.02 Programís Right of Subrogation.

A. The Department may not pay medical claims that are payable by a third party.

B. The Department is assigned any and all rights to payments by any third party that result from medical care received by the recipient, together with the rights of any other individuals eligible for Program benefits for whom the recipient can make assignment. This assignment shall be effective to the extent of the amount of medical assistance actually paid by the Program.

C. If a recipient has a cause of action against a third party, including a claim under Insurance Article, §19-509 or 19-510, Annotated Code of Maryland, the Department shall be subrogated to that cause of action to the extent of any payments made by the Department on behalf of the recipient that result from the occurrence that gave rise to the cause of action.

D. The Departmentís subrogation claim shall be limited to that portion of the claim that represents compensation for the medical expenses paid by the Program until the date of an award, settlement or judgment.

E. Judicial Allocation of Medical Expenses from an Award or Settlement.

(1) A recipient may not agree, in settlement of the recipientís cause of action, to an allocation of medical expenses less than the amounts set forth in §F of this regulation, without prior approval of the Department.

(2) If an action decided by the court does not determine the allocation of medical expenses in such action, the allocation shall be determined in accordance with §F of this regulation.

(3) Provided that the Department is provided at least 10 days advance written notice of any hearing at which the allocation of medical expenses shall be heard, the Department shall defer to the courtís determination of the allocation of medical expenses.

F. The Departmentís Recovery in Subrogation Claims.

(1) Except as provided in §§F(2)—(4) of this regulation, in satisfaction of the Departmentís subrogation claim, the Department shall recover the lesser of:

(a) The full amount of past medical costs paid by the Program; or

(b) 50 percent of the judgment, award or settlement less attorney fees, litigation costs, and other deductions required by law.

(2) For the benefit of the recipient, the Departmentís recovery in subrogation claims as provided in §F(1) of this regulation shall be reduced by one-third, for the amount of the attorneyís fees incurred by the recipient in bringing the case, unless the Department files a petition to intervene in a case in which it has a subrogation interest, is independently represented by counsel and has been provided the notice required by §E(3) of this regulation.

(3) The Department shall provide the recipient written notice under COMAR of the amount of the subrogation claim it proposes to recover as provided in §§F(1)—(2) of this regulation and of the recipientís right to request a fair hearing to present evidence of a different allocation of medical expenses. If the recipient files a request for a hearing, the recipient shall bear the burden of proof and the hearing shall be governed by COMAR 10.01.04. Unless the recipient files a timely request for a hearing within 30 days of receipt of the written notice, the Department shall recover the amount of the subrogation claim set forth in the written notice to the recipient.

(4) If the amount of money actually collected by the recipient is less than the amount of the judgment or award because available insurance coverage is less than the amount of the judgment or award, the Departmentís recovery as calculated in §F(1) of this regulation shall be proportionally reduced by the same percentage as is the amount actually collected compared to the amount of the judgment or award.

G. Unless ordered by a court, the Department may not be required to join, intervene, or otherwise become a party to the cause of action against a third party to maintain the Departmentís subrogation right under §C of this regulation.

H. An action brought under this regulation is not exclusive and is independent of and in addition to any right, remedy, or cause of action available to the State, the Department, other State agencies, or a Program recipient or other individual.

I. The Department may enter into contracts for the collection of medical expenses already paid by the Program from potential third parties. The Department may pay, from the funds recovered by the contractor, amounts owed to the federal government as the Departmentís share of the Program paid claim, and the costs of collecting the funds.

J. The Department may assign the Departmentís rights of subrogation to a managed care organization and shall provide notice of the assignment to the recipient or the recipientís attorney.

K. The Department may compromise or settle and release the Departmentís subrogation claim if, in the Departmentís judgment, collection of the claim will cause substantial hardship to the:

(1) Recipient; or

(2) Surviving dependents of a deceased recipient in a wrongful death action.