Chapter 83. Third Party Liability
Regulation .01 Definitions.LinkCopy Citation
A.
In this chapter, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Claim” means a demand for payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.
(2)
“Department” means the Maryland Department of Health, the single State agency designated to administer the Maryland Medical Assistance Program under Title XIX of the Social Security Act, 42 U.S.C. §1396 et seq.
(3)
“Program” means the Maryland Medical Assistance Program.
(4)
“Provider” means an individual, association, partnership, corporation, or unincorporated group licensed or certified to provide health care services for recipients and who, through appropriate agreement with the Department, has been identified as a Program provider by the issuance of an individual account number.
(5)
“Recipient” means:
(a)
An individual who is certified as eligible for, and is receiving, Program benefits;
(b)
An individual who was certified as eligible for and received Program benefits; or
(c)
The successor in interest of a person identified in §B(6)(a) or (b) of this regulation.
(6)
“Third party” means any individual, entity or program that is or may be liable to pay all or part of the expenditures for Program benefits.
Regulation .02 Program’s Right of Subrogation.LinkCopy Citation
A.
The Department may not pay medical claims that are payable by a third party.
B.
The Department is assigned any and all rights to payments by any third party that result from medical care received by the recipient, together with the rights of any other individuals eligible for Program benefits for whom the recipient can make assignment. This assignment shall be effective to the extent of the amount of medical assistance actually paid by the Program.
C.
If a recipient has a cause of action against a third party, including a claim under Insurance Article, §19-509 or 19-510, Annotated Code of Maryland, the Department shall be subrogated to that cause of action to the extent of any payments made by the Department on behalf of the recipient that result from the occurrence that gave rise to the cause of action.
D.
The Department’s subrogation claim shall be limited to that portion of the claim that represents compensation for the medical expenses paid by the Program until the date of an award, settlement or judgment.
E.
Judicial Allocation of Medical Expenses from an Award or Settlement.
(1)
A recipient may not agree, in settlement of the recipient’s cause of action, to an allocation of medical expenses less than the amounts set forth in §F of this regulation, without prior approval of the Department.
(2)
If an action decided by the court does not determine the allocation of medical expenses in such action, the allocation shall be determined in accordance with §F of this regulation.
(3)
Provided that the Department is provided at least 10 days advance written notice of any hearing at which the allocation of medical expenses shall be heard, the Department shall defer to the court’s determination of the allocation of medical expenses.
F.
The Department’s Recovery in Subrogation Claims.
(1)
Except as provided in §§F(2) — (4) of this regulation, in satisfaction of the Department’s subrogation claim, the Department shall recover the lesser of:
(a)
The full amount of past medical costs paid by the Program; or
(b)
50 percent of the judgment, award or settlement less attorney fees, litigation costs, and other deductions required by law.
(2)
For the benefit of the recipient, the Department’s recovery in subrogation claims as provided in §F(1) of this regulation shall be reduced by one-third, for the amount of the attorney’s fees incurred by the recipient in bringing the case, unless the Department files a petition to intervene in a case in which it has a subrogation interest, is independently represented by counsel and has been provided the notice required by §E(3) of this regulation.
(3)
The Department shall provide the recipient written notice under COMAR 10.01.04.03 of the amount of the subrogation claim it proposes to recover as provided in §§F(1)—(2) of this regulation and of the recipient’s right to request a fair hearing to present evidence of a different allocation of medical expenses. If the recipient files a request for a hearing, the recipient shall bear the burden of proof and the hearing shall be governed by COMAR 10.01.04. Unless the recipient files a timely request for a hearing within 30 days of receipt of the written notice, the Department shall recover the amount of the subrogation claim set forth in the written notice to the recipient.
(4)
If the amount of money actually collected by the recipient is less than the amount of the judgment or award because available insurance coverage is less than the amount of the judgment or award, the Department’s recovery as calculated in §F(1) of this regulation shall be proportionally reduced by the same percentage as is the amount actually collected compared to the amount of the judgment or award.
G.
Unless ordered by a court, the Department may not be required to join, intervene, or otherwise become a party to the cause of action against a third party to maintain the Department’s subrogation right under §C of this regulation.
H.
An action brought under this regulation is not exclusive and is independent of and in addition to any right, remedy, or cause of action available to the State, the Department, other State agencies, or a Program recipient or other individual.
I.
The Department may enter into contracts for the collection of medical expenses already paid by the Program from potential third parties. The Department may pay, from the funds recovered by the contractor, amounts owed to the federal government as the Department’s share of the Program paid claim, and the costs of collecting the funds.
J.
The Department may assign the Department’s rights of subrogation to a managed care organization and shall provide notice of the assignment to the recipient or the recipient’s attorney.
K.
The Department may compromise or settle and release the Department’s subrogation claim if, in the Department’s judgment, collection of the claim will cause substantial hardship to the:
(1)
Recipient; or
(2)
Surviving dependents of a deceased recipient in a wrongful death action.
Regulation .03 Recipient Responsibility.LinkCopy Citation
A.
A recipient shall cooperate with and assist the Department in identifying and providing information concerning third parties who may be liable to pay for care and services received by the recipient under the Program.
B.
A recipient is required to assist and cooperate fully with the Department in the Department’s efforts to secure the Department’s rights in Regulation .02 of this chapter, including but not limited to:
(1)
Notifying the Program’s Division of Recoveries and Financial Services in writing within 10 days of filing suit or commencing an action against a third party;
(2)
Notifying the Program’s Division of Recoveries and Financial Services in writing before negotiating or entering a settlement with a third party;
(3)
Subject to Regulation .05 of this chapter, paying to the Program within 30 days all funds received from a third party to the extent necessary to satisfy the subrogation rights of the Department;
(4)
Disclosing information regarding health insurance or other third party resources when applying for Program benefits;
(5)
Notifying providers of health and casualty coverage and other third party resources when requesting medical care;
(6)
Notifying the Program of any health insurance obtained after becoming eligible for Medicaid;
(7)
Notifying the Program’s Division of Recoveries and Financial Services of any casualty or liability insurance that may cover medical treatment received due to an injury; and
(8)
Executing and delivering to the Program such documents as reasonably requested by the Program to pursue the Department’s subrogation claim.
C.
As a condition of medical assistance eligibility, a person who applies for Program benefits shall, at the time of application:
(1)
Assign to the Department the applicant's rights of payment for care and services from a third party to the extent the Department has paid for care and services;
(2)
Cooperate with and assist the Department in identifying and providing information concerning third parties who may be liable to pay for care and services received by the recipient under the Program; and
(3)
Agree to apply for all other available third party resources that may be used to:
(a)
Provide or pay for the cost of care or services received by the recipient; or
(b)
Finance reimbursement to the State for the cost of care or services received by the recipient.
D.
Nothing in this regulation shall require a recipient to file a civil or other action for the purpose of reimbursing the State for the cost of care or services. If a recipient fails or refuses to commence a civil or other action to enforce the legal liability of a third party, the Department may commence an independent action, after notice to the recipient, to recover all medical costs to which the Department is entitled. In any such action by the Department, the recipient in interest may be joined as a party.
E.
Failure of the applicant or recipient to cooperate with the Program to secure the Department’s rights to subrogation and assignment may result in the denial or termination of the recipient’s Program eligibility. Recipients terminated under this regulation shall be notified in writing of the proposed Program action and afforded the opportunity for a fair hearing under COMAR 10.01.04.
Regulation .04 Notice to the Department.LinkCopy Citation
A.
An attorney representing a recipient in a cause of action that gives rise to the Department’s right of subrogation under Regulation .02 of this chapter shall notify the Program’s Division of Recoveries and Financial Services in writing before:
(1)
Filing a claim;
(2)
Commencing an action; or
(3)
Negotiating a settlement.
B.
The notice required under §A of this regulation shall include submission of the following information:
(1)
The recipient's name, Social Security Number, date of birth, last known address, and telephone number;
(2)
The name of any person against whom the recipient is making a claim;
(3)
The identification of each potentially liable third party, including that party's name, last known address, and telephone number;
(4)
The name of any insurer of any person against whom the recipient is making a claim, if known;
(5)
The date of the injury or illness giving rise to the claim;
(6)
A short statement identifying the nature of the recipient’s claim or the terms of any settlement, judgment or award;
(7)
Copies of the pleadings and other papers related to the action or claim; and
(8)
A valid release of the confidentiality of the recipient’s medical records from the date of the injury until the date of the notice.
C.
In any action or claim by a recipient to recover damages for an injury or illness that has resulted in the Department providing or paying for Program benefits, an attorney who represents a recipient shall give the Program’s Division of Recoveries and Financial Services written notice:
(1)
Not later than 30 calendar days after any judgment or award in such action or claim; or
(2)
Before the resolution of the cause of action or claim.
D.
In addition to the notices required in §§A and C of this regulation, an attorney required to give notice under §A or C of this regulation shall give the Program’s Division of Recoveries and Financial Services additional written notice not later than 30 calendar days after judgment, award, or settlement of the action or claim stating the amount and terms of any judgment, award, or settlement of the action or claim.
E.
Upon receiving the notice required pursuant to §A of this regulation, the Department shall, within 3 business days, acknowledge in writing its claim to the recipient or the attorney of the recipient and to the third party. The Department shall provide the amount of the claim and an itemized list of charges within 15 business days pursuant to Regulation .06 of this chapter. Nothing herein shall prevent the Department from thereafter updating the amount of the claim and itemized list of charges within a reasonable time after the recipient’s provider notifies the Department of additional charges.
F.
Upon receiving the notice required pursuant to §A of this regulation, the Department shall, within 3 business days, advise the recipient or the attorney of the recipient and the third party, in writing, whether the recipient is:
(1)
A Medicaid recipient;
(2)
A member of a Medicaid Managed Care Organization (MCO); or
(3)
Not a Medicaid recipient.
G.
Under Regulation .06 of this chapter, the Department shall provide the amount of the claim and an itemized list of charges within 15 business days of receipt of the notice required under §A of this regulation. Nothing in this regulation shall prevent the Department from updating the amount of the claim and itemized list of charges within a reasonable time after the recipient’s provider notifies the Department of additional charges.
Regulation .05 Judgment, Award, or Settlement of a Medical Assistance Claim.LinkCopy Citation
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.
Regulation .06 Program Claim.LinkCopy Citation
A.
In a case where the Department is subrogated to the rights of the recipient, the Department has a claim to the proceeds of the recovery from the persons liable, whether the proceeds of the recovery are by way of judgment, settlement, or otherwise and shall, to the extent permitted by federal law, be satisfied in full.
B.
The claim is in the amount of all Program benefits paid minus any deductions required by law.
C.
The claim is effective when:
(1)
Filed with a court of competent jurisdiction in the State; and
(2)
Notice of filing of the claim is served by the Department upon the third party, personally or by registered, certified, or insured mail, return receipt requested.
Regulation .07 Conflict with Federal Requirements.LinkCopy Citation
If any provision of this chapter related to subrogation, assignment, or lien conflicts with federal law concerning the Program or receipt of federal funds to finance the Program, the provision does not apply to the extent of the conflict.
Chapter annotations
Authority: Health-General Article, §§2-104(b), 15-103, 15-105, and 15-120—15-121.3, Annotated Code of Maryland
History: Effective date: June 24, 2013 (40:12 Md. R. 1042)