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S.B. 162






Sponsor: David H. Steele

             6      This act modifies the Medical Benefits Recovery Act, the Workers' Compensation Act,
             7      and the Utah Uniform Probate Code. The act amends definitions. The act clarifies the
             8      Health Department's recovery of medical assistance benefits by lien. The act amends
             9      notice provisions related to medical assistance recovery. The act amends provisions
             10      related to the payment of attorney's fees. The act clarifies the statute of limitations
             11      related to recovery from estates and trusts. The act requires a third party to notify the
             12      Health Department of applicable insurance policy provisions relied upon by the third
             13      party to deny the department's claim or lien. The act provides for third party use and
             14      acceptance of electronic claims records. The act amends estate and trust recovery for
             15      medical assistance. The act subjects worker's compensation claims and benefits to
             16      recovery for medical assistance. The act amends provisions for notice to creditors to
             17      include the Office of Recovery Services on behalf of the Department of Health in certain
             18      circumstances. The act repeals the restriction on the release of medical billing
             19      information by providers. The act makes technical changes.
             20      This act affects sections of Utah Code Annotated 1953 as follows:
             21      AMENDS:
             22          26-19-2, as last amended by Chapter 116, Laws of Utah 2001
             23          26-19-5, as last amended by Chapter 145, Laws of Utah 1998
             24          26-19-6, as last amended by Chapter 21, Laws of Utah 1985
             25          26-19-7, as last amended by Chapter 102, Laws of Utah 1995
             26          26-19-8, as last amended by Chapter 145, Laws of Utah 1998
             27          26-19-13.5, as enacted by Chapter 145, Laws of Utah 1998

             28          34A-2-417, as last amended by Chapter 261, Laws of Utah 1999
             29          34A-2-422, as renumbered and amended by Chapter 375, Laws of Utah 1997
             30          75-7-308, as enacted by Chapter 227, Laws of Utah 2002
             31          75-7-309, as enacted by Chapter 227, Laws of Utah 2002
             32      ENACTS:
             33          26-19-9.5, Utah Code Annotated 1953
             34          26-19-9.7, Utah Code Annotated 1953
             35      REPEALS:
             36          26-19-18, as last amended by Chapter 196, Laws of Utah 1989
             37      Be it enacted by the Legislature of the state of Utah:
             38          Section 1. Section 26-19-2 is amended to read:
             39           26-19-2. Definitions.
             40          As used in this chapter:
             41          (1) "Annuity" shall have the same meaning as provided in Section 31A-1-301 .
             42          [(1)] (2) "Employee welfare benefit plan" means a medical insurance plan developed
             43      by an employer under 29 U.S.C. Section 1001, et seq., the Employee Retirement Income
             44      Security Act of 1974 as amended.
             45          [(2)] (3) "Estate" means, regarding a deceased recipient[,]:
             46          (a) all real and personal property or other assets included within a decedent's estate as
             47      defined in Section 75-1-201 [and a];
             48          (b) the decedent's augmented estate as defined in Section 75-2-203 [.]; and
             49          (c) that part of other real or personal property in which the decedent had a legal interest
             50      at the time of death including assets conveyed to a survivor, heir, or assign of the decedent
             51      through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other
             52      arrangement.
             53          [(3)] (4) "Insurer" includes:
             54          (a) a group health plan as defined in Subsection 607(1) of the federal Employee
             55      Retirement Income Security Act of 1974;
             56          (b) a health maintenance organization; and
             57          (c) any entity offering a health service benefit plan.
             58          [(4)] (5) "Medical assistance" means:

             59          (a) all funds expended for the benefit of a recipient under Title 26, Chapter 18, Medical
             60      Assistance Act, or under Titles XVIII and XIX, federal Social Security Act; and
             61          (b) any other services provided for the benefit of a recipient by a prepaid health care
             62      delivery system under contract with the department.
             63          [(5)] (6) "Provider" means a person or entity who provides services to a recipient.
             64          [(6)] (7) "Recipient" means:
             65          (a) a person who has applied for or received medical assistance from the state;
             66          (b) the guardian, conservator, or other personal representative of a person under
             67      Subsection [(6)] (7)(a) if the person is a minor or an incapacitated person; or
             68          (c) the estate and survivors of a person under Subsection [(6)] (7)(a) if the person is
             69      deceased.
             70          [(7)] (8) "State plan" means the state Medicaid program as enacted in accordance with
             71      Title XIX, federal Social Security Act.
             72          [(8)] (9) "Third party" includes:
             73          (a) an individual, institution, corporation, public or private agency, trust, estate,
             74      insurance carrier, employee welfare benefit plan, health maintenance organization, health
             75      service organization, preferred provider organization, governmental program such as Medicare,
             76      CHAMPUS, and workers' compensation, which may be obligated to pay all or part of the
             77      medical costs of injury, disease, or disability of a recipient, unless any of these are excluded by
             78      department rule; and
             79          (b) a spouse or a parent who:
             80          (i) may be obligated to pay all or part of the medical costs of a recipient under law or
             81      by court or administrative order; or
             82          (ii) has been ordered to maintain health, dental, or accident and health insurance to
             83      cover medical expenses of a spouse or dependent child by court or administrative order.
             84          (10) "Trust" shall have the same meaning as provided in Section 75-1-201 .
             85          Section 2. Section 26-19-5 is amended to read:
             86           26-19-5. Recovery of medical assistance from third party -- Lien -- Notice --
             87      Action -- Compromise or waiver -- Recipient's right to action protected.
             88          (1) (a) When the department provides or becomes obligated to provide medical
             89      assistance to a recipient [because of an injury, disease, or disability] that a third party is

             90      obligated to pay for, the department may recover the medical assistance directly from that third
             91      party.
             92          (b) [The department's claim] Any claim arising under Subsection (1)(a) or Section
             93      26-19-4.5 to recover medical assistance provided [as a result of the injury, disease, or
             94      disability] to a recipient is a lien against any proceeds payable to or on behalf of the recipient
             95      by that third party. This lien has priority over all other claims to the proceeds, except claims
             96      for attorney's fees and costs authorized under Subsection 26-19-7 (4).
             97          (2) (a) The department shall mail or deliver written notice of its claim or lien to the
             98      third party at its principal place of business or last-known address.
             99          (b) The notice shall include:
             100          (i) the recipient's name[,];
             101          (ii) the approximate date of illness or injury[,];
             102          (iii) a general description of the type of illness or injury; and[,]
             103          (iv) if applicable, the general location where the injury is alleged to have occurred.
             104          (3) The department may commence an action on its claim or lien in its own name, but
             105      that claim or lien is not enforceable as to a third party unless:
             106          (a) the third party receives written notice of the department's claim or lien before it
             107      settles with the recipient; or
             108          (b) the department has evidence that the third party had knowledge that the department
             109      provided or was obligated to provide medical assistance.
             110          (4) The department may:
             111          (a) waive a claim or lien against a third party in whole or in part[,]; or [may]
             112          (b) compromise, settle, or release a claim or lien.
             113          (5) An action commenced under this section does not bar an action by a recipient or a
             114      dependent of a recipient for loss or damage not included in the department's action.
             115          (6) The department's claim or lien on proceeds under this section is not affected by the
             116      transfer of the proceeds to a trust, annuity, financial account, or other financial instrument.
             117          Section 3. Section 26-19-6 is amended to read:
             118           26-19-6. Action by department -- Notice to recipient.
             119          (1) (a) Within 30 days after commencing an action under [Section] Subsection
             120      26-19-5 (3), the department shall give the recipient, his guardian, personal representative,

             121      trustee, estate, or survivor, whichever is appropriate, written notice of the action by:
             122          (i) personal service or certified mail to the last known address of the person receiving
             123      the notice[.]; or
             124          (ii) if no last known-address is available, by publishing a notice once a week for three
             125      successive weeks in a newspaper of general circulation in the county where the recipient
             126      resides.
             127          (b) Proof of service shall be filed in the action.
             128          (c) The recipient may intervene in the department's action at any time before trial.
             129          (2) The notice required by Subsection (1) shall name the court in which the action is
             130      commenced and advise the recipient of [his]:
             131          (a) the right to intervene in the proceeding[, his];
             132          (b) the right to obtain a private attorney[,]; and
             133          (c) the department's right to recover medical assistance directly from the third party.
             134          Section 4. Section 26-19-7 is amended to read:
             135           26-19-7. Action or claim by recipient -- Consent of department required --
             136      Department's right to intervene -- Department's interests protected -- Attorney's fees and
             137      costs.
             138          (1) (a) A recipient may not file a claim for recovery, commence an action, or settle,
             139      compromise, release, or waive a claim against a third party for which the department has a lien
             140      for recovery of medical costs [for an injury, disease, or disability for which the department has
             141      provided or has become obligated to provide medical assistance], without the department's
             142      written consent.
             143          (b) The department has an unconditional right to intervene in an action commenced by
             144      a recipient for recovery [of medical costs connected with the same injury, disease, or disability,
             145      for which it has provided or has become obligated to provide medical assistance] from a third
             146      party in any action in which the department has a lien.
             147          (2) (a) If the recipient proceeds without the department's written consent as required by
             148      Subsection (1)(a), the department is not bound by any decision, judgment, agreement,
             149      settlement, or compromise rendered or made on the claim or in the action.
             150          (b) The department may recover in full from the recipient or any party to which the
             151      proceeds were made payable all medical assistance which it has provided and retains its right to

             152      commence an independent action against the third party, subject to Subsection 26-19-5 (3).
             153          (3) The department's written consent, if given, shall state under what terms the interests
             154      of the department may be represented in an action commenced by the recipient.
             155          (4) The department [may not pay more than 33% of its total recovery for attorney's
             156      fees, but shall pay a proportionate share of the costs in an action that is commenced with the
             157      department's written consent.] shall:
             158          (a) pay attorney's fees, not to exceed 33% of the department's total recovery, if the
             159      attorney entered into a written agreement with the department; and
             160          (b) pay costs in the action if:
             161          (i) the department receives a recovery;
             162          (ii) the costs to be paid by the department are a proportionate share of the total cost;
             163      and
             164          (iii) the department entered into a written agreement with the attorney.
             165          Section 5. Section 26-19-8 is amended to read:
             166           26-19-8. Statute of limitations -- Survival of right of action -- Insurance policy not
             167      to limit time allowed for recovery.
             168          (1) (a) An action commenced by the department under this chapter against a health
             169      insurance carrier or employee welfare benefit plan must be commenced within:
             170          (i) two years after the date of the injury or onset of the illness; or [within]
             171          (ii) six months after the date of the last payment for medical assistance, whichever is
             172      later.
             173          (b) An action against any other third party, the recipient, or anyone to whom the
             174      proceeds are payable must be commenced within:
             175          (i) four years after the date of the injury or onset of the illness[,]; or [within]
             176          (ii) six months after the date of the last payment for medical assistance, whichever is
             177      later.
             178          (2) The death of the recipient does not abate any right of action established by this
             179      chapter.
             180          (3) No insurance policy issued or renewed after June 1, 1981, may contain any
             181      provision that limits the time in which the department may submit its claim to recover medical
             182      assistance benefits to a period of less than 24 months from the date the provider furnishes

             183      services or goods to the recipient.
             184          (4) The provisions of this section do not apply to Section 26-19-13.5 .
             185          (5) The provisions of this section supercede any other sections regarding the time limit
             186      in which an action must be commenced, including Section 75-7-309 .
             187          Section 6. Section 26-19-9.5 is enacted to read:
             188          26-19-9.5. Availability of insurance policy.
             189          If the third party does not pay the department's claim or lien within 30 days from the
             190      date the claim or lien is received, the third party shall:
             191          (1) provide a written explanation if the claim is denied;
             192          (2) specifically describe and request any additional information from the department
             193      that is necessary to process the claim; and
             194          (3) provide the department or its agent a copy of any relevant or applicable insurance
             195      or benefit policy.
             196          Section 7. Section 26-19-9.7 is enacted to read:
             197          26-19-9.7. Legal recognition of electronic claims records.
             198          Pursuant to Title 46, Chapter 4, Uniform Electronic Transactions Act:
             199          (1) a claim submitted to the department for payment may not be denied legal effect,
             200      enforceability, or admissibility as evidence in any court in any civil action because it is in
             201      electronic form;
             202          (2) a third party shall accept an electronic record of payments by the department for
             203      medical services on behalf of a recipient as evidence in support of the department's claim; and
             204          (3) an electronic record from the department showing claims submitted for medical
             205      services provided to the recipient and amounts of medical assistance paid on behalf of the
             206      recipient by the department is admissible as evidence as a business record of the department in
             207      any civil action.
             208          Section 8. Section 26-19-13.5 is amended to read:
             209           26-19-13.5. Estate and trust recovery.
             210          (1) Upon a recipient's death, the department may recover from the recipient's estate and
             211      any trust, in which the recipient is the grantor and a beneficiary, medical assistance correctly
             212      provided for the benefit of the recipient when he was 55 years of age or older if, at the time of
             213      death, the recipient has no:

             214          (a) surviving spouse; or
             215          (b) child:
             216          (i) younger than 21 years of age; or
             217          (ii) who is blind or permanently and totally disabled.
             218          (2) (a) The amount of medial assistance correctly provided for the benefit of a recipient
             219      and recoverable under this section is a lien against the estate of the deceased recipient or any
             220      trust when the recipient is the grantor and a beneficiary.
             221          (b) The lien holds the same priority as reasonable and necessary medical expenses of
             222      the last illness as provided in Section 75-3-805 .
             223          (3) (a) The department shall perfect the lien by filing a notice in the court of
             224      appropriate jurisdiction for the amount of the lien, in the same manner as a creditor's claim is
             225      filed, prior to final distribution [in the same manner as a creditor's claim is filed].
             226          (b) The department may file an amended lien prior to the entry of the final order
             227      closing the estate.
             228          (4) Claims against a deceased recipient's inter vivos trust shall be presented in
             229      accordance with Sections 75-7-309 and 75-7-310 .
             230          [(4)] (5) Any trust provision that denies recovery for medical assistance is void [on and
             231      after] at the time of its making.
             232          [(5)] (6) Nothing in this section affects the right of the department to recover Medicaid
             233      assistance before a recipient's death under Section 26-19-4.5 or Section 26-19-13.7 .
             234          Section 9. Section 34A-2-417 is amended to read:
             235           34A-2-417. Claims and benefits -- Time limits for filing -- Burden of proof.
             236          (1) Except with respect to prosthetic devices, in nonpermanent total disability cases an
             237      employee's medical benefit entitlement ceases if for a period of three consecutive years the
             238      employee does not:
             239          (a) incur medical expenses reasonably related to the industrial accident; and
             240          (b) submit the medical expenses incurred to the employee's employer or insurance
             241      carrier for payment.
             242          (2) (a) A claim described in Subsection (2)(b) is barred, unless the employee:
             243          (i) files an application for hearing with the Division of Adjudication no later than six
             244      years from the date of the accident; and

             245          (ii) by no later than 12 years from the date of the accident, is able to meet the
             246      employee's burden of proving that the employee is due the compensation claimed under this
             247      chapter.
             248          (b) Subsection (2)(a) applies to a claim for compensation for:
             249          (i) temporary total disability benefits;
             250          (ii) temporary partial disability benefits;
             251          (iii) permanent partial disability benefits; or
             252          (iv) permanent total disability benefits.
             253          (c) The commission may enter an order awarding or denying an employee's claim for
             254      compensation under this chapter within a reasonable time period beyond 12 years from the date
             255      of the accident, if:
             256          (i) the employee complies with [Subsections] Subsection (2)(a)[(i) and (ii)]; and
             257          (ii) 12 years from the date of the accident:
             258          (A) (I) the employee is fully cooperating in a commission approved reemployment
             259      plan; and
             260          (II) the results of that commission approved reemployment plan are not known; or
             261          (B) the employee is actively adjudicating issues of compensability before the
             262      commission.
             263          (3) A claim for death benefits is barred unless an application for hearing is filed within
             264      one year of the date of death of the employee.
             265          (4) (a) (i) Subject to Subsections (2)(c) and (4)(b), after an employee files an
             266      application for hearing within six years from the date of the accident, the Division of
             267      Adjudication may enter an order to show cause why the employee's claim should not be
             268      dismissed because the employee has failed to meet the employee's burden of proof to establish
             269      an entitlement to compensation claimed in the application for hearing.
             270          (ii) The order described in Subsection (4)(a)(i) may be entered on the motion of the:
             271          (A) Division of Adjudication;
             272          (B) employee's employer; or
             273          (C) employer's insurance carrier.
             274          (b) Under Subsection (4)(a), the Division of Adjudication may dismiss a claim:
             275          (i) without prejudice; or

             276          (ii) with prejudice only if:
             277          (A) the Division of Adjudication adjudicates the merits of the employee's entitlement
             278      to the compensation claimed in the application for hearing; or
             279          (B) the employee fails to comply with Subsection (2)(a)(ii).
             280          (c) If a claim is dismissed without prejudice under Subsection (4)(b), the employee is
             281      subject to the time limits under Subsection (2)(a) to claim compensation under this chapter.
             282          (5) A claim for compensation under this chapter is subject to a claim or lien for
             283      recovery under Section 26-19-5 .
             284          Section 10. Section 34A-2-422 is amended to read:
             285           34A-2-422. Compensation exempt from execution.
             286          Compensation before payment shall be exempt from all claims of creditors, and from
             287      attachment or execution, and shall be paid only to employees or their dependents, except as
             288      provided in Sections 26-19-5 and 34A-2-417 .
             289          Section 11. Section 75-7-308 is amended to read:
             290           75-7-308. Notice to creditors.
             291          (1) A trustee for an inter vivos revocable trust, upon the death of the settlor, may
             292      publish a notice to creditors once a week for three successive weeks in a newspaper of general
             293      circulation in the county where the settlor resided at the time of death[, providing]. The notice
             294      required by this Subsection (1) must:
             295          (a) provide the trustee's name and address; and [notifying]
             296          (b) notify creditors:
             297          (i) of the deceased settlor; and
             298          (ii) to present their claims within three months after the date of the first publication of
             299      the notice or be forever barred from presenting the claim.
             300          (2) A trustee may give written notice by mail or other delivery to any known creditor of
             301      the deceased settlor, notifying the creditor to present his claim within 90 days from the
             302      published notice if given as provided in Subsection (1) or within 60 days from the mailing or
             303      other delivery of the notice, whichever is later, or be forever barred. Written notice shall be the
             304      notice described in Subsection (1) or a similar notice.
             305          (3) (a) If the deceased settlor received medical assistance as defined in Subsection
             306      26-19-2 (5) at any time after the age of 55, the trustee for an inter vivos revocable trust, upon

             307      the death of the settlor, shall mail or deliver written notice to the Director of the Office of
             308      Recovery Services to present any claim under Section 26-19-13.5 within 60 days from the
             309      mailing or other delivery of notice, whichever is later, or be forever barred.
             310          (b) If the trustee does not mail notice to the director of the Office of Recovery Services
             311      on behalf of the department in accordance with Subsection (3)(a), the department shall have
             312      two years from the death of the settlor to present its claim.
             313          [(3)] (4) The trustee shall not be liable to any creditor or to any successor of the
             314      deceased settlor for giving or failing to give notice under this section.
             315          Section 12. Section 75-7-309 is amended to read:
             316           75-7-309. Limitations on presentation of claims.
             317          (1) [All] Except as provided in Subsection 75-7-308 (3), all claims against a deceased
             318      settlor which arose before the death of the deceased settlor, [including claims of the state and
             319      any subdivision of it,] whether due or to become due, absolute or contingent, liquidated or
             320      unliquidated, founded on contract, tort, or other legal basis, if not barred earlier by other statute
             321      of limitations, are barred against the deceased settlor's estate, the trustee, the trust estate, and
             322      the beneficiaries of the deceased settlor's trust, unless presented within the earlier of the
             323      following:
             324          (a) one year after the settlor's death; or
             325          (b) the time provided by Subsection 75-3-308 (2) or (3) for creditors who are given
             326      actual notice, and where notice is published, within the time provided in Subsection
             327      75-3-308 (1) for all claims barred by publication.
             328          (2) In all events, claims barred by the nonclaim statute at the deceased settlor's
             329      domicile are also barred in this state.
             330          (3) [All] Except as provided in Subsection 75-7-308 (3), all claims against a deceased
             331      settlor's estate or trust estate which arise at or after the death of the settlor, [including claims of
             332      the state and any of its subdivisions,] whether due or to become due, absolute or contingent,
             333      liquidated or unliquidated, founded on contract, tort, or other legal basis are barred against the
             334      deceased settlor's estate, the trustee, the trust estate, and the beneficiaries of the deceased
             335      settlor, unless presented as follows:
             336          (a) a claim based on a contract with the trustee within three months after performance
             337      by the trustee is due; or

             338          (b) any other claim within the later of three months after it arises, or the time specified
             339      in Subsection (1).
             340          (4) Nothing in this section affects or prevents:
             341          (a) any proceeding to enforce any mortgage, pledge, or other lien upon property of the
             342      deceased settlor's estate or the trust estate;
             343          (b) to the limits of the insurance protection only, any proceeding to establish liability of
             344      the deceased settlor or the trustee for which he is protected by liability insurance; [or]
             345          (c) collection of compensation for services rendered and reimbursement for expenses
             346      advanced by the trustee or by the attorney or accountant for the trustee of the trust estate[.]; or
             347          (d) the right to recover medical assistance provided to the settlor under Title 26,
             348      Chapter19, Medical Benefits Recovery Act.
             349          Section 13. Repealer.
             350          This act repeals:
             351          Section 26-19-18, Release of medical billing information by provider restricted --
             352      Exception -- Liability for violation.

Legislative Review Note
    as of 2-3-03 2:12 PM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

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