Can a Texas county get back money it spent on indigent medical care if the patient later wins a lawsuit?

Texas AG Opinion JM-1094: Can a County Recover Indigent Care Costs from a Later Injury Settlement?

Plain-English summary

Henderson County had spent a large sum providing medical care to an indigent resident under the Indigent Health Care and Treatment Act, the state law that makes a county the payor of last resort for medical care for poor residents who are not covered by a hospital district or public hospital. The person then filed a personal injury lawsuit against a private individual. The county attorney asked the Attorney General whether the county could recover its costs out of any settlement or judgment the patient might win.

The Attorney General's answer was no, at least under the law as it existed. The starting problem was that neither the Indigent Health Care and Treatment Act nor the state agency's rules placed a lien on, or provided for the assignment of, a potential personal injury recovery. That is different from the Medicaid program, where filing an application automatically assigns the applicant's right to recover from a negligent third party (Human Resources Code section 32.033). The indigent-care law had no such provision, and it did not even require an applicant to report an unsettled tort claim.

The opinion acknowledged that the legislature plainly did not want counties paying for care when another source of payment exists; the Act calls the county the "payor of last resort" and excludes services payable by insurance or a legally liable third party. But those provisions all turn on a source of payment that already exists or is available, or a liability that has already been determined. A future personal injury award does not yet exist, is not yet available, and involves no established liability, so those provisions did not reach it. The remaining question was whether a lien or assignment could be implied. Under Texas law, a lien on property arises only from a contract or a statute, and a county has only the powers the constitution or statutes confer on it. With no statute or rule providing for a lien or assignment of a future recovery, the county had no right to reimbursement.

The opinion did point to a path forward through rulemaking. Because the Department of Human Services must set indigent-care eligibility standards "in accordance with" its AFDC-Medicaid rules, and the Medicaid side already includes the automatic assignment in section 32.033, the department had authority to adopt a parallel rule under the indigent-care Act requiring applicants to assign any personal injury recovery for medical expenses to the county, up to the amount of public funds spent. An individual county, however, could not adopt that requirement on its own. Counties may depart from the department's standards only to make them less restrictive, and requiring an assignment would be more restrictive, so it would take a department rule, not a county rule.

Currency note

This opinion was issued in 1989. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Indigent Health Care and Treatment Act (former article 4438f, V.T.C.S.) has since been recodified into chapter 61 of the Health and Safety Code, the Department of Human Services has been reorganized into the Health and Human Services agencies, and the relevant rules in title 40 (now generally title 26) of the Texas Administrative Code have been amended, including on third-party recovery and assignment. Anyone dealing with a present-day indigent-care reimbursement or assignment question should work from current law and current agency rules rather than the 1989 provisions described here.

Who this opinion affected (as of 1989)

Counties paying for indigent care: The opinion meant a county could not, on its own, recoup its indigent-care spending out of a patient's later personal injury recovery, because no statute or rule created a lien or assignment and a county could not adopt a more restrictive requirement.

Indigent patients with injury claims: The opinion meant that, absent a department rule, an applicant did not have to assign a potential personal injury recovery or report an unsettled tort claim to receive county assistance under the Act.

The Department of Human Services: The opinion identified the department, not individual counties, as the body with authority to adopt a rule requiring assignment of personal injury recoveries, tracking the Medicaid assignment in Human Resources Code section 32.033.

Common questions

Can a Texas county recover indigent-care costs from a patient's injury settlement?
Not under the law as it stood. The Attorney General concluded the county had no authority to seek reimbursement, because neither the Indigent Health Care and Treatment Act nor its rules created a lien on or assignment of a future personal injury recovery.

Why doesn't the "payor of last resort" language cover this?
Because that language and the related exclusions turn on a source of payment that already exists or is available, or a liability already determined. A future injury award does not yet exist and involves no established liability.

How is this different from Medicaid?
Under Medicaid, filing an application constitutes an assignment of the applicant's right to recover from a negligent third party (Human Resources Code section 32.033). The indigent-care Act had no comparable provision.

Could anything change that result?
Yes, a rule. The opinion concluded the Department of Human Services had authority to adopt a rule requiring applicants to assign personal injury recoveries to the county. An individual county could not, because that would be more restrictive than the department's standards, and counties may only be less restrictive.

Background and statutory framework

The Indigent Health Care and Treatment Act (article 4438f, V.T.C.S.) requires a county to pay for medical care for indigent residents not served by a hospital district or public hospital, and directs the Department of Human Services to establish eligibility standards and application, documentation, and verification procedures. Id. § 1.06(a). Nothing in the Act or the regulations placed a lien on or provided for the assignment of a potential personal injury recovery, in contrast to the Medicaid rule that an application for medical assistance constitutes an assignment of the applicant's right of recovery from a negligent third party. Cf. Hum. Res. Code § 32.033. Nor did the Act require an indigent to report an unsettled tort claim. See generally 40 T.A.C. §§ 14.104 and 14.105.

The opinion recognized the legislature's intent that counties not pay when another source exists: section 1.06(c)(5) requires applicants to provide information about insurance or other health care benefits; section 2.02(b) makes the county "the payor of last resort" that provides assistance only if other adequate public or private sources of payment are not available; and section 2.03(a)(3) imposes the obligation only if "no other adequate source of payment exists." A department rule likewise excludes mandatory services payable by insurance or "any legally liable third party." 40 T.A.C. § 14.202(b)(7). But all of those depend on a source that exists or is available, or a liability already established. A potential award in a personal injury suit does not yet exist, is not available, and involves no determined liability.

On whether a lien or assignment could be implied, the opinion applied settled Texas law: a lien on personal property or real estate arises only by contract or statute. Horton v. Gibson, 274 S.W. 292, 293 (Tex. Civ. App. - Waco 1925, no writ); see also Johnson v. Second Injury Fund, 688 S.W.2d 107, 108 (Tex. 1985) (right of subrogation does not exist except where clearly mandated by the legislature). The office had earlier concluded a county could not acquire a lien on the real estate of paupers it supported, because a county has only the powers expressly or impliedly conferred by the constitution or statutes. Attorney General Opinion WW-1150 (1961); see also Annot., Personal Injury Recovery as Affecting Eligibility for, or Duty to Reimburse, Public Welfare Assistance, 80 A.L.R.3d 772 (1977). With no provision for a lien or assignment of a future recovery, the county had no right to reimbursement.

Finally, on rulemaking, the department must set indigent-care standards and procedures "in accordance with" its AFDC-Medicaid rules. V.T.C.S. art. 4438f, § 1.06(a). Because section 32.033 of the Human Resources Code makes an application for medical assistance an assignment of the applicant's right of recovery (restated at 40 T.A.C. § 45.501), the opinion concluded the department could adopt a parallel rule under the indigent-care Act tracking that Medicaid provision. A county's own authority is narrower: under section 1.06(h) a county may use the department's standards or adopt less restrictive ones, and section 2.04(b) is to the same effect. Because requiring an assignment would be more restrictive than the department's requirements, a county could not adopt such a requirement on its own absent a department rule.

Citations

Statutory and regulatory authorities:

• Indigent Health Care and Treatment Act, article 4438f, V.T.C.S. (county as payor of last resort for indigent medical care)
• V.T.C.S. art. 4438f, § 1.06(a) (department sets standards in accordance with AFDC-Medicaid rules)
• V.T.C.S. art. 4438f, § 1.06(c)(5) (applicant information on insurance/benefits)
• V.T.C.S. art. 4438f, § 2.02(b) (county is payor of last resort)
• V.T.C.S. art. 4438f, § 2.03(a)(3) (obligation only if no other adequate source of payment exists)
• V.T.C.S. art. 4438f, § 1.06(h) (county may use department standards or less restrictive ones)
• V.T.C.S. art. 4438f, § 2.04(b) (county standards and procedures)
• Human Resources Code § 32.033 (Medicaid application constitutes assignment of right of recovery)
• 40 T.A.C. §§ 14.104 and 14.105 (income and resource standards); § 14.105(c)(11) (lump-sum payments as a resource); § 14.202(b)(7) (services excluded when payable by a legally liable third party); § 45.501 (restating the section 32.033 assignment)

Cases:

• Horton v. Gibson, 274 S.W. 292, 293 (Tex. Civ. App. - Waco 1925, no writ) (a lien arises only by contract or statute)
• Johnson v. Second Injury Fund, 688 S.W.2d 107, 108 (Tex. 1985) (subrogation exists only where clearly mandated by the legislature)

Attorney General opinion referenced:

• WW-1150 (1961)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-1094
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1989/jm1094.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor OCR errors may remain; the linked PDF is authoritative. (The scan's first line mis-renders the opinion number as "JR-1094"; the running headers on later pages correctly show "JM-1094." Some out-of-state statutory citations in footnote 1 are partly illegible in the scan and are marked accordingly.)

THE ATTORNEY GENERAL OF TEXAS

September 7, 1989

Honorable John Owens
Henderson County Attorney
Courthouse
Athens, Texas 75751

Opinion No. JM-1094

Re: Whether a county may recover expenses incurred under the Indigent Health Care Act (RQ-1522)

Dear Mr. Owens:

You ask about the authority of a county to seek reimbursement for money it has spent pursuant to the provisions of the Indigent Health Care and Treatment Act, article 4438f, V.T.C.S. You explain that Henderson County has spent a large sum of money for medical treatment for a particular individual. The individual has now filed a personal injury action against a private individual, and you ask whether the county may seek reimbursement if the individual receives a settlement or judgment that covers his medical expenses.

The Indigent Health Care and Treatment Act requires a county to pay for medical care for indigent residents of the county who are not residents of a hospital district or the area a public hospital has an obligation to serve. Id. tit. 2. The act requires that the Department of Human Services "establish eligibility standards and application, documentation, and verification procedures for counties to use in determining eligibility." Id. § 1.06(a).

Nothing in the Indigent Health Care and Treatment Act or the current regulations purports to place a lien on or to provide for the assignment of any potential right of recovery in a personal injury action. Cf. Hum. Res. Code § 32.033 (filing of an application for receipt of medical assistance constitutes an assignment of the applicant's right of recovery from another person for personal injury caused by the other person's negligence or wrong).[1] Indeed, nothing in the Indigent Health Care and Treatment Act or current regulations would require an indigent to report any unsettled tort claim on an application for assistance under the Indigent Health Care and Treatment Act. See generally 40 T.A.C. §§ 14.104 and 14.105 (income and resources standards under Indigent Health Care and Treatment Act).[2]

Although the act does not expressly provide for a lien or an assignment in the context you ask about, it is clear that the legislature did not intend for counties to pay for medical care when another source of payment exists. For example, section 1.06(c)(5) requires that an applicant provide information about "the existence of insurance coverage or other hospital or health care benefits for which the applicant is eligible." Also, section 2.02(b) of article 4438f provides:

The county is the payor of last resort and shall provide assistance only if other adequate public or private sources of payment are not available.

Section 2.03(a)(3) provides that a county has an obligation to provide indigent health care only if "no other adequate source of payment exists." Also, a rule adopted by the Department of Human Services provides that mandatory services under the Indigent Health Care and Treatment Act do not include services and supplies that:

are payable by or available under any health, accident, or other insurance coverage; by any private or other governmental benefit systems; by any legally liable third party; or under other contract. (Emphasis added.)

40 T.A.C. § 14.202(b)(7). All those provisions, however, apply to sources of payment that "exist" or "are available" or for which a third party is "legally liable." A potential award in a personal injury suit does not yet exist and it is therefore not available. Further, no legal liability has been determined. Therefore, even though we think it is clear that the legislature would not have intended for an indigent to be able to retain a windfall in the circumstances you ask about, we do not think the provisions cited above cover a potential, rather than actual, right to reimbursement. The question, then, is whether a lien on or an assignment of a future personal injury recovery can be implied from the provisions of the Indigent Health Care and Treatment Act.

It is the rule in Texas that a lien on personal property or real estate arises only by virtue of contract or statutory provision. Horton v. Gibson, 274 S.W. 292, 293 (Tex. Civ. App. - Waco 1925, no writ); see also Johnson v. Second Injury Fund, 688 S.W.2d 107, 108 (Tex. 1985) (right of subrogation does not exist except where clearly mandated by the legislature). Also, in 1961 this office considered whether a county could acquire a lien on the real estate of paupers for whom the county provided support. Attorney General Opinion WW-1150 (1961). This office concluded that a county could not acquire such a lien. The basis for that conclusion was that a county has only those powers expressly or impliedly conferred on them by the constitution or statutes. See generally Annot., Personal Injury Recovery as Affecting Eligibility for, or Duty to Reimburse, Public Welfare Assistance, 80 A.L.R.3d 772 (1977). In light of those authorities, we must conclude that under the current statute and regulations, which make no provision for a lien on or an assignment of a future personal injury recovery, a county does not have a right to reimbursement in the context you ask about.

Although current Department of Human Services regulations under the Indigent Health Care and Treatment Act do not require an assignment in the context you ask about, we do think that the Department of Human Services has authority to promulgate a rule requiring that an applicant for county assistance under the Indigent Health Care and Treatment Act assign any personal injury recovery or right to recovery for medical expenses to the county, to the extent of the public funds expended.

The department is required to set eligibility standards and application procedures "in accordance with" department rules relating to the AFDC-Medicaid program. V.T.C.S. art. 4438f, § 1.06(a). Section 32.033 of the Human Resources Code, which governs the Medicaid program, provides in part:

(a) The filing of an application for or receipt of medical assistance constitutes an assignment of the applicant's or recipient's right of recovery from:

(1) personal insurance;

(2) other sources; or

(3) another person for personal injury caused by the other person's negligence or wrong.

See also 40 T.A.C. § 45.501 (rule restating provision set out above). Because the department is authorized to adopt regulations governing eligibility for and application for indigent health care that are "in accordance with" the department's standards and procedures for determining eligibility in the AFDC-Medicaid program, we think it is within the department's authority to adopt a rule under the Indigent Health Care and Treatment Act that tracks the Medicaid rule set out in section 32.033 of the Human Resources Code.

It has been suggested that individual counties have independent authority to adopt such a rule under section 1.06(h) of the Indigent Health Care and Treatment Act, which provides:

A county may use the standards and procedures established by the department or may adopt and use less restrictive standards and procedures.

See also V.T.C.S. art. 4438f, § 2.04(b). Although that provision allows a county to adopt its own standards and procedures, it allows a county to do so only if the county's own standards and procedures are less restrictive than those of the Department of Human Services. In the absence of a department regulation requiring assignment of potential personal injury recoveries, a county would have no authority to adopt such a requirement since such a requirement would be more restrictive than the department's requirements.

SUMMARY

A county has no authority, under current law, to seek reimbursement from an indigent whose medical expenses are paid by the county in accordance with the Indigent Health Care and Treatment Act and who subsequently recovers damages in a personal injury suit. However, the Department of Human Services does have authority under the Indigent Health Care and Treatment Act to promulgate a rule requiring that applicants for county assistance under the Indigent Health Care and Treatment Act assign their rights to reimbursement from another person for personal injury caused by the other person's negligence or wrong.

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Sarah Woelk
Assistant Attorney General

Footnotes

[1] For examples from other jurisdictions of statutory liens on or assignments of later-acquired property of welfare recipients, see Conn. Gen. Stat. Ann. §§ 17-83e, 17-83f (West 1988) (lien on later acquired property or estate for AFDC or delinquent child support); Ill. Ann. Stat. ch. 23, para. 11-22 (Smith-Hurd 1988) (charge on personal injury claims for repayment of public medical assistance); Minn. Stat. Ann. § 393.10 (West 1968 & Supp. 1989) (county lien on any cause of action of one furnished medical assistance); N.J. Stat. Ann. [section not legible in scan] (West Supp. 1988) (provision that application for AFDC operates as assignment of other rights to support); N.Y. Soc. Serv. Law § 104-b (McKinney 1983) (lien on suit for personal injury as repayment of public assistance); id. § 366 (McKinney 1983 & Supp. 1988) (repayment of costs of medical care and services); Pa. Stat. Ann. tit. 62 § 403 (Purdon Supp. 1988) (assignment of property rights to state as prerequisite for public assistance).

[2] The regulations of the Department of Human Services list "lump-sum payments" as a type of resource. 40 T.A.C. § 14.105(c)(11). We think it is clear from the examples of "lump-sum payments," however, that a "lump-sum payment" is a payment the receipt of which is certain.