Special Needs Trust take a significant amount of time to complete, it is recom- mended that an attorney specializing in this type of trust be contact at the earliest possible moment. Waiting until after the judgment or settlement is distributed may be too late and could result in a loss of local, state or federal means-tested ben- efits. It can take several weeks to negotiate the Medical Assistance lien and several months for the Special Needs Trust to be reviewed and accepted by the Office of the Attorney General.9
An attorney spe-
cializing in this type of trust can usually perform all of the above steps and many others, which are beyond the scope of this article.
Attorney’s fees for the preparation and
approval of a Special Needs Trust can be paid out of the settlement proceeds; how- ever, it must be clear to the attorney that if this method is chosen, fees will not be paid until services have been rendered and the Special Needs Trust is funded.10
Negotiation Of The Medical Assistance Lien:
Before a Special Needs Trust is estab- lished and funded, it is prudent to have the trust reviewed and approved by the Office of the Attorney General to avoid any questions concerning a client’s eligi- bility for Medical Assistance benefits. Among other things, the client must first reimburse the State’s Medical Assistance lien, to repay the State for any benefits that the State has provided up to the time of settlement or verdict.11 The Medical Assistance lien exists be- cause all Medical Assistance recipients are deemed to have assigned to the State any rights to payment for medical services from liable third parties as a condition of eligibility for medical assistance.12
In
other words, if the disabled client receives Medical Assistance, the State has a lien
on any money the client receives as a re- sult of a recovery from any defendant. 13 The State does not have a subrogation right, however, for payments that are not the result of the alleged negligence.14 Under Section 15-120 of the Health- General Article of the Maryland Annotated Code, an attorney represent- ing a program recipient in a cause of action to which the Department has a right of subrogation shall: • Notify the State prior to filing a claim, commencing an action, or negotiating a settlement.15
In order to accomplish 13 14 15
Md. Health-Gen. Code Ann. § 15-109(d) (Supp. 1998).
Md. Health-Gen. Code Ann. § 15-120 (Supp. 1998).
Md. Health-Gen. Code Ann. § 15-120(b)(1) (Supp. 1998).
16
Md. Health-Gen. Code Ann. § 15-120(b)(2) (Supp. 1998).
this, the attorney should investigate whether a Medical Assistance lien ex- ists, determine the amount of the lien, identify all healthcare providers and identify all services rendered as of the date of the settlement or verdict that pertain of the injuries sustained.
• Notify the State in advance of the reso- lution of a cause of action and allow the State 3 business days from the re- ceipt of notice to establish its subrogated interest.16
• Hold money received in settlement of or under a judgment or award in a cause of action for the benefit of the State to the extent required for the sub-
(Continued on page 20)
9
The Attorney General’s Office should indi- cate in writing its approval of the Trust and that the Trust will not be considered a re- source for the purposes of determining the client’s Medical Assistance eligibility.
10 11
See A. Frank Johns, Preserving Assets with Supplemental Needs Trusts, Trial (Nov. 1998).
See 42 U.S.C. 1396k (1994); Cricchio v. Pennisi, 90 N.Y.2d 296, 660 N.Y.S.2d 679, 683 N.E.2d 301 (1997) and Norwest Bank North Dakota, N.A. v. Doth, 969 F. Supp. 532 (D. Minn. 1997).
12
Md. Health-Gen. Code Ann. § 15-109(d) (Supp. 1998).
Winter 2000 Trial Reporter 19
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