§346-37  Recovery of payments and costs ofmedical assistance.  (a)  If a recipient under this chapter dies leaving anestate and does not have a surviving spouse, child, father, mother,grandfather, grandmother, grandchild, stepfather, stepmother, or any designatedheir, the department shall have a valid claim against the estate for the amountof social services overpayments, financial assistance overpayments, or burialpayments granted.  The department shall file a claim against the estate of adeceased recipient of medical assistance for the amount of medical assistancegranted, only if the recipient was age fifty-five or over when such medicalassistance was received and there is no surviving spouse, or surviving childwho is under twenty-one years of age, or blind, or disabled.  The departmentshall file a claim against the estate of a recipient of medical assistance whowas an inpatient in a nursing facility, intermediate care facility for thementally retarded, or other medical institution only if there is no survivingspouse or surviving child who is under twenty-one years of age, or blind, ordisabled.

(b)  If any portion of any public assistance,including medical assistance, food stamps, or burial payment, was obtained byany fraudulent device, including but not limited to those under section 346-34,or if any public assistance, including medical assistance, food stamps, orburial payment, was furnished or provided after receipt of income or resourceswhich were not reported to the department as required by this chapter or by thedepartment, the department may file a claim against the estate of the deceasedrecipient notwithstanding subsection (a).

(c)  If the department has provided medicalassistance or burial payment to a person who was injured, suffered a disease,or died under circumstances creating a tort or other liability or paymentobligation against a third person, the department shall have a right to recoverfrom the third person an amount not to exceed the full amount of the costs of medicalassistance or burial payment furnished or to be furnished by the department.

(d)  The department, as to this right ofreimbursement, shall also be subrogated to all rights or claims that a claimanthas against the third person for all damages not to exceed the full extent ofthe costs of medical assistance or burial payment furnished or to be furnishedby the department.  The department's right to full reimbursement of the costsof medical assistance or burial payment as a subrogee of a claimant shall notbe diminished by the recovery of any judgment, settlement, or award of anamount less than the value of the original or settled claim as perceived orcalculated by the claimant or any other person.

To enforce its rights, the department mayintervene or join in any action or proceeding brought by a claimant against thethird person.  If the action or proceeding is not commenced within six monthsafter the first day on which medical assistance or burial payment is furnishedby the department in connection with the injury, disease, or death involved,the department may institute and prosecute legal proceedings against the thirdperson for the injury, disease, or death, in a state court, either alone (inits own name or in the name of a claimant) or in conjunction with the claimant.

(e)  An attorney representing a claimant orthird person shall make reasonable inquiry as to whether the claimant hasreceived or is receiving from the department medical assistance related to theincident involved in the action.  If the claimant, claimant's attorney, orclaimant's heirs, representatives, or beneficiaries, or any third person havereceived from the department actual notice of its right to reimbursement or ifthey have reason to know that the claimant has received or is receiving fromthe department medical assistance related to the incident, then the claimant,claimant's attorney, claimant's heirs, representatives, or beneficiaries, orthird person or third person's attorney shall give to the department timely writtennotice of any claim or action against a third person.  At any time during thependency of any claim or action, the claimant, claimant's attorney ifrepresented, claimant's heirs, representatives, or beneficiaries, or thirdperson or third person's attorney may contact the department to ascertain thefull amount of the costs of medical assistance or burial payment made, whichinformation shall be provided in a reasonable time by the department.  Uponobtaining a judgment or reaching a settlement through negotiation or legalproceedings, but before the release of any award or settlement proceeds to anyperson:

(1)  The claimant's attorney or third person or thirdperson's attorney, if the attorney has received actual notice from thedepartment of a lien or if the attorney or third person has reason to know thata lien exists; or

(2)  The claimant or the claimant's heirs,representatives, or beneficiaries, if not represented by an attorney who hasreceived actual notice of the lien,

shall notify the department immediately in order toascertain and pay the full amount of the costs of medical assistance or burialpayment made.

(f)  If liability is found to exist, or if theissue of third-party liability is settled or compromised without a finding ofliability, regardless of who institutes legal proceedings or seeks other meansof recovering, the department shall have a right to recover the full amount ofthe costs of medical assistance or burial payment made.  To aid in the recoveryof the costs the department shall have a first lien in the full amount of thecosts of medical assistance or burial payment made against the proceeds fromall damages awarded in a suit or settlement.  The lien shall attach as providedby subsection (g).

(g)  The lien of the department forreimbursement of costs of medical assistance or burial payments undersubsection (f), shall attach by a written notice of lien served upon theclaimant's attorney or upon the third person, the third person's agent,attorney, or insurance company.  The method of service shall be by certified orregistered mail, return receipt requested, or by delivery of the notice of lienpersonally to the individuals referred to.  Service by certified or registeredmail is complete upon receipt.  The notice of lien shall state the name of theinjured, diseased, or deceased person, the amount of the lien, and the date ofthe accident or incident which caused the injuries, disease, or death whichnecessitated the department's medical assistance or burial payments.  If thenotice of lien is served upon the claimant's attorney, the notice of lien shallstate that the claimant's attorney shall pay the full amount of the lien fromthe proceeds of any judgment, settlement, or compromise based on the incidentor accident.  If the notice of lien is served upon the third person, the thirdperson's agent, attorney, or insurance company, the notice of lien shall statethat the third person shall pay the full amount of the lien prior to disbursingany of the proceeds to the claimant or to the claimant's attorney.  A notice oflien may be amended from time to time until extinguished, each amendment takingeffect upon proper service.

(h)  The lien shall attach as provided bysubsection (g). If a notice of lien is properly served upon the attorneyrepresenting the claimant as provided in subsection (g), that attorney shallpay the full amount of the lien, prior to disbursing any of the proceeds of thesuit or settlement to the attorney's client.  If a notice of lien is properlyserved upon the third person, the third person's agent or attorney, or thethird person's insurance company, as provided in subsection (g), it shall bethe responsibility of the person receiving the notices to pay the full amountof the lien prior to disbursing any of the proceeds to the claimant's attorney.

If, after having received timely written noticeof any claim or action under subsection (e), the department did not interveneor join in the action or prosecute its own claims or actively participate withclaimant or claimant's attorney in the prosecution of claims, or a distributionagreement was not entered into between the parties, then the department shalldetermine its fair contribution toward attorney fees and costs incurred in theaction that shall be a reasonable amount based solely upon legitimate costs andservices rendered by the claimant or claimant's attorney in recovering the lienamount. Any dispute regarding the department's determination of itscontribution to fees and costs may be submitted to administrative hearing undersubsection (i) or a court of competent jurisdiction.  The value of servicescontributed by the claimant and department may be considered in fairlyallocating fees and costs between the claimant and department where both contributeto recovering the lien amount.

(i)  Notwithstanding any other law to thecontrary, if there is a dispute between the claimant, the claimant's agent orthe claimant's attorney, and the department concerning the existence of thelien or the amount of  the lien, or the amount to be reimbursed, the claimant,the claimant's agent, or the claimant's attorney shall request in writing ahearing on the dispute.  After receipt by the department of a written request,the department shall conduct an administrative hearing within a reasonableperiod of time.  Chapter 91, including any provisions for judicial review orappeal, shall apply to the hearing.  Funds sufficient to fully satisfy thereimbursement rights of the department shall be either retained by the personserved with the notice of lien, shall be paid to the department, or otherwisereserved subject to agreement with the department pending its decision and anysubsequent judicial review or appeal.

(j)  Upon the recovery of any claim as providedin this section, the amount recovered shall be paid into the treasury of theState, and if the amount for which claim was paid was in part from federalfunds, the proper portion thereof shall be paid by the director of finance intothe treasury of the United States, and the director of finance shall report thepayment to the department.

(k)  Any person who is subject to the lien whofails to pay the full amount due to the department for reimbursement of thecosts of medical assistance, although able to do so from the proceeds of thesuit or settlement, shall be personally liable to the department for any damageproximately caused to the department by such failure.

(l)  No action taken by the department inconnection with the rights under this section shall deny to the claimant therecovery for that portion of the claimant's damages not covered under thissection.

(m)  For purposes of this section:

"Claimant" includes an injured ordiseased person, the person's guardian, or the personal representative, estate,dependents, or survivors, of the deceased person.

"Costs of medical assistance"furnished or to be furnished by the department includes:

(1)  The value or cost of medical care servicesprovided directly by the department;

(2)  The amount paid by the department to a providerfor medical care services rendered or to be rendered; and

(3)  The value or cost of medical care servicesrendered or to be rendered by a provider that has received the equivalent of aninsurance benefit, capitation rate, and other fee or like charge paid by thedepartment or by a medical care insurer to provide for medical care services.

"Third person" includes any person,business, corporation, partnership, or entity of any kind or nature, includingemployers and insurance carriers, that is potentially liable to the claimantfor any tort, liability, payment, reimbursement, or benefit of any kind ornature by reason of any injury, disease, or death.

(n)  The department may agree with a provideror medical care insurer for the provision of medical care services or medicalassistance to any claimant, and the agreement may provide for the department tobe the exclusive entity authorized to recover all costs of medical assistancerendered to a claimant.  The department may recover all costs through the useof the lien procedures established by this section.

(o)  In third-party liability situations, themedical assistance program of the department shall be fully reimbursed beforethe claimant receives any money from the settlement or award.  This section isnot intended to restrict or diminish the right of the department to settle orcompromise its reimbursement rights under this section for less than the fullamount due or enter into any agreement with claimant, claimant's attorney orrepresentative, or other party for the distribution of proceeds from a suit orsettlement. [L 1941, c 296, pt of §1; RL 1945, §4842; RL 1955, §108-23; am L Sp1959 2d, c 1, §14; am L 1963, c 114, §1; HRS §346-37; am L 1972, c 32, §2; am L1975, c 137, pt of §2; am L 1980, c 206, §1; am L 1982, c 147, §17; gen ch1985; am L 1994, c 187, §§4, 5; am L 1997, c 201, §1; am L 1999, c 52, §2; am L2001, c 50, §2]

 

Cross References

 

  Medicaid fraud unit, see §28-91.

 

Case Notes

 

  State's lien cannot be evaded by settlement agreement betweeninjured person and putative tortfeasor covering only special damages.  Validityand amount of subrogated claim is for court to decide.  69 H. 21, 731 P.2d 157.

  Subsection (j) (1997) grants the State recovery of its costsfor medical assistance from special damages and does not limit the State toaccepting a pro rata share of claimant's recovery; a settling claimant cannotwaive recovery of special damages, but the State is entitled to and may recoverits medical assistance expenses from the special damages obtained.  101 H. 466,71 P.3d 417.

  The clear and unambiguous language of this section (1997),establishes a priority that the medical assistance lien be paid to thedepartment of human services before the recipient of the medical assistance isreimbursed; thus, trial court erred when it reduced the amount of thedepartment's statutory lien.  101 H. 473 (App.), 71 P.3d 424.

  Cited:  73 H. 403, 833 P.2d 890.