Sec. 10.09.83.05. Judgment, Award, or Settlement of a Medical Assistance Claim

A. Except as provided in §§B-E of this regulation, a third party shall have no further liability if it settles or compromises a dispute in good faith and without knowledge that the individual is a recipient of Program benefits.

B. A recipient, or the recipient’s attorney, guardian, or personal representative, who receives money as a result of a judgment, award, or settlement of an action or claim in which the Department has a subrogation claim shall:

(1) Deduct applicable attorney fees and litigation costs from the total judgment, award, or settlement;

(2) Subject to §C of this regulation, hold and forward to the Department the remainder of the judgment, award, or settlement for the benefit of the Department to the extent required for the Department’s subrogation claim.

C. A recipient shall first repay the Department for costs of past Program services provided to the recipient related to that action or claim before placing any money received from a judgment, award, or settlement into any special needs trust, pooled trust, or pooled trust sub-account, or otherwise distributing the recovered funds to or for the benefit of the recipient. If the recipient and the Department disagree about the amount of the Department’s subrogation right under Regulation .02 of this chapter, the recipient may place the undisputed portion of the judgment, award or settlement into any special needs trust, pooled trust, or pooled trust sub-account, or otherwise distribute the undisputed portion to or for the benefit of the recipient, and the disputed portion of the judgment, award or settlement into an escrow account pending resolution of the disagreement.

D. The Department may only discharge a claim under Regulation .06 of this chapter if the discharge complies with federal law.

E. Liability to the Department.

(1) Except as otherwise provided in §E(3) of this regulation, a person who, after written notice of the Department’s subrogation claim under Regulation .04F of this chapter, disposes of money as a result of a judgment, award, or settlement of an action or claim in violation of §B or C of this regulation, without the written approval of the Department, shall be liable to the Department for any amount that, because of the disposition, is not recoverable by the Department.

(2) Except as otherwise provided in §E(3) of this regulation, any person who fails to comply with the notice requirements of Regulation .04 of this chapter is liable to the Department for:

(a) The total amount of the Department’s claim created pursuant to Regulation .06 of this chapter; and

(b) Any attorney’s fees and litigation expenses incurred by the Department in enforcing the Department’s subrogation rights.

(3) A person is not liable to the Department under §E(1) or (2) of this regulation if a court determines that there was good cause for:

(a) Disposing of the money in violation of §B or C of this regulation; or

(b) Failing to comply with the notice requirements of Regulation .04 of this chapter.