Amends TCA Title 8, Chapter 27.

This bill revises the present law provisions governing a county's, a municipal corporation's, and a special school district's (referred to collectively as "local authority") right of subrogation under the local authority's group life, hospitalization, disability, or medical insurance plan (collectively referred to as a "plan"). This summary will highlight various differences between the present law provisions and the provisions of this bill. Generally under present law and this bill, a local authority may not recover a medical payment paid to, or on behalf of, an insured under a medical plan, unless the medical payment has been incorrectly paid, or unless the insured recovers or is entitled to recover from a third-party reimbursement for all or part of the costs of care or treatment for the injury or illness for which the medical payment is paid. A local authority is subrogated to all rights of recovery, for the cost of care or treatment for the injury or illness for which medical payment is provided, contractual or otherwise, of the insured against any person. This bill clarifies that the subrogation provisions apply in regard to an insured who recovers from a third-party tortfeasor, in addition to a third-party insurer. This bill also extends application of the subrogation provisions to plans under an on-the-job or work-related injury program. This bill specifies that the plan has a right of reimbursement from any plan participant for the cost of care or treatment for any injury or illness caused by a third-party tortfeasor for which medical payment is provided, contractual or otherwise, by the plan for the benefit of or on behalf of a plan participant. This bill sets out the plan's right of reimbursement from any plan participant for the cost of care or treatment for any injury or illness caused by a third-party tortfeasor for which medical payment is provided, contractual or otherwise, by the plan for the benefit of or on behalf of a plan participant. The right of reimbursement is contingent upon certain plan stipulations as detailed by this bill. Also, this bill specifies that the subrogation and reimbursement rights will attach automatically as a lien against any proceeds received by the plan participant from a third-party tortfeasor. A plan will not be required to choose between the plan's right of subrogation or right of reimbursement, and a plan may elect, on a case by case basis, to waive either interest. This bill prohibits a plan from withdrawing or reducing payments to a provider of medical services in order to recover funds obtained by a plan participant from a third-party tortfeasor or third-party insurer for medical services rendered by the medical-services provider if the plan has reason to know that the funds were obtained without the knowledge or direct assistance of the provider. Present law requires a local authority, if the authority asserts its rights to subrogation, to notify the insured of the insured's rights of recovery against third parties. This bill clarifies that such assertion must be clearly stated in the summary plan description. This bill explains in detail requirements for plan documents and summary plan descriptions. Present law authorizes a local authority to recover from the insured any benefits incorrectly paid, while living, as a debt due to the local authority and, upon the insured's death, as a claim classified with taxes having preference under the laws of this state. This bill deletes this provision. This bill specifies that if a plan has a third-party administrator, recovery for any benefits incorrectly paid must be exclusively from such third-party administrator. Under present law, a local authority may remove an insured from a plan for certain noncompliance with the subrogation provisions. Present law and this bill both require certain notice prior to such an action. This bill establishes a specific process for such notice. Under present law, a local authority is authorized to require certain information identifying persons covered by third parties for medical services. Present law requires a third party for medical services to, among other things, respond to a written inquiry by the local authority regarding a claim for a payment for any healthcare item or service that is submitted not later than three years after the date of the provision of the healthcare item or service. This bill additionally requires the third party to respond to a written inquiry by the plan regarding a claim for payment for any healthcare item or service submitted within three years of conclusion of litigation. Present law provides the procedure for a plaintiff's attorney in a personal injury case to provide notice to the local authority and for the local authority to respond with any claim to a subrogation interest and the procedure for a trial judge to calculate the amount of a subrogation interest. Present law also establishes the factors by which the trial judge must reduce the gross amount of the subrogation interest. The amount determined after performance of the calculations is the net subrogation interest. This bill: (1) Adds provisions, that apply to all claims under this bill, detailing information that a plan document must include in regard to subrogation and reimbursement; and requiring a plan to provide insureds, at each enrollment renewal period, with a form for requesting subrogation and reimbursement information (RSRI form); (2) Revises the provisions governing the process in a personal injury case and requires, among other things, that: (A) The plan participant or the plan's participant attorney, or other individual or individual's attorney, who has an interest in recovery under this bill notify the plan by completing the plan's RSRI form, requesting that the plan determine the amount, if any, of the plan's subrogation or reimbursement interest; and (B) If the plan participant's attorney or representative fails to provide the required notice to the plan, upon motion by the plan, the plan participant's attorney's interest in any recovery must be reduced by up to 50 percent with the forfeited amount paid to the plan. If the plan participant is unrepresented and fails to provide notice, upon motion by the plan, the court must award to the plan from the plan participant's recovery an amount that, in the court's discretion, reimburses the plan for amounts the plan lost due to the plan participant's failure or refusal to provide the plan with the notice; (3) States that it does not preclude a plan from declining to provide its subrogation or reimbursement interest, or both, until the plan receives certain affidavits or statements in regard to an insured's injury and recovery, as detailed in this bill. A plan's request for the information will not extinguish the plan's subrogation or reimbursement interest and will not considered for purposes of calculating the plan's 180-day response period; (4) Like present law, authorizes a trial judge to reduce the gross amount of both subrogation or reimbursement interest by factors detailed in this bill, as applicable. This bill also specifies that the amount determined after performance of the calculations is the net subrogation interest or reimbursement interest. This bill adds that if a plan participant plaintiff or the plan participant's attorney, or both, fails to timely remit to the counsel or other individual specified in the plan document or SPD the plan's pro rata portion of judgment moneys received, upon motion by the plan, the court must award to the plan attorney's fees for the cost of the motion, interest on moneys withheld, as well as the amounts withheld, and may, in its discretion, order those who failed to timely release funds to forfeit to the plan all sums received in payment of the judgment; and (5) Adds that if a plan participant initiates suit against a plan or administrator for any action taken on behalf of the plan with respect to benefits, then recovery will be limited to accrued benefits due under the terms of the plan, a declaratory judgment on entitled-to benefits, or an injunction against a plan's or administrator's improper refusal to pay benefits. Relief will not include damages but may include reasonable attorney's fees. ON APRIL 26, 2021, THE SENATE ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 989, AS AMENDED. AMENDMENT #1 revises various provisions of the bill, as follows: (1) Removes, in the definition of "plan", the limit on nominal fees paid by the primary insured for the primary insured and any insured whose relationship to the primary insured allows them to receive benefits under the plan; (2) Redefines "third-party for medical services" or "third party" to mean a person or entity that contracts with either the plan or the third-party administrator to provide payment for claims of healthcare items or services for plan participants; (3) Clarifies that a "third party" instead of a "third party insurer or other third party" must provide information identifying persons covered by third parties for medical services upon receiving a request from the plan; (4) Makes the reduction of a plan participant's attorney's interest (described in the bill summary in (2)(B)) applicable only in cases where the attorney or representative is on notice that the plan has an interest in judgment or settlement and fails to provide notice to the plan; and (5) Authorizes, instead of requires, the court to award to the plan, upon motion, certain remedies if a plan participant plaintiff or such attorney, or both, fail to timely remit the plan's pro rata portion of judgment money received. This amendment also adds that the court is authorized to award to the plan participant plaintiff or the plan participant's attorney, or both, attorney's fees for the cost of the motion and order the plan to forfeit its net subrogation or reimbursement interest, if it finds that the plan filed a motion under this provision in bad faith.