HB2448 HD1.DOC

SECTION 1. The legislature finds that the United States Supreme Court has significantly limited the states' ability to recover full reimbursement in medicaid third-party-lien cases. The Supreme Court left the discretion to the states to use formulas to address the allocation and distribution of proceeds in these cases. Many states have implemented formulas to address this outstanding issue and to clarify what will happen in settlements in these cases. Current Hawaii law requires that the State contribute a reasonable amount towards a medicaid claimant's attorney's fees and costs, which results in many disputes as to what is considered a reasonable amount.

The legislature also finds that there is a need to strengthen the medicaid program's ability to recover moneys to which it is entitled, as these moneys are used to help sustain the viability of the medicaid program. The medicaid program has faced budget cuts, which has resulted in reduced benefits for all recipients. Recovery of reimbursements helps to reduce the burden on the program while also ensuring it is available for the community. This Act will enhance the medicaid program's ability to recover these moneys.

The purpose of this Act is to establish a formula for calculating the amount to be contributed by the State towards a claimant's attorney's fees and costs, in lieu of recovering the full amount.

This Act also defines the terms "value of damages" and "medical institution" and clarifies that the lien amount stated in notices of lien produced by the department of human services for reimbursement of medicaid benefits paid for a recipient, shall be presumed to be valid.

SECTION 2. Section 346-1, Hawaii Revised Statutes, is amended by adding two definitions to be appropriately inserted and to read as follows:

""Medical institution" means an institution created for the practice of medicine that provides long-term care services at a nursing facility level of care.

"Value of damages" for the limited purpose of reimbursing medicaid for benefits paid out means the total amount that a medicaid recipient receives from a settlement or what a court or jury awards to the medicaid recipient."

SECTION 3. Section 346-29.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The department may also place a lien against the real property of any recipient receiving medical assistance who is an inpatient in a nursing facility, intermediate care facility for individuals with intellectual disabilities, or other medical institution, after a state determination, pursuant to notice and hearing requirements of chapter 91, that the recipient cannot reasonably be expected to be discharged from the medical institution and returned home. The lien amount shall be presumed to be valid. There is a rebuttable presumption that the recipient cannot reasonably be expected to be discharged from the facility and return home if the recipient or a representative of the recipient declares that there is no intent to return home or if the recipient has been institutionalized for six months or longer without a discharge plan.

(1) The department may not place a lien on the recipient's home if the recipient's:

(A) Spouse;

(B) Minor, blind, or disabled child; or

(C) Sibling who has an equity interest in the home and who was residing in the home for a period of at least one year immediately before the date of the recipient's admission to the medical institution;

is lawfully residing in the home.

(2) The department shall not recover funds from the lien on the recipient's home when:

(A) A sibling who was residing in the home for a period of at least one year immediately before the date of the recipient's admission to the medical institution; or

(B) A son or daughter who was residing in the recipient's home for a period of at least two years immediately before the date of the recipient's admission to the medical institution, and who establishes to the satisfaction of the State that he or she provided care to the recipient which permitted such recipient to reside at home rather than in an institution;

lawfully resides in the home and has lawfully resided in the home on a continuous basis since the date of the recipient's admission to the medical institution.

(3) The department also shall not recover funds from the lien if the recipient has a surviving spouse; or surviving minor, blind, or disabled child.

(4) Any lien imposed with respect to this subsection shall be dissolved upon the individual's discharge from the medical institution and return home."

SECTION 4. Section 346-37, Hawaii Revised Statutes, is amended by amending subsections (f), (g), and (h) to read as follows:

"(f) If liability is found to exist, or if the issue of third-party liability is settled or compromised without a finding of liability, regardless of who institutes legal proceedings or seeks other means of recovering, the department shall have a right to recover the full amount of the costs of medical assistance or burial payment made. To aid in the recovery of the costs the department shall have a first lien in the full amount of the costs of medical assistance or burial payment made against the proceeds from all damages awarded in a suit or settlement. The lien shall attach as provided by subsection (g). Thirty-three per cent of a total settlement or, if not otherwise specified by a jury, thirty-three per cent of a judgment or award shall be considered special damages for the limited purpose of identifying the total amount available to satisfy the lien.

(g) The lien of the department for reimbursement of costs of medical assistance or burial payments under subsection (f), shall attach by a written notice of lien served upon the claimant's attorney or upon the third person, the third person's agent, attorney, or insurance company. The method of service shall be by certified or registered mail, return receipt requested, or by delivery of the notice of lien personally to the individuals referred to. Service by certified or registered mail is complete upon receipt. The notice of lien shall state the name of the injured, diseased, or deceased person, the amount of the lien, and the date of the accident or incident which caused the injuries, disease, or death which necessitated the department's medical assistance or burial payments. If the notice of lien is served upon the claimant's attorney, the notice of lien shall state that the claimant's attorney shall pay the full amount of the lien from the proceeds of any judgment, settlement, or compromise based on the incident or accident. If the notice of lien is served upon the third person, the third person's agent, attorney, or insurance company, the notice of lien shall state that the third person shall pay the full amount of the lien prior to disbursing any of the proceeds to the claimant or to the claimant's attorney. A notice of lien may be amended from time to time until extinguished, each amendment taking effect upon proper service. The lien amount shall be presumed to be valid.

(h) The lien shall attach as provided by subsection (g). If a notice of lien is properly served upon the attorney representing the claimant as provided in subsection (g), that attorney shall pay the full amount of the lien, prior to disbursing any of the proceeds of the suit or settlement to the attorney's client. If a notice of lien is properly served upon the third person, the third person's agent or attorney, or the third person's insurance company, as provided in subsection (g), it shall be the responsibility of the person receiving the notices to pay the full amount of the lien prior to disbursing any of the proceeds to the claimant's attorney.

[If, after having received timely written notice of any claim or action under subsection (e), the department did not intervene or join in the action or prosecute its own claims or actively participate with claimant or claimant's attorney in the prosecution of claims, or a distribution agreement was not entered into between the parties, then the department shall determine its fair contribution toward attorney fees and costs incurred in the action that shall be a reasonable amount based solely upon legitimate costs and services rendered by the claimant or claimant's attorney in recovering the lien amount. Any dispute regarding the department's determination of its contribution to fees and costs may be submitted to administrative hearing under subsection (i) or a court of competent jurisdiction. The value of services contributed by the claimant and department may be considered in fairly allocating fees and costs between the claimant and department where both contribute to recovering the lien amount.] If the lien is less than or equal to the special damages amount specified in subsection (f), thirty-three per cent of the lien amount will be deducted and considered the State's reasonable and fair contribution towards the claimant's attorney's fees and costs unless the State prosecutes its own claim, in which case it is not required to reduce its lien. If the lien is greater than the special damages amount specified in subsection (f), the total settlement shall be split equally among the State, the claimant, and the claimant's attorney, after deducting all legitimate costs incurred by claimant's attorney in prosecuting claimant's case."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

HOUSE OF REPRESENTATIVES	H.B. NO.	2448
TWENTY-SIXTH LEGISLATURE, 2012		H.D. 1
STATE OF HAWAII