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H 3833
Session 112 (1997-1998) 

H 3833 General Bill, By Hawkins, Altman, Bauer, J.M. Baxley, Beck, H. Brown, 
Campsen, Delleney, J.G. Felder, Fleming, Haskins, Limehouse, Maddox, McCraw, 
D. Smith, F. Smith, J. Smith, Whipper and W.J. Young
 A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION
 43-7-435 AND BY AMENDING SECTION 43-7-440, AS AMENDED, RELATING TO ENFORCEMENT
 OF A SUPERIORITY OF RIGHTS OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES, SO
 AS TO REQUIRE, RATHER THAN AUTHORIZE, THE DEPARTMENT OF HEALTH AND HUMAN
 SERVICES, IN ENFORCING ITS ASSIGNMENT OR SUBROGATION RIGHTS, TO REDUCE ANY
 AMOUNT DUE THE DEPARTMENT BY TWENTY-FIVE PERCENT IF THE RECIPIENT OF SERVICES
 HAS RETAINED AN ATTORNEY TO PURSUE THE RECIPIENT'S CLAIM AGAINST A THIRD
 PARTY; AND TO AMEND SECTION 43-7-410, AS AMENDED, RELATING TO DEFINITIONS
 CONCERNING ASSIGNMENT AND SUBROGATION OF CLAIMS FOR REIMBURSEMENT FOR MEDICAID
 SERVICES, SO AS TO CONFORM THE DEFINITION OF "COMMISSION" TO GOVERNMENT
 RESTRUCTURING.

   04/08/97  House  Introduced and read first time HJ-3
   04/08/97  House  Referred to Committee on Judiciary HJ-4
   03/11/98  House  Committee report: Favorable with amendment
                     Judiciary HJ-2
   03/17/98  House  Amended HJ-17
   03/17/98  House  Requests for debate-Rep(s). Moody-Lawrence HJ-23
   03/17/98  House  Read second time HJ-23
   03/18/98  House  Read third time and sent to Senate HJ-28
   03/19/98  Senate Introduced and read first time SJ-6
   03/19/98  Senate Referred to Committee on Judiciary SJ-6
   05/20/98  Senate Committee report: Favorable with amendment
                     Judiciary SJ-27



Indicates Matter Stricken
Indicates New Matter

COMMITTEE REPORT

May 20, 1998

H. 3833

Introduced by Reps. Hawkins, Altman, F. Smith, J. Smith, Maddox, Campsen, Whipper, Baxley, Bauer, Delleney, D. Smith, Beck, H. Brown, McCraw, Haskins, Fleming, Young, Felder and Limehouse

S. Printed 5/20/98--S.

Read the first time March 19, 1998.

THE COMMITTEE ON JUDICIARY

To whom was referred a Bill (H. 3833), to amend the Code of Laws of South Carolina, 1976, by adding Section 43-7-435 and by amending Section 43-7-440, as amended, relating to enforcement of a superiority of rights of the Department of Health and Human Services, etc., respectfully

REPORT:

That they have duly and carefully considered the same, and recommend that the same do pass with amendment:

Amend the bill, as and if amended, page 2, line 13, in Section 43-7-435(B)(2), as contained in SECTION 1, after /trial./ by inserting:

/The petition shall be addressed to the court with notice and opportunity for the department to be heard. If the department desires to be heard, it must file a responsive pleading within five working days after receipt of the notice./

Amend the bill further, as and if amended, page 2, beginning on line 33, in Section 43-7-435(D), as contained in SECTION 1, by striking subsection (D) in its entirety and inserting therein the following:

/(D) Upon discovery by the department of a Medicaid claim which may be part of a personal injury lawsuit, the department shall send to the applicant or recipient by certified mail a letter which shall contain the following notice in bold print and uppercase letters:

'NOTICE: IF YOU ARE A PARTY TO A LAWSUIT OR CONSIDERING A LAWSUIT BECAUSE OF YOUR INJURIES, YOU MUST BRING THIS NOTICE OF A MEDICAID CLAIM TO THE ATTORNEY OF YOUR CHOICE AS SOON AS POSSIBLE. YOUR ATTORNEY MUST CONTACT US BY CERTIFIED MAIL WITHIN THIRTY DAYS OF YOUR RECEIPT OF THIS LETTER TO NOTIFY US THAT HE OR SHE REPRESENTS YOU. FAILURE TO DO THIS MAY RESULT IN THE DEPARTMENT OF HEALTH AND HUMAN SERVICES HIRING AN ATTORNEY OF ITS CHOICE TO PURSUE ITS CLAIM. IF YOU WISH TO HIRE AN ATTORNEY BUT DO NOT KNOW ONE, YOU MAY CALL THE LAWYER REFERRAL SERVICE OF THE SOUTH CAROLINA BAR AT 1-800-868-2284 FOR THE NAMES OF ATTORNEYS IN YOUR AREA.'

An attorney for an applicant or recipient shall by certified mail return receipt requested notify the department of the attorney's representation and his client's potential Medicaid claim within thirty days of the attorney's actual discovery of the claim, but in no event later than thirty days following the applicant's or recipient's receipt of written notice of the Medicaid claim by the department sent by certified mail to the applicant or recipient containing the above language. If the department receives timely notice of the attorney's representation, it must use the applicant's or recipient's attorney to pursue its claim. If timely notice is not given, the department may pursue its claim as provided by law subject to Section 43-7-440(E), and is not liable for the fees and costs in Section 43-7-435(B)(1) unless it elects to use the applicant's or recipient's attorney to pursue its claim./

Amend the bill further, as and if amended, page 6, line 41, in Section 43-7-440(E), as contained in SECTION 3, after /is/ by inserting /equal to or/.

Amend title to conform.

DONALD H. HOLLAND, for Committee.

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 43-7-435 AND BY AMENDING SECTION 43-7-440, AS AMENDED, RELATING TO ENFORCEMENT OF A SUPERIORITY OF RIGHTS OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES, SO AS TO REQUIRE, RATHER THAN AUTHORIZE, THE DEPARTMENT OF HEALTH AND HUMAN SERVICES, IN ENFORCING ITS ASSIGNMENT OR SUBROGATION RIGHTS, TO REDUCE ANY AMOUNT DUE THE DEPARTMENT BY TWENTY-FIVE PERCENT IF THE RECIPIENT OF SERVICES HAS RETAINED AN ATTORNEY TO PURSUE THE RECIPIENT'S CLAIM AGAINST A THIRD PARTY; AND TO AMEND SECTION 43-7-410, AS AMENDED, RELATING TO DEFINITIONS CONCERNING ASSIGNMENT AND SUBROGATION OF CLAIMS FOR REIMBURSEMENT FOR MEDICAID SERVICES, SO AS TO CONFORM THE DEFINITION OF "COMMISSION" TO GOVERNMENT RESTRUCTURING.

SECTION 1. The 1976 Code is amended by adding:

"Section 43-7-435. (A) For purposes of determining the value of medical services received by the applicant or recipient in order to pursue recovery from a third party or private insurer, the applicant or recipient may present evidence of the greater of the Medicaid claim amount or the billed amount of those medical services before any discount applied because of Medicaid coverage of the services.

(B)(1) In enforcing its assignment or subrogation rights, the Department of Health and Human Services shall reduce any amount due to the department by the percent agreed upon by the applicant or recipient and his attorney as attorney fees. The agreed upon percent reduction may not exceed thirty-three and one third percent except as provided in Subsection (B)(2). The percent reduction is twenty-five percent if no percentage attorney fee is agreed upon between the applicant or recipient and the attorney. That amount represents the department's share of attorney fees paid by the applicant or recipient. An attorney retained by the applicant or recipient must not be considered liable to the department for improper settlement, compromise, or disbursement of funds unless the attorney has written notice by certified mail of the department's claim before the disbursement of funds.

(2) The applicant or recipient and his attorney may petition the court to increase the percentage over thirty-three and one-third percent in complicated litigation which proceeds to trial. The court must conduct a hearing and make written findings on its decision to order more than a thirty-three and one-third percent reduction in the amount due to the department. The court must make a finding that the resulting fee for the attorney is reasonable based on factors including, but not limited to, the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly, the likelihood that the acceptance of the particular employment precluded other employment by the lawyer, the fee customarily charged in the locality for similar legal services, the amount involved and the results obtained, the time limitations imposed by the applicant or recipient or by the circumstances, the nature and length of the professional relationship with the applicant or recipient, and the experience, reputation, and ability of the lawyer or lawyers performing the services.

(C) The department shall also share in other reasonable costs of litigation by reducing the amount due the department by a percentage of the costs, the percentage calculated by dividing the amount due the department by the total recovery received from the third party or private insurer.

(D) Upon discovery by the department of a Medicaid claim which may be part of a personal injury lawsuit, the department shall send to the applicant or recipient a letter which shall contain the following notice in bold print and all upper case letters:

'NOTICE: IF YOU ARE A PARTY TO A LAWSUIT OR CONSIDERING A LAWSUIT BECAUSE OF YOUR INJURIES, YOU MUST BRING THIS NOTICE OF MEDICAID CLAIM TO THE ATTORNEY OF YOUR CHOICE AS SOON AS POSSIBLE. YOUR ATTORNEY MUST CONTACT US BY CERTIFIED MAIL WITHIN THIRTY DAYS OF YOUR RECEIPT OF THIS LETTER TO NOTIFY US THAT HE OR SHE REPRESENTS YOU. FAILURE TO DO THIS MAY RESULT IN THE DEPARTMENT OF HEALTH AND HUMAN SERVICES HIRING AN ATTORNEY OF ITS CHOICE TO PURSUE ITS CLAIM. IF YOU WISH TO HIRE AN ATTORNEY BUT DO NOT KNOW ONE, YOU MAY CALL THE LAWYER REFERRAL SERVICE OF THE SOUTH CAROLINA BAR AT 1-800-868-2284 FOR THE NAMES OF ATTORNEYS IN YOUR AREA.'

An attorney for an applicant or recipient shall notify the department of a potential Medicaid claim upon its actual discovery, as well as notice of his or her representation of the applicant or recipient. This notice must be mailed to the department by certified mail within thirty days of actual discovery of the claim, but in no event later than thirty days following the applicant's or recipient's receipt of written notice of the Medicaid claim by the department sent certified mail to the applicant or recipient containing the above language.

(E) Upon written request by the attorney for the applicant or recipient, the department shall provide written information regarding the Medicaid claim which shall include, but is not limited to, the outstanding amount of the claim at the time of the department's response. The department shall provide its response within ten days of receipt of the request if the first claim was submitted to the department within the last eighteen months and within forty-five days of receipt in all other cases. The attorney may rely on that information for a period of sixty days after receipt for purposes of negotiating a settlement or pursuing a verdict. If a settlement or verdict is not obtained within sixty days of receipt of the claim of information, the attorney must request an update, and the department may amend the claim to reflect its most current information which may be relied upon for a new period of sixty days of receipt. If a settlement or verdict is obtained, the attorney must provide written documentation to the department within the sixty days."

SECTION 2. Section 43-7-410(B) of the 1976 Code is amended to read:

"(B) "Commission" 'Department' means the State South Carolina Department of Health and Human Services Finance Commission."

SECTION 3. Sections 43-7-420, 43-7-430 and 43-7-440 of the 1976 Code are amended to read:

"Section 43-7-420. (A) Every applicant or recipient, only to the extent of the amount of the medical assistance paid by Medicaid, shall be is deemed to have assigned his rights to recover such amounts so paid by Medicaid from any third party or private insurer to the State South Carolina Department of Health and Human Services Finance Commission. This assignment shall does not include rights to Medicare benefits. The applicant or recipient shall cooperate fully with the State Health and Human Services Finance Commission department in its efforts to enforce its assignment rights.

(B) An applicant's and recipient's determination of, and continued eligibility for, medical assistance under Medicaid is contingent upon his cooperation with the Commission department in its efforts to enforce its assignment rights. Cooperation includes, but is not limited to, reimbursing the Commission department from proceeds or payments received by the applicant or recipient from any third party or private insurer.

(C) Every applicant or recipient is considered to have authorized all persons, including insurance companies and providers of medical care, to release to the Commission department all information needed to enforce the assignment rights of the Commission department.

Section 43-7-430. (A) The State South Carolina Department of Health and Human Services Finance Commission shall be is automatically subrogated, only to the extent of the amount of medical assistance paid by Medicaid, to the rights an applicant or recipient may have to recover such these amounts so paid by Medicaid from any third party or private insurer. The applicant or recipient shall cooperate fully with the State Health and Human Services Finance Commission department and shall do nothing after medical assistance is provided to prejudice the subrogation rights of the State Health and Human Services Finance Commission department.

(B) An applicant's and recipient's determination of, and continued eligibility for, medical assistance under Medicaid is contingent upon his cooperation with the Commission department in its efforts to enforce its subrogation rights. Cooperation includes, but is not limited to, reimbursing the Commission department from proceeds or payments received by the recipient from any third party or private insurer.

(C) Every applicant or recipient is considered to have authorized all persons, including insurance companies and providers of medical care, to release to the Commission department all information needed to enforce the subrogation rights of the Commission department.

Section 43-7-440. (A) The Commission department, to enforce its assignment or subrogation rights, may take any one, or any combination of, the following actions if the actions do not conflict with the requirements of Section 43-7-735:

(1) intervene or join in an action or proceeding brought by the applicant or recipient against any third party, or private insurer, in state or federal court.

(2) commence and prosecute legal proceedings against any third party or private insurer who may be liable to any applicant or recipient in state or federal court, either alone or in conjunction with the applicant or recipient, his guardian, personal representative of his estate, dependents, or survivors;

(3) commence and prosecute legal proceedings against any third party or private insurer who may be liable to an applicant or recipient, or his guardian, personal representative of his estate, dependents, or survivors;

(4) commence and prosecute legal proceedings against any applicant or recipient;

(5) settle and compromise any amount due to the State South Carolina Department of Health and Human Services Finance Commission under its assignment and subrogation rights. Provided, further, any representative or attorney retained by an applicant or recipient shall not be considered liable to State Health and Human Services Finance Commission for improper settlement, compromise or disbursement of funds unless he has written notice of State Health and Human Services Finance Commission's assignment and subrogation rights prior to disbursement of funds;

(6) reduce any amount due to the State Health and Human Services Finance Commission by twenty-five percent if the applicant or recipient has retained an attorney to pursue the applicant's or recipient's claim against a third party or private insurer, that amount to represent the State Health and Human Services Finance Commission's share of attorney's fees paid by the applicant or recipient. Additionally, the State Health and Human Services Finance Commission may, in its discretion, share in other costs of litigation by reducing the amount due it by a percentage of those costs, the percentage calculated by dividing the amount due the State Health and Human Services Finance Commission by the total settlement received from the third party or private insurer. Provided, further, any representative or attorney retained by an applicant or recipient shall not be considered liable to State Health and Human Services Finance Commission for improper settlement, compromise, or disbursement of funds unless he has written notice by certified mail of State Health and Human Services Finance Commission's assignment and subrogation rights prior to disbursement of funds.

(B) Providers and practitioners who participate in the Medicaid program shall cooperate with the Commission department in the identification of third parties whom they have reason to believe may be liable to pay all or part of the medical costs of the injury, disease, or disability of an applicant or recipient.

(C) Any provision in the contract of a private insurer issued or renewed after June 11, 1986, which denies or reduces benefits because of the eligibility of the insured to receive assistance under Medicaid, is null and void.

In enrolling a person or in making payments for benefits to a person or on behalf of a person, no private insurer may take into account that the person is eligible for or is provided medical assistance under a State Plan for Medical Assistance pursuant to Title XIX of the Social Security Act.

(D) The assignment and subrogation rights of the Commission department are superior to any right of reimbursement, subrogation, or indemnity of any third party or recipient except as provided for in subsection (D). Provided, further, any representative or attorney retained by an applicant or recipient shall not be considered liable to State Health and Human Services Finance Commission for improper settlement, compromise, or disbursement of funds unless he has written notice of State Health and Human Services Finance Commission's assignment and subrogation rights prior to disbursement of funds.

In a case where a third party has a legal liability to make payments for medical assistance to or on behalf of a person, to the extent that payment has been made under a State Plan for Medical Assistance pursuant to Title XIX of the Social Security Act for health care items or services furnished to the person, the State is considered to have acquired the rights of the person to payment by any other party for the health care items or services.

(E) If the applicant's or recipient's total recovery from a third party or private insurer is more than two times the value of the applicant's or recipient's medical services received, the South Carolina Department of Health and Human Services is entitled to a full recovery of Medicaid money paid for the applicant's or recipient's related medical services, less the department's share of attorneys fees and costs. If the applicant's or recipient's total recovery from a third party or private insurer is less than two times the value of the applicant's or recipient's medical services received, the department, using cost effectiveness principles set forth in the Medicaid State Plan, shall determine what portion of the Medicaid claim it should seek to recover. If, after a good faith attempt, the applicant or recipient and the department do not agree on a recovery amount, the applicant or recipient may request an allocation hearing in the Court of Common Pleas and a judge shall determine the proper allocation of the applicant's or recipient's total recovery, after payment of attorney's fees, to reimbursement for medical services, and to all of the applicant's or recipient's other damages. Upon agreement of all parties, the allocation may be effected through mediation or arbitration."

SECTION 4. Section 43-7-460(G) of the 1976 Code, as last amended by Act 93 of 1997, is further amended to read:

"(G) Notwithstanding subsection (A)(2) upon the enactment of any amendments to federal law which grants states the option to exempt home and community-based services or other noninstitutional Medicaid services from the estate recovery provisions mandated by Section 13612 of the federal Omnibus Budget Reconciliation Act of 1993, the State South Carolina Department of Health and Human Services Finance Commission shall seek recovery of medical assistance paid under the Title XIX State Plan for Medical Assistance from the estate of an individual who:

(1) at the time of death was an inpatient in a nursing facility, intermediate care facility for the mentally retarded, or other medical institution if the individual is required, as a condition of receiving services in the facility under the state plan, to spend for costs of medical care all but a minimal amount of the person's income required for personal needs; or

(2) was fifty-five years of age or older when the individual received medical assistance but only for medical assistance consisting of nursing facility services."

SECTION 5. This act takes effect upon approval by the Governor.

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