State ex rel. Office of Recovery Servs. v. McCoy
In State ex rel. Office of Recovery Servs. v. McCoy, 2000 UT 39, 999 P.2d 572, the Court considered the case of a Medicaid recipient whose attorney asked for the State's consent to bring an action to pursue insurance recovery on behalf of the recipient and the State.
The State refused. Id. The attorney, John McCoy, then proceeded against the relevant insurers, but did so in such a way as to expressly exclude the State's claim against the insurers, thereby preserving the State's right to seek recovery separately. Id.
The Court reasoned that the State could not enforce its Medicaid lien against McCoy's attorney fees because McCoy had requested consent and had done nothing to prejudice the State's right to recover its Medicaid payments. Id.
The Court therefore held that "under subsection (4), when the State elects to recover directly from a recipient who has expressly excluded the State's claim from any attempt to recover from a third party, the State must pay the attorney fees incurred in procuring the State's share of the settlement proceeds." Id.
In McCoy, the State's refusal to consent to the recipient's action was an essential element of our holding that the State was obligated to pay the recipient's attorney fees.
The McCoy court stated that, "having elected not to recover directly from the third party in the case before us, the State . . . incurred a responsibility to pay attorney fees." Id.