Litigation Alert: Change to Connecticut DAS Medical Liens Subrogation Statute provides for direct claim against insurers and responsible third parties

Executive Summary:

Connecticut statutory changes now provide for a direct claim by DAS against insurers and responsible third parties for medical payments made by the state for Medicaid payments, effective July 1, 2021.  The changes are retroactive and apply to all active DAS medical payment liens.  Insurers and liable third parties must respond to receipt of the claim within 90 days.  If an insurer or liable third party does not respond within 120 days, the lien becomes uncontestable.

Statutory Changes:

Connecticut has revised the statute providing subrogation rights to the state for medical payments made by the Department of Social Services through its medical assistance programs including Medicaid, providing a direct claim for reimbursement against insurers and other legally liable third parties.  The changes are retroactive, affecting all liens asserted by the Department of Administrative Services for Medicaid payments.

Effective July 1, 2021, Conn. Gen. Stat. § 17b-265 was revised to add the following subsections:

(g) An insurer or other legally liable third party, upon receipt of a claim submitted by the department or the department's designee, in accordance with the requirements of subsection (c) of this section, for payment of a health care item or service covered under a state medical assistance program administered by the department, shall, not later than ninety days after receipt of the claim or not later than ninety days after the effective date of this section, whichever is later, (1) make payment on the claim, (2) request information necessary to determine its legal obligation to pay the claim, or (3) issue a written reason for denial of the claim. Failure to pay, request information necessary to determine legal obligation to pay or issue a written reason for denial of a claim not later than one hundred twenty days after receipt of the claim, or not later than one hundred twenty days after the effective date of this section, whichever is later, creates an uncontestable obligation to pay the claim. The provisions of this subsection shall apply to all claims, including claims submitted by the department or the department's designee prior to July 1, 2021.

(h) On and after July 1, 2021, an insurer or other legally liable third party who has reimbursed the department for a health care item or service paid for and covered under a state medical assistance program administered by the department shall, upon determining it is not liable and at risk for cost of the health care item or service, request any refund from the department not later than twelve months from the date of its reimbursement to the department.

The additional subsections require an insurer or other legally liable third party within 90 days of receipt of notice of the claim to pay the claim, request information necessary to determine the legal obligation to pay the claim, or issue a written reason for denial of the claim.  If the insurer or other legally liable third party does not do so within 120 days of the notice of the claim, there is an uncontestable obligation to pay the claim.  The statute is retroactive, applying to all existing claims where notice has previously been provided.

While no additional guidance has been provided by the Department of Administrative Services, the statutory changes will impact the handling of Medicaid liens in Connecticut moving forward.  Insurers and other legally responsible parties need to respond to existing lien notices and future notices in order to ensure that they do not become uncontestable obligations, especially in cases where liability or damages causation are at issue.  If you have any questions, please do not hesitate to contact Ryan Ryan Deluca LLP to discuss further.

Executive Summary:

Connecticut statutory changes now provide for a direct claim by DAS against insurers and responsible third parties for medical payments made by the state for Medicaid payments, effective July 1, 2021.  The changes are retroactive and apply to all active DAS medical payment liens.  Insurers and liable third parties must respond to receipt of the claim within 90 days.  If an insurer or liable third party does not respond within 120 days, the lien becomes uncontestable.

Statutory Changes:

Connecticut has revised the statute providing subrogation rights to the state for medical payments made by the Department of Social Services through its medical assistance programs including Medicaid, providing a direct claim for reimbursement against insurers and other legally liable third parties.  The changes are retroactive, affecting all liens asserted by the Department of Administrative Services for Medicaid payments.

Effective July 1, 2021, Conn. Gen. Stat. § 17b-265 was revised to add the following subsections:

(g) An insurer or other legally liable third party, upon receipt of a claim submitted by the department or the department's designee, in accordance with the requirements of subsection (c) of this section, for payment of a health care item or service covered under a state medical assistance program administered by the department, shall, not later than ninety days after receipt of the claim or not later than ninety days after the effective date of this section, whichever is later, (1) make payment on the claim, (2) request information necessary to determine its legal obligation to pay the claim, or (3) issue a written reason for denial of the claim. Failure to pay, request information necessary to determine legal obligation to pay or issue a written reason for denial of a claim not later than one hundred twenty days after receipt of the claim, or not later than one hundred twenty days after the effective date of this section, whichever is later, creates an uncontestable obligation to pay the claim. The provisions of this subsection shall apply to all claims, including claims submitted by the department or the department's designee prior to July 1, 2021.

(h) On and after July 1, 2021, an insurer or other legally liable third party who has reimbursed the department for a health care item or service paid for and covered under a state medical assistance program administered by the department shall, upon determining it is not liable and at risk for cost of the health care item or service, request any refund from the department not later than twelve months from the date of its reimbursement to the department.

The additional subsections require an insurer or other legally liable third party within 90 days of receipt of notice of the claim to pay the claim, request information necessary to determine the legal obligation to pay the claim, or issue a written reason for denial of the claim.  If the insurer or other legally liable third party does not do so within 120 days of the notice of the claim, there is an uncontestable obligation to pay the claim.  The statute is retroactive, applying to all existing claims where notice has previously been provided.

While no additional guidance has been provided by the Department of Administrative Services, the statutory changes will impact the handling of Medicaid liens in Connecticut moving forward.  Insurers and other legally responsible parties need to respond to existing lien notices and future notices in order to ensure that they do not become uncontestable obligations, especially in cases where liability or damages causation are at issue.  If you have any questions, please do not hesitate to contact Ryan Ryan Deluca LLP to discuss further.