S.B. 50

1

MEDICAL BENEFITS RECOVERY
2 AMENDMENTS
3 2008 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Allen M. Christensen
6 House Sponsor: Bradley G. Last
7
8 LONG TITLE
9 Committee Note:
10 The Medicaid Interim Committee recommended this bill.
11 General Description:
12 This bill amends the Medical Benefits Recovery Act to provide that a lien, to recover
13 medical assistance benefits provided by the state, may be imposed against the real
14 property of a person who is an inpatient in a care facility, during the life of that person.
15 The bill also amends provisions related to the recovery of medical assistance from an
16 estate or trust and recodifies the Medical Benefits Recovery Act.
17 Highlighted Provisions:
18 This bill:
19 . defines terms;
20 . recodifies the Medical Benefits Recovery Act;
21 . modifies provisions related to recovery of medical assistance from a recipient's
22 estate or a trust, so that recovery can be made as soon as an exception to recovery,
23 relating to a surviving spouse or child, is no longer in effect;
24 . provides for the imposition of a lien, authorized by the federal Tax Equity and
25 Fiscal Responsibility Act of 1982 (TEFRA), against the real property of a person
26 who is an inpatient in a care facility, during the life of that person;
27 . establishes procedures, requirements, and exemptions, relating to imposing a

28 TEFRA lien;
29 . establishes a rebuttable presumption that a person who is an inpatient in a care
30 facility cannot reasonably be expected to be discharged from the care facility and
31 return to the person's home, if the person has been an inpatient in a care facility for a
32 period of at least 180 consecutive days;
33 . provides for review and appeal of a decision to impose a TEFRA lien;
34 . provides for the dissolution and removal of a TEFRA lien;
35 . provides that an agency that the department contracts with to recover funds paid for
36 medical assistance under the Medical Benefits Recovery Act shall be the sole
37 agency that imposes or removes a TEFRA lien; and
38 . makes technical changes.
39 Monies Appropriated in this Bill:
40 None
41 Other Special Clauses:
42 None
43 Utah Code Sections Affected:
44 AMENDS:
45 31A-4-107.5, as enacted by Laws of Utah 2007, Chapter 64
46 31A-22-610, as last amended by Laws of Utah 2007, Chapter 307
47 31A-22-610.5, as last amended by Laws of Utah 2004, Chapters 108 and 185
48 34A-2-417, as last amended by Laws of Utah 2007, Chapter 62
49 34A-2-422, as last amended by Laws of Utah 2007, Chapter 63
50 75-3-805, as last amended by Laws of Utah 1998, Chapter 145
51 75-7-508, as last amended by Laws of Utah 2007, Chapter 64
52 75-7-511, as renumbered and amended by Laws of Utah 2004, Chapter 89
53 ENACTS:
54 26-19-404, Utah Code Annotated 1953
55 26-19-501, Utah Code Annotated 1953
56 26-19-502, Utah Code Annotated 1953
57 26-19-503, Utah Code Annotated 1953
58 26-19-504, Utah Code Annotated 1953

59 26-19-505, Utah Code Annotated 1953
60 26-19-506, Utah Code Annotated 1953
61 26-19-507, Utah Code Annotated 1953
62 26-19-508, Utah Code Annotated 1953
63 26-19-509, Utah Code Annotated 1953
64 RENUMBERS AND AMENDS:
65 26-19-101, (Renumbered from 26-19-1, as enacted by Laws of Utah 1981, Chapter 126)
66 26-19-102, (Renumbered from 26-19-2, as last amended by Laws of Utah 2007,
67 Chapter 64)
68 26-19-103, (Renumbered from 26-19-3, as last amended by Laws of Utah 1984,
69 Chapter 34)
70 26-19-201, (Renumbered from 26-19-4.5, as last amended by Laws of Utah 1998,
71 Chapter 145)
72 26-19-301, (Renumbered from 26-19-4.7, as enacted by Laws of Utah 2007, Chapter
73 64)
74 26-19-302, (Renumbered from 26-19-14, as last amended by Laws of Utah 1995,
75 Chapter 102)
76 26-19-303, (Renumbered from 26-19-9.5, as enacted by Laws of Utah 2004, Chapter
77 72)
78 26-19-304, (Renumbered from 26-19-9, as enacted by Laws of Utah 1993, Chapter 145)
79 26-19-305, (Renumbered from 26-19-8, as last amended by Laws of Utah 2007,
80 Chapter 64)
81 26-19-401, (Renumbered from 26-19-5, as last amended by Laws of Utah 2005,
82 Chapter 103)
83 26-19-402, (Renumbered from 26-19-6, as last amended by Laws of Utah 2004,
84 Chapter 72)
85 26-19-403, (Renumbered from 26-19-7, as last amended by Laws of Utah 2005,
86 Chapter 103)
87 26-19-405, (Renumbered from 26-19-13.5, as last amended by Laws of Utah 2004,
88 Chapter 72)
89 26-19-406, (Renumbered from 26-19-13.7, as enacted by Laws of Utah 1998, Chapter

90 145)
91 26-19-601, (Renumbered from 26-19-9.7, as enacted by Laws of Utah 2004, Chapter
92 72)
93 26-19-602, (Renumbered from 26-19-19, as enacted by Laws of Utah 1998, Chapter
94 145)
95 26-19-603, (Renumbered from 26-19-15, as last amended by Laws of Utah 1984,
96 Chapter 34)
97 26-19-604, (Renumbered from 26-19-16, as enacted by Laws of Utah 1981, Chapter
98 126)
99 26-19-605, (Renumbered from 26-19-17, as last amended by Laws of Utah 1984,
100 Chapter 34)
101
102 Be it enacted by the Legislature of the state of Utah:
103 Section 1. Section 26-19-101 , which is renumbered from Section 26-19-1 is
104 renumbered and amended to read:
105 CHAPTER 19. MEDICAL BENEFITS RECOVERY ACT
106 Part 1. General Provisions
107 [26-19-1]. 26-19-101. Title.
108 This chapter [shall be] is known [and may be cited] as the "Medical Benefits Recovery
109 Act."
110 Section 2. Section 26-19-102 , which is renumbered from Section 26-19-2 is
111 renumbered and amended to read:
112 [26-19-2]. 26-19-102. Definitions.
113 As used in this chapter:
114 (1) "Annuity" shall have the same meaning as provided in Section 31A-1-301 .
115 (2) "Care facility" means:
116 (a) a nursing facility;
117 (b) an intermediate care facility for the mentally retarded; or
118 (c) any other medical institution.
119 [(2)] (3) "Claim" means:
120 (a) a request or demand for payment; or

121 (b) a cause of action for money or damages arising under any law.
122 [(3)] (4) "Employee welfare benefit plan" means a medical insurance plan developed
123 by an employer under 29 U.S.C. Section 1001, et seq., the Employee Retirement Income
124 Security Act of 1974 as amended.
125 [(4)] (5) "Estate" means, regarding a deceased recipient:
126 (a) all real and personal property or other assets included within a decedent's estate as
127 defined in Section 75-1-201 ;
128 (b) the decedent's augmented estate as defined in Section 75-2-203 ; and
129 (c) that part of other real or personal property in which the decedent had a legal interest
130 at the time of death including assets conveyed to a survivor, heir, or assign of the decedent
131 through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other
132 arrangement.
133 [(5)] (6) "Health insurance entity" means:
134 (a) an insurer;
135 (b) a person who administers, manages, provides, offers, sells, carries, or underwrites
136 health insurance, as defined in Section 31A-1-301 ;
137 (c) a self-insured plan;
138 (d) a group health plan, as defined in Subsection 607(1) of the federal Employee
139 Retirement Income Security Act of 1974;
140 (e) a service benefit plan;
141 (f) a managed care organization;
142 (g) a pharmacy benefit manager;
143 (h) an employee welfare benefit plan; or
144 (i) a person who is, by statute, contract, or agreement, legally responsible for payment
145 of a claim for a health care item or service.
146 (7) "Inpatient" means a person who is a patient and a resident of a care facility.
147 [(6)] (8) "Insurer" includes:
148 (a) a group health plan as defined in Subsection 607(1) of the federal Employee
149 Retirement Income Security Act of 1974;
150 (b) a health maintenance organization; and
151 (c) any entity offering a health service benefit plan.

152 [(7)] (9) "Medical assistance" means:
153 (a) all funds expended for the benefit of a recipient under Title 26, Chapter 18, Medical
154 Assistance Act, or under Titles XVIII and XIX, federal Social Security Act; and
155 (b) any other services provided for the benefit of a recipient by a prepaid health care
156 delivery system under contract with the department.
157 [(8)] (10) "Office of Recovery Services" means the Office of Recovery Services within
158 the Department of Human Services.
159 [(9)] (11) "Provider" means a person or entity who provides services to a recipient.
160 [(10)] (12) "Recipient" means:
161 (a) a person who has applied for or received medical assistance from the state;
162 (b) the guardian, conservator, or other personal representative of a person under
163 Subsection [(10)] (12)(a) if the person is a minor or an incapacitated person; or
164 (c) the estate and survivors of a person under Subsection [(10)] (12)(a) if the person is
165 deceased.
166 [(11)] (13) "State plan" means the state Medicaid program as enacted in accordance
167 with Title XIX, federal Social Security Act.
168 (14) "TEFRA lien" means a lien, authorized under the Tax Equity and Fiscal
169 Responsibility Act of 1982, against the real property of an individual prior to the individual's
170 death, as described in 42 U.S.C. 1396p.
171 [(12)] (15) "Third party" includes:
172 (a) an individual, institution, corporation, public or private agency, trust, estate,
173 insurance carrier, employee welfare benefit plan, health maintenance organization, health
174 service organization, preferred provider organization, governmental program such as Medicare,
175 CHAMPUS, and workers' compensation, which may be obligated to pay all or part of the
176 medical costs of injury, disease, or disability of a recipient, unless any of these are excluded by
177 department rule; and
178 (b) a spouse or a parent who:
179 (i) may be obligated to pay all or part of the medical costs of a recipient under law or
180 by court or administrative order; or
181 (ii) has been ordered to maintain health, dental, or accident and health insurance to
182 cover medical expenses of a spouse or dependent child by court or administrative order.

183 [(13)] (16) "Trust" shall have the same meaning as provided in Section 75-1-201 .
184 Section 3. Section 26-19-103 , which is renumbered from Section 26-19-3 is
185 renumbered and amended to read:
186 [26-19-3]. 26-19-103. Program established by department -- Promulgation of
187 rules.
188 (1) The department shall establish and maintain a program for the recoupment of
189 medical assistance.
190 (2) The department may promulgate rules to implement the purposes of this chapter.
191 Section 4. Section 26-19-201 , which is renumbered from Section 26-19-4.5 is
192 renumbered and amended to read:
193 Part 2. Assignment of Rights
194 [26-19-4.5]. 26-19-201. Assignment of rights to benefits.
195 (1) (a) To the extent that medical assistance is actually provided to a recipient, all
196 benefits for medical services or payments from a third party otherwise payable to or on behalf
197 of a recipient are assigned by operation of law to the department if the department provides, or
198 becomes obligated to provide, medical assistance, regardless of who made application for the
199 benefits on behalf of the recipient.
200 (b) The assignment:
201 (i) authorizes the department to submit its claim to the third party and authorizes
202 payment of benefits directly to the department; and
203 (ii) is effective for all medical assistance.
204 (2) The department may recover the assigned benefits or payments in accordance with
205 Section [ 26-19-5 ] 26-19-401 and as otherwise provided by law.
206 (3) The assignment of benefits includes medical support and third party payments
207 ordered, decreed, or adjudged by any court of this state or any other state or territory of the
208 United States. That assignment is not in lieu of, and does not supersede or alter any other court
209 order, decree, or judgment.
210 (4) When an assignment takes effect, the recipient is entitled to receive medical
211 assistance, and the benefits paid to the department are a reimbursement to the department.
212 Section 5. Section 26-19-301 , which is renumbered from Section 26-19-4.7 is
213 renumbered and amended to read:

214 Part 3. Insurance Provisions
215 [26-19-4.7]. 26-19-301. Health insurance entity -- Duties related to state claims
216 for Medicaid payment or recovery.
217 As a condition of doing business in the state, a health insurance entity shall:
218 (1) with respect to a person who is eligible for, or is provided, medical assistance under
219 the state plan, upon the request of the Department of Health, provide information to determine:
220 (a) during what period the person, or the spouse or dependent of the person, may be or
221 may have been, covered by the health insurance entity; and
222 (b) the nature of the coverage that is or was provided by the health insurance entity
223 described in Subsection (1)(a), including the name, address, and identifying number of the
224 plan;
225 (2) accept the state's right of recovery and the assignment to the state of any right of a
226 person to payment from a party for an item or service for which payment has been made under
227 the state plan;
228 (3) respond to any inquiry by the Department of Health regarding a claim for payment
229 for any health care item or service that is submitted no later than three years after the day on
230 which the health care item or service is provided; and
231 (4) not deny a claim submitted by the Department of Health solely on the basis of the
232 date of submission of the claim, the type or format of the claim form, or failure to present
233 proper documentation at the point-of-sale that is the basis for the claim, if:
234 (a) the claim is submitted no later than three years after the day on which the item or
235 service is furnished; and
236 (b) any action by the Department of Health to enforce the rights of the state with
237 respect to the claim is commenced no later than six years after the day on which the claim is
238 submitted.
239 Section 6. Section 26-19-302 , which is renumbered from Section 26-19-14 is
240 renumbered and amended to read:
241 [26-19-14]. 26-19-302. Insurance policies not to deny or reduce benefits of
242 persons eligible for state medical assistance -- Exemptions.
243 (1) A policy of accident or sickness insurance issued or renewed after May 12, 1981,
244 may not contain any provision denying or reducing benefits because services are rendered to an

245 insured or dependent who is eligible for or receiving medical assistance from the state.
246 (2) After May 12, 1981, no association, corporation, or organization may deliver, issue
247 for delivery, or renew any subscriber's contract which contains any provisions denying or
248 reducing benefits because services are rendered to a subscriber or dependent who is eligible for
249 or receiving medical assistance from the state.
250 (3) After May 12, 1981, no association, corporation, business, or organization
251 authorized to do business in this state and which provides or pays for any health care benefits
252 may deny or reduce benefits because services are rendered to a beneficiary who is eligible for
253 or receiving medical assistance from the state.
254 (4) Notwithstanding Subsection (1), (2), or (3), the Utah State Public Employees
255 Health Program, administered by the Utah State Retirement Board, is not required to reimburse
256 any agency of state government for custodial care which the agency provides, through its staff
257 or facilities, to members of the Utah State Public Employees Health Program.
258 (5) This section is subject to the provisions of Subsection 31A-22-610.5 (3).
259 Section 7. Section 26-19-303 , which is renumbered from Section 26-19-9.5 is
260 renumbered and amended to read:
261 [26-19-9.5]. 26-19-303. Availability of insurance policy.
262 If the third party does not pay the department's claim or lien within 30 days from the
263 date the claim or lien is received, the third party shall:
264 (1) provide a written explanation if the claim is denied;
265 (2) specifically describe and request any additional information from the department
266 that is necessary to process the claim; and
267 (3) provide the department or its agent a copy of any relevant or applicable insurance
268 or benefit policy.
269 Section 8. Section 26-19-304 , which is renumbered from Section 26-19-9 is
270 renumbered and amended to read:
271 [26-19-9]. 26-19-304. Employee benefit plans.
272 As allowed pursuant to 29 U.S.C. Section 1144, an employee benefit plan may not
273 include any provision that has the effect of limiting or excluding coverage or payment for any
274 health care for an individual who would otherwise be covered or entitled to benefits or services
275 under the terms of the employee benefit plan based on the fact that the individual is eligible for

276 or is provided services under the state plan.
277 Section 9. Section 26-19-305 , which is renumbered from Section 26-19-8 is
278 renumbered and amended to read:
279 [26-19-8]. 26-19-305. Statute of limitations -- Survival of right of action --
280 Insurance policy not to limit time allowed for recovery.
281 (1) (a) Subject to Subsection (6), action commenced by the department under this
282 chapter against a health insurance entity must be commenced within:
283 (i) subject to Subsection (7), six years after the day on which the department submits
284 the claim for recovery or payment for the health care item or service upon which the action is
285 based; or
286 (ii) six months after the date of the last payment for medical assistance, whichever is
287 later.
288 (b) An action against any other third party, the recipient, or anyone to whom the
289 proceeds are payable must be commenced within:
290 (i) four years after the date of the injury or onset of the illness; or
291 (ii) six months after the date of the last payment for medical assistance, whichever is
292 later.
293 (2) The death of the recipient does not abate any right of action established by this
294 chapter.
295 (3) (a) No insurance policy issued or renewed after June 1, 1981, may contain any
296 provision that limits the time in which the department may submit its claim to recover medical
297 assistance benefits to a period of less than 24 months from the date the provider furnishes
298 services or goods to the recipient.
299 (b) No insurance policy issued or renewed after April 30, 2007, may contain any
300 provision that limits the time in which the department may submit its claim to recover medical
301 assistance benefits to a period of less than that described in Subsection (1)(a).
302 (4) The provisions of this section do not apply to Section [ 26-19-13.5 ] 26-19-405 or
303 Part 5, TEFRA Liens.
304 (5) The provisions of this section supercede any other sections regarding the time limit
305 in which an action must be commenced, including Section 75-7-509 .
306 (6) (a) Subsection (1)(a) extends the statute of limitations on a cause of action

307 described in Subsection (1)(a) that was not time-barred on or before April 30, 2007.
308 (b) Subsection (1)(a) does not revive a cause of action that was time-barred on or
309 before April 30, 2007.
310 (7) An action described in Subsection (1)(a) may not be commenced if the claim for
311 recovery or payment described in Subsection (1)(a)(i) is submitted later than three years after
312 the day on which the health care item or service upon which the claim is based was provided.
313 Section 10. Section 26-19-401 , which is renumbered from Section 26-19-5 is
314 renumbered and amended to read:
315 Part 4. General Recovery Provisions
316 [26-19-5]. 26-19-401. Recovery of medical assistance from third party -- Lien
317 -- Notice -- Action -- Compromise or waiver -- Recipient's right to action protected.
318 (1) (a) When the department provides or becomes obligated to provide medical
319 assistance to a recipient that a third party is obligated to pay for, the department may recover
320 the medical assistance directly from that third party.
321 (b) Any claim arising under Subsection (1)(a) or Section [ 26-19-4.5 ] 26-19-201 to
322 recover medical assistance provided to a recipient is a lien against any proceeds payable to or
323 on behalf of the recipient by that third party. This lien has priority over all other claims to the
324 proceeds, except claims for [attorney's] attorney fees and costs authorized under Subsection
325 [ 26-19-7 ] 26-19-403 (2)(c)(ii).
326 (2) (a) The department shall mail or deliver written notice of its claim or lien to the
327 third party at its principal place of business or last-known address.
328 (b) The notice shall include:
329 (i) the recipient's name;
330 (ii) the approximate date of illness or injury;
331 (iii) a general description of the type of illness or injury; and
332 (iv) if applicable, the general location where the injury is alleged to have occurred.
333 (3) The department may commence an action on its claim or lien in its own name, but
334 that claim or lien is not enforceable as to a third party unless:
335 (a) the third party receives written notice of the department's claim or lien before it
336 settles with the recipient; or
337 (b) the department has evidence that the third party had knowledge that the department

338 provided or was obligated to provide medical assistance.
339 (4) The department may:
340 (a) waive a claim or lien against a third party in whole or in part; or
341 (b) compromise, settle, or release a claim or lien.
342 (5) An action commenced under this section does not bar an action by a recipient or a
343 dependent of a recipient for loss or damage not included in the department's action.
344 (6) The department's claim or lien on proceeds under this section is not affected by the
345 transfer of the proceeds to a trust, annuity, financial account, or other financial instrument.
346 Section 11. Section 26-19-402 , which is renumbered from Section 26-19-6 is
347 renumbered and amended to read:
348 [26-19-6]. 26-19-402. Action by department -- Notice to recipient.
349 (1) (a) Within 30 days after commencing an action under Subsection [ 26-19-5 ]
350 26-19-401 (3), the department shall give the recipient, [his] the recipient's guardian, personal
351 representative, trustee, estate, or survivor, whichever is appropriate, written notice of the action
352 by:
353 (i) personal service or certified mail to the last known address of the person receiving
354 the notice; or
355 (ii) if no last-known address is available, by publishing a notice once a week for three
356 successive weeks in a newspaper of general circulation in the county where the recipient
357 resides.
358 (b) Proof of service shall be filed in the action.
359 (c) The recipient may intervene in the department's action at any time before trial.
360 (2) The notice required by Subsection (1) shall name the court in which the action is
361 commenced and advise the recipient of:
362 (a) the right to intervene in the proceeding;
363 (b) the right to obtain a private attorney; and
364 (c) the department's right to recover medical assistance directly from the third party.
365 Section 12. Section 26-19-403 , which is renumbered from Section 26-19-7 is
366 renumbered and amended to read:
367 [26-19-7]. 26-19-403. Notice of claim by recipient -- Department response --
368 Conditions for proceeding -- Collection agreements.

369 (1) (a) A recipient may not file a claim, commence an action, or settle, compromise,
370 release, or waive a claim against a third party for recovery of medical costs for an injury,
371 disease, or disability for which the department has provided or has become obligated to provide
372 medical assistance, without the department's written consent as provided in Subsection (2)(b)
373 or (4).
374 (b) For purposes of Subsection (1)(a), consent may be obtained if:
375 (i) a recipient who files a claim, or commences an action against a third party notifies
376 the department in accordance with Subsection (1)(d) within ten days of making [his] the
377 recipient's claim or commencing an action; or
378 (ii) an attorney, who has been retained by the recipient to file a claim, or commence an
379 action against a third party, notifies the department in accordance with Subsection (1)(d) of the
380 recipient's claim:
381 (A) within 30 days after being retained by the recipient for that purpose; or
382 (B) within 30 days from the date the attorney either knew or should have known that
383 the recipient received medical assistance from the department.
384 (c) Service of the notice of claim to the department shall be made by certified mail,
385 personal service, or by e-mail in accordance with Rule 5 of the Utah Rules of Civil Procedure,