judicial district and docket number of any action filed.

(c) A recipient or the recipient's legal representative who has received actual notice that the department has paid medical assistance is liable to the department for the amount it is entitled to receive under this section if:

(i) the recipient or the recipient's legal representative fails to timely notify the department or fails to mail a copy of the notice to the third party or the third party's insurer; and

(ii) a third party or the third party's insurer that did not receive notice from the department as provided for in subsection (5)(b) pays the recipient or the recipient's legal representative without satisfying any lien of the department.

(5) (a) If a third party or the third party's insurer that has received notice of the department's lien as provided for in subsection (5)(b) makes payment in whole or in part of the recipient's claim without first satisfying the lien of the department, the third party or the third party's insurer is liable to the department for the amount the department is entitled to receive under this section.

(b) For the purposes of subsection (5)(a), a third party or the third party's insurer has been given notice if:

(i) the department mails, by certified mail, to the third party or the third party's insurer:

(A) a statement of the medical assistance paid or that may be paid by the department on behalf of the recipient; and

(B) a claim for reimbursement;

(ii) the recipient or the recipient's legal representative mails, by certified mail, to the third party or the third party's insurer:

(A) a copy of the notice required by subsection (4)(a); or

(B) a statement stating that the recipient has applied for or has received medical assistance from the department in connection with the same claim; or

(iii) the recipient or the recipient's legal representative has commenced an action against the third party or the third party's insurer for damages or compensation for personal injury, disease, illness, or disability for which the department has paid or may pay medical assistance, in whole or in part, and the department files in the court in which the action is pending a notice of lien stating that a lien is claimed for medical assistance on any money paid in satisfaction of any judgment in or settlement of the action and that:

(A) medical assistance in a stated amount has been paid by the department on behalf of the recipient; or

(B) medical assistance may be paid on behalf of the recipient.

(6) As used in this section, the following definitions apply:

(a) "Legal representative" means an attorney having or exercising authority on behalf of a recipient with respect to a claim or action to recover damages or compensation from a third party or a third party's insurer.

(b) "Recipient" means a person on whose behalf the department has paid or may pay medical assistance for the cost of medical treatment and medical-related services for personal injury, disease, illness, or disability. If the context allows, the term includes a recipient's legal representative.

(c) "Third party" means an individual, institution, corporation, or public or private agency that is or may be liable to pay all or part of the cost of medical treatment and medical-related services for personal injury, disease, illness, or disability of a recipient of medical assistance from the department and includes but is not limited to insurers, health service organizations, and parties liable or who may be liable in tort.

History: En. 71-241.1 by Sec. 1, Ch. 379, L. 1977; R.C.M. 1947, 71-241.1; amd. Sec. 1, Ch. 535, L. 1985; amd. Sec. 1, Ch. 482, L. 1989; amd. Sec. 3, Ch. 262, L. 1997; amd. Sec. 23, Ch. 571, L. 2001; amd. Sec. 156, Ch. 574, L. 2001; amd. Sec. 1, Ch. 153, L. 2009.