H.B. 353 Enrolled

MEDICAL ASSISTANCE RECOVERY AMENDMENTS
1998 GENERAL SESSION
STATE OF UTAH
Sponsor: Gary F. Cox
AN ACT RELATING TO HEALTH; CLARIFYING PROVISIONS RELATED TO THE
STATE'S RECOVERY OF MEDICAL ASSISTANCE AND THE ENROLLMENT OF A
CHILD IN A PARENT'S HEALTH INSURANCE PLAN PURSUANT TO AN ORDER.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
26-19-2, as last amended by Chapter 79, Laws of Utah 1996
26-19-4.5, as enacted by Chapter 145, Laws of Utah 1993
26-19-5, as last amended by Chapter 102, Laws of Utah 1995
26-19-8, as last amended by Chapter 145, Laws of Utah 1993
62A-5-110, as last amended by Chapter 179, Laws of Utah 1996
62A-11-326.1, as last amended by Chapter 102, Laws of Utah 1995
62A-11-326.2, as last amended by Chapter 102, Laws of Utah 1995
75-3-805, as enacted by Chapter 150, Laws of Utah 1975
ENACTS:
26-19-13.5, Utah Code Annotated 1953
26-19-13.7, Utah Code Annotated 1953
26-19-19, Utah Code Annotated 1953
REPEALS:
26-19-13, as last amended by Chapter 102, Laws of Utah 1995
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 26-19-2 is amended to read:
26-19-2. Definitions.
As used in this chapter:
(1) "Employee welfare benefit plan" means a medical insurance plan developed by an
employer under 29 U.S.C. Section 1001, et seq., the Employee Retirement Income Security Act

of 1974 as amended.
(2) "Estate" means, regarding a deceased recipient, all real and personal property or other
assets included within a decedent's estate as defined in Section 75-1-201 and a decedent's augmented
estate as defined in Section 75-2-202 .
(3) "Insurer" includes:
(a) a group health plan as defined in Subsection 607(1) of the federal Employee Retirement
Income Security Act of 1974;
(b) a health maintenance organization; and
(c) any entity offering a health service benefit plan.
(4) "Medical assistance" means [any]:
(a) all funds expended [by the state] for the benefit of a recipient under Title 26, Chapter 18,
Medical Assistance Act, [and] or under Titles XVIII and XIX, federal Social Security Act[.]; and
(b) any other services provided for the benefit of a recipient by a prepaid health care delivery
system under contract with the department.
(5) "Provider" means a person or entity who provides services to a recipient.
(6) "Recipient" means:
(a) a person who has applied for or received medical assistance from the state;
(b) the guardian, conservator, or other personal representative of a person under Subsection
(6)(a) if the person is a minor or an incapacitated person; or
(c) the estate and survivors of a person under Subsection (6)(a) if the person is deceased.
(7) "State plan" means the state Medicaid program as enacted in accordance with Title XIX,
federal Social Security Act.
(8) "Third party" includes:
(a) an individual, institution, corporation, public or private agency, trust, estate, insurance
carrier, employee welfare benefit plan, health maintenance organization, health service organization,
preferred provider organization, governmental program such as Medicare, CHAMPUS, and workers'
compensation, which may be [liable] obligated to pay all or part of the medical costs of injury,
disease, or disability of a recipient, unless any of these are excluded by department rule; and

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(b) a spouse or a parent who:
(i) may be [liable] obligated to pay all or part of the medical costs of a recipient under law
or by court or administrative order; or
(ii) has been ordered to maintain health, dental, or disability insurance to cover medical
expenses of a spouse or dependent child by court or administrative order.
Section 2. Section 26-19-4.5 is amended to read:
26-19-4.5. Assignment of rights to benefits.
(1) (a) To the extent that medical assistance is actually provided to a recipient, all benefits
for medical services or payments from a third party otherwise payable to or on behalf of a recipient
are [deemed to be] assigned by operation of law to the department if the department provides, or
becomes obligated to provide, medical assistance, regardless of who made application for the
benefits on behalf of the recipient. [That]
(b) The assignment:
(i) authorizes the department to submit its claim to the third party and authorizes payment
of benefits directly to the department[. The assignment]; and
(ii) is effective for [services that are paid or to be paid by the department under the state plan,
Section 26-18-10 , and Title XIX of the federal Social Security Act] all medical assistance.
(2) The department may recover the assigned benefits or payments in accordance with
Section 26-19-5 and as otherwise provided by law.
(3) The assignment of benefits includes medical support and third party payments ordered,
decreed, or adjudged by any court of this state or any other state or territory of the United States.
That assignment is not in lieu of, and does not supersede or alter any other court order, decree, or
judgment.
(4) When an assignment takes effect, the recipient is entitled to receive medical assistance,
and the benefits paid to the department are a reimbursement to the department.
Section 3. Section 26-19-5 is amended to read:
26-19-5. Recovery of medical assistance from third party -- Lien -- Notice -- Action --
Compromise or waiver -- Recipient's right to action protected.

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(1) (a) When the department provides or becomes obligated to provide medical assistance
to a recipient because of an injury, disease, or disability [for which] that a third party is [liable]
obligated to pay for, the department may recover the medical assistance directly from that third
party.
(b) The department's claim to recover medical assistance provided as a result of the injury,
disease, or disability is a lien against any proceeds payable to or on behalf of the recipient by that
third party. This lien has priority over all other claims to the proceeds, except claims for attorney's
fees and costs authorized under Subsection 26-19-7 (4).
(2) The department shall mail or deliver written notice of its lien to the third party at its
principal place of business or last known address. The notice shall include the recipient's name, the
approximate date of injury, a general description of the type of injury and, if applicable, the general
location where the injury is alleged to have occurred.
(3) The department may commence an action on its lien in its own name, but that lien is not
enforceable as to a third party unless:
(a) the third party receives written notice of the department's lien before it settles with the
recipient; or
(b) the department has evidence that the third party had knowledge that the department
provided or was obligated to provide medical assistance.
(4) The department may waive a claim against a third party in whole or in part, or may
compromise, settle, or release a claim or lien.
(5) An action commenced under this section does not bar an action by a recipient or a
dependent of a recipient for loss or damage not included in the department's action.
(6) The department's lien on proceeds under this section is not affected by the transfer of the
proceeds to a trust, account, or other financial instrument.
Section 4. Section 26-19-8 is amended to read:
26-19-8. Statute of limitations -- Survival of right of action -- Insurance policy not to
limit time allowed for recovery.
(1) (a) An action commenced by the department under this chapter against a health insurance

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carrier or employee welfare benefit plan must be commenced within two years after the date of the
injury or onset of the illness or within six months after the date of the last payment for medical
assistance [payment], whichever is later.
(b) An action against any other third party must be commenced within four years after the
date of the injury or onset of the illness, or within six months after the date of the last payment for
medical assistance [payment], whichever is later.
(2) The death of the recipient does not abate any right of action established by this chapter.
(3) No insurance policy issued or renewed after June 1, 1981, may contain any provision that
limits the time in which the department may submit its claim to recover medical assistance benefits
to a period of less than 24 months from the date the provider furnishes services or goods to the
recipient.
Section 5. Section 26-19-13.5 is enacted to read:
26-19-13.5. Estate recovery.
(1) Upon a recipient's death, the department may recover from the recipient's estate and any
trust, in which the recipient is the grantor and a beneficiary, medical assistance correctly provided
for the benefit of the recipient when he was 55 years of age or older if, at the time of death, the
recipient has no:
(a) surviving spouse; or
(b) child:
(i) younger than 21 years of age; or
(ii) who is blind or permanently and total disabled.
(2) (a) The amount of medial assistance correctly provided for the benefit of a recipient and
recoverable under this section is a lien against the estate of the deceased recipient or any trust when
the recipient is the grantor and a beneficiary.
(b) The lien holds the same priority as reasonable and necessary medical expenses of the last
illness as provided in Section 75-3-805 .
(3) (a) The department shall perfect the lien by filing a notice in the court of appropriate
jurisdiction for the amount of the lien prior to final distribution in the same manner as a creditor's

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claim is filed.
(b) The department may file an amended lien prior to the entry of the final order closing the
estate.
(4) Any trust provision that denies recovery for medical assistance is void on and after the
time of its making.
(5) Nothing in this section affects the right of the department to recover Medicaid assistance
before a recipient's death under Section 26-19-4.5 or Section 26-19-13.7 .
Section 6. Section 26-19-13.7 is enacted to read:
26-19-13.7. Recovery from recipient of incorrectly provided medical assistance.
The department may:
(1) recover medical assistance incorrectly provided, whether due to administrative or factual
error or fraud, from the recipient or his estate; and
(2) pursuant to a judgment, impose a lien against real property of the recipient.
Section 7. Section 26-19-19 is enacted to read:
26-19-19. Direct payment to the department by third party.
(1) Any third party required to make payment to the department pursuant to this chapter shall
make the payment directly to the department or its designee.
(2) The department may negotiate a payment or payment instrument it receives in connection
with Subsection (1) without the cosignature or other participation of the recipient or any other party.
Section 8. Section 62A-5-110 is amended to read:
62A-5-110. Discretionary trusts for persons with disabilities -- Impact on state services.
(1) For purposes of this section:
(a) "Discretionary trust for a person with disabilities" means a trust:
(i) that is established for the benefit of an individual who, at the time the trust is created, is
under age 65 and has a disability as defined in 42 U.S.C. Sec. 1382c;
(ii) under which the trustee has discretionary power to determine distributions;
(iii) under which the beneficiary may not control or demand payments unless an abuse of
the trustee's duties or discretion is shown;

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(iv) that contains the assets of the beneficiary and is established for the benefit of the
beneficiary by a parent, grandparent, legal guardian, or court;
(v) that is irrevocable, except that the trust document may provide that the trust be
terminated if the beneficiary no longer has a disability as defined in 42 U.S.C. Sec. 1382c; [and]
(vi) that is invalid as to any portion funded by property that is or may be subject to a lien by
the state; and
[(vi)] (vii) providing that, upon the death of the beneficiary, the state will receive all amounts
remaining in the trust, up to an amount equal to the total medical assistance paid on behalf of the
beneficiary.
(b) "Medical assistance" means the same as that term is defined in Section 26-18-2 .
(2) A state agency providing services or support to a person with disabilities may:
(a) waive application of Subsection (1)(a)(v) with respect to that individual if it determines
that application of the criteria would place an undue hardship upon that individual; and
(b) define, by rule, what constitutes "undue hardship" for purposes of this section.
(3) A discretionary trust for a person with disabilities is not liable for reimbursement or
payment to the state or any state agency, for financial aid or services provided to that individual
except:
(a) to the extent that the trust property has been distributed directly to or is otherwise under
the control of the disabled beneficiary; or
(b) as provided in Subsection (1)(a)(vi).
(4) Property, goods, and services that are purchased or owned by a discretionary trust for a
person with disabilities and that are used or consumed by a disabled beneficiary shall not be
considered trust property that is distributed to or under the control of the beneficiary.
(5) The benefits that a person with disabilities is otherwise legally entitled to may not be
reduced, impaired, or diminished in any way because of contribution to a discretionary trust for that
person.
(6) All state agencies shall disregard a discretionary trust for a person with disabilities, as
defined in Subsection (1), as a resource when determining eligibility for services or support except

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as, and only to the extent that it is otherwise prohibited by federal law.
(7) This section applies to all discretionary trusts that meet the requirements contained in
Subsection (1) created before, on, or after July 1, 1994.
Section 9. Section 62A-11-326.1 is amended to read:
62A-11-326.1. Enrollment of child in disability insurance plan -- Order -- Notice.
(1) [In accordance with Title 63, Chapter 46b, Administrative Procedures Act, the office may
commence an adjudicative proceeding to determine whether or not to require by order the enrollment
of a dependent child in a disability] The office may issue a notice to existing and future employers
or unions to enroll a dependent child in a disability insurance plan that is available through his parent
or legal guardian's employer or union, when the following conditions are satisfied:
(a) the parent or legal guardian is already required to obtain insurance coverage for the child
by a prior court or administrative order; and
(b) the parent or legal guardian has failed to provide written proof to the office that:
(i) the child has been enrolled in a disability insurance plan in accordance with the court or
administrative order; or
(ii) the coverage required by the order was not available [at a reasonable cost] at group rates
through the employer or union 30 or more days prior to the date of the mailing of the notice [of
agency action] to enroll.
(2) The office shall provide concurrent notice to the parent or legal guardian in accordance
with Section 62A-11-304.4 of:
(a) the notice to enroll sent to the employer or union; and
(b) the opportunity to contest the enrollment due to a mistake of fact by filing a written
request for an adjudicative proceeding with the office within 15 days of the notice being sent.
(3) A notice to enroll shall result in the enrollment of the child in the parent's disability
insurance plan, unless the parent successfully contests the notice based on a mistake of fact.
[(2) An order] (4) A notice to enroll issued under this section may be considered a "qualified
medical support order" for the purposes of enrolling a dependent child in a group disability insurance
plan as defined in Section 609(a), Federal Employee Retirement Income Security Act of 1974.

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[(3) If the office issues an order to enroll a dependent child in a disability insurance plan
under Subsection (1), the office may serve notice of the order on all existing and future employers
or unions of the parent or guardian.]
Section 10. Section 62A-11-326.2 is amended to read:
62A-11-326.2. Compliance with order -- Enrollment of dependent child for insurance.
(1) An employer or union shall comply with [an order] a notice to enroll issued by the office
under Section 62A-11-326.1 by enrolling the dependent child that is the subject of the [order] notice
in the:
(a) disability insurance plan in which the parent or legal guardian is enrolled, if the plan
satisfies the prior court or administrative order; or
(b) least expensive plan, assuming equivalent benefits, offered by the employer or union that
complies with the prior court or administrative order which provides coverage which is reasonably
accessible to the dependent child.
(2) The employer, union, or insurer may not refuse to enroll a dependent child pursuant to
[an office order] a notice to enroll because a parent or legal guardian has not signed an enrollment
application.
(3) Upon enrollment of the dependent child, the employer shall deduct the appropriate
premiums from the parent or legal guardian's wages and remit them directly to the insurer.
(4) The insurer shall provide proof of insurance to the office upon request.
(5) The signature of the custodial parent of the insured dependent is a valid authorization to
the insurer for purposes of processing any insurance reimbursement claim.
Section 11. Section 75-3-805 is amended to read:
75-3-805. Classification of claims.
(1) If the applicable assets of the estate are insufficient to pay all claims in full, the personal
representative shall make payment in the following order:
(a) reasonable funeral expenses;
(b) costs and expenses of administration;
(c) debts and taxes with preference under federal law;

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(d) reasonable and necessary medical and hospital expenses of the last illness of the
decedent, including compensation of persons attending him, and medical assistance if Section
26-19-13.5 applies;
(e) debts and taxes with preference under other laws of this state; and
(f) all other claims.
(2) No preference shall be given in the payment of any claim over any other claim of the
same class, and a claim due and payable shall not be entitled to a preference over claims not due.
Section 12. Repealer.
This act repeals:
Section 26-19-13, Recovery of medical assistance payments from recipient -- Lien
against estate -- Recovery of incorrectly paid amounts.

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