CHAPTER 259. THIRD-PARTY LIABILITY

 (a)  With respect to claims against third parties for the costs of Medical Assistance (MA) services delivered through a Managed Care Organization (MCO) contract, the Department will recover the actual payment to the hospital or other medical provider for the service. If no specific payment is earmarked by the MCO for the service, such as in the example of a capitated payment to physicians, the Department will recover its fee schedule amount for the service.

 (a)  With respect to claims asserted by the MA Program against moneys owed by third parties as a result of tort claims asserted by a beneficiary of MA benefits, the Department will only recover from that portion of a tort recovery which represents payment for medical care by the third party. The term ‘‘beneficiary’’ includes both present and former recipients of MA benefits, and includes individuals receiving benefits through an MA managed care organization.

 (b)  In determining the portion of a tort recovery that represents payment for medical care by a third party, the Department will apply the following interpretations:

   (1)  Unless the Department intervenes in a lawsuit or sues separately, beneficiaries, including beneficiaries who are minors, are vested with the right to recover injury related medical expenses paid by the MA Program as part of their cause of action for other damages, and absent an express court order to the contrary are deemed to recover medical expenses as part of any tort recovery.

   (2)  In the absence of a court order allocating tort proceeds among categories of damages, 1/2 of the net proceeds are allocated by law to be available to repay injury-related MA expenses. The amount of the net proceeds is computed by deducting from the gross proceeds the attorney’s fees, litigation costs and medical expenses relating to the injury that were paid for by the beneficiary prior to the settlement of the injured beneficiary’s action or claim.

   (3)  If the beneficiary or other party seeks to obtain a court order limiting the portion of the tort recovery from which MA reimbursement may be paid to an amount less than 1/2 of the net proceeds, or excluding amounts paid by the MA program from the recovery, the Department shall be given fair notice and an opportunity to protect its interest.

   (4)  Failure to provide the Department with fair notice and an opportunity to protect its interest, prior to obtaining a court order limiting the portion of a tort recovery from which MA reimbursement may be paid, constitutes a violation of section 1408(a)(1) of the Public Welfare Code (62 P. S. §  1408(a)(1)).

   (5)  The Department is not bound by a private agreement between the parties to a tort claim regarding allocation of the proceeds.

   (6)  The Department’s claims against third parties for reimbursement of MA cannot be released by a beneficiary without the Department’s express consent in writing.

 (c)  The following procedures provide the Department with fair notice and an opportunity to protect its interest prior to entry of an order subject to subsection (b)(3):

   (1)  In a case when the beneficiary seeks to exclude injury-related medical expenses paid by the MA Program from the recovery, the beneficiary shall comply with the notice of suit requirements in section 1409(b)(5) of the Public Welfare Code (62 P. S. §  1409(b)(5)) and include a statement that the beneficiary will seek to exclude moneys paid by the MA Program from any recovery.

   (2)  In a case when the beneficiary seeks an allocation of tort proceeds by the court or a trier of fact, the beneficiary shall provide the Department with reasonable advance notice and an opportunity to intervene in the case prior to the determination.

   (3)  In a case when the beneficiary seeks a court order limiting the portion of the tort settlement from which MA reimbursement may be paid to an amount less than 1/2 of the net proceeds of any settlement, the beneficiary shall provide the Department with reasonable advance notice of the settlement before it becomes binding.

   (4)  In a case when a motion is to eliminate medical expenses paid by MA from the case, the moving party shall provide the Department with reasonable advance notice and an opportunity to intervene in the case prior to adjudication of the motion.

   (5)  Thirty days advance notice is considered reasonable advance notice under this subsection.

   (6)  Notices must be in writing and sent by certified or registered mail to the Division of Third Party Liability, Department of Public Welfare, P. O. Box 8486, Harrisburg, PA 17105 and include the following information:

     (i)   The name of the beneficiary.

     (ii)   The beneficiary’s MA identification number, if known.

     (iii)   The beneficiary’s date of birth.

     (iv)   The name of the beneficiary’s attorney, if applicable.

     (v)   The insurance carriers, if applicable.

     (vi)   The date and specific injuries giving rise to the claim.

     (vii)   The court and docket number in which the claim is pending, if applicable.

   The provisions of this §  259.2 adopted September 7, 2007, effective September 8, 2007, 37 Pa.B. 4881.