BILL REQ. #:  Z-0655.1 

Read first time 03/23/2005.   Referred to Committee on Ways & Means.

     AN ACT Relating to debts owed to the department of social and health services for medical assistance and recovery of those debts; amending RCW 65.04.050, 6.13.080, 43.20B.010, 43.20B.030, and 43.20B.080; adding a new section to chapter 74.04 RCW; adding a new section to chapter 64.04 RCW; and adding a new section to chapter 43.20B RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   A new section is added to chapter 74.04 RCW to read as follows:
     (1) When an individual receives public assistance as defined in RCW 74.04.005 and the individual is the holder of record title to real property or the purchaser under a land sale contract, the department of social and health services may present to the county clerk for recording in the deed and mortgage records of a county a request for notice of transfer or encumbrance of the real property.
     (2) A title insurance company or agent shall provide the department with a notice of transfer or encumbrance as required in section 2 of this act.
     (3) If the department has caused a request for notice of transfer or encumbrance to be recorded in the deed and mortgage records, the department shall present to the county clerk for recording a termination of request for notice of transfer or encumbrance when, in the judgment of the department, it is no longer necessary or appropriate for the department to monitor transfers or encumbrances related to the real property.
     (4) The department shall adopt by rule a form for the request for notice of transfer or encumbrance and the termination of request for notice of transfer or encumbrance that, at a minimum:
     (a) Contains the name of the public assistance recipient and a departmental case identifier or other appropriate information that links the individual who is the holder of record title to real property or the purchaser under a land sale contract to the individual's public assistance records;
     (b) Contains the legal description of the real property;
     (c) Contains a mailing address for the department to receive the notice of transfer or encumbrance; and
     (d) Complies with the requirements for recording in RCW 36.18.010 for those forms intended to be recorded.
     (5) The department shall pay the recording fee required by the county clerk under RCW 36.18.010.
     (6) The request for notice of transfer or encumbrance described in this section does not affect title to real property and is not a lien on, encumbrance of, or other interest in the real property.

NEW SECTION.  Sec. 2   A new section is added to chapter 64.04 RCW to read as follows:
     (1) A title insurance company or agent that discovers the presence of a request for notice of transfer or encumbrance under section 1 of this act in the deed and mortgage records when performing a title search on real property shall:
     (a) Provide the department of social and health services with a notice of transfer or encumbrance of the real property within thirty days of a transfer or encumbrance that results in the issuance of a certificate of title insurance; and
     (b) Disclose the presence of the request for notice of transfer or encumbrance in any report preliminary to, or any commitment to offer, a certificate of title insurance for the real property.
     (2) If the department of social and health services has caused to be recorded a termination of request for notice of transfer or encumbrance in the deed and mortgage records, a title insurance company or agent is no longer required to provide the notice of transfer or encumbrance required by subsection (1)(a) of this section for the affected real property.
     (3) The department of social and health services shall adopt by rule a model form for notice of transfer or encumbrance required by subsection (1)(a) of this section. A title insurance company or agent shall use the model form or a form substantially similar to the model form when notifying the department under subsection (1)(a) of this section.

Sec. 3   RCW 65.04.050 and 1996 c 143 s 4 are each amended to read as follows:
     Every auditor or recording officer must keep a general index, direct and inverted. The index may be either printed on paper or produced on microfilm or microfiche, or it can be created from a computerized data base and displayed on a video display terminal. Any reference to a prior record location number may be entered in the remarks column. Any property legal description contained in the instrument must be entered in the description of property column of the general index. The direct index shall be divided into eight columns, and with heads to the respective columns, as follows: Date of reception, grantor, grantee, nature of instrument, volume and page where recorded and/or the auditor's file number, remarks, description of property, assessor's property tax parcel or account number. The auditor or recording officer shall correctly enter in such index every instrument concerning or affecting real estate which by law is required to be recorded, the names of grantors being in alphabetical order. The inverted index shall also be divided into eight columns, precisely similar, except that "grantee" shall occupy the second column and "grantor" the third, the names of grantees being in alphabetical order. The auditor or recording officer may combine the direct and indirect indexes into a single index if it contains all the information required to be contained in the separate direct and indirect indexes and the names of all grantors and grantees can be found by a person searching the combined index. For the purposes of this chapter, the term "grantor" means any person conveying or encumbering the title to any property, or any person against whom any lis pendens, judgment, notice of lien, order of sale, execution, writ of attachment, ((or)) claims of separate or community property, or notice for request of transfer or encumbrance under section 1 of this act shall be placed on record. The auditor or recording officer shall also enter in the general index, the name of the party or parties platting a town, village, or addition in the column prescribed for "grantors," describing the grantee in such case as "the public." However, the auditor or recording officer shall not receive or record any such plat or map until it has been approved by the mayor and common council of the municipality in which the property so platted is situated, or if the property be not situated within any municipal corporation, then the plat must be first approved by the county legislative authority. The auditor or recording officer shall not receive for record any plat, map, or subdivision of land bearing a name the same or similar to the name of any map or plat already on record in the office. The auditor or recording officer may establish a name reservation system to preclude the possibility of duplication of names.

NEW SECTION.  Sec. 4   A new section is added to chapter 43.20B RCW to read as follows:
     Consistent with 42 U.S.C. Sec. 1396(p), in the case of an individual who is an inpatient in a nursing facility, intermediate care facility for individuals with mental retardation, or other medical institution, with respect to whom the department has determined after notice and opportunity for a hearing that the individual cannot reasonably be expected to be discharged from the medical institution and to return home, the department shall file liens and seek adjustment and recovery from the individual's estate or upon sale of the property subject to a lien imposed on account of medical assistance paid on behalf of the individual.

Sec. 5   RCW 6.13.080 and 1993 c 200 s 4 are each amended to read as follows:
     The homestead exemption is not available against an execution or forced sale in satisfaction of judgments obtained:
     (1) On debts secured by mechanic's, laborer's, construction, maritime, automobile repair, materialmen's or vendor's liens arising out of and against the particular property claimed as a homestead;
     (2) On debts secured (a) by security agreements describing as collateral the property that is claimed as a homestead or (b) by mortgages or deeds of trust on the premises that have been executed and acknowledged by the husband and wife or by any unmarried claimant;
     (3) On one spouse's or the community's debts existing at the time of that spouse's bankruptcy filing where (a) bankruptcy is filed by both spouses within a six-month period, other than in a joint case or a case in which their assets are jointly administered, and (b) the other spouse exempts property from property of the estate under the bankruptcy exemption provisions of 11 U.S.C. Sec. 522(d);
     (4) On debts arising from a lawful court order or decree or administrative order establishing a child support obligation or obligation to pay spousal maintenance; ((or))
     (5) On debts owing to the state of Washington for recovery of medical assistance correctly paid on behalf of an individual consistent with 42 U.S.C. Sec. 1396p; or
     (6) On debts secured by a condominium's or homeowner association's lien. In order for an association to be exempt under this provision, the association must have provided a homeowner with notice that nonpayment of the association's assessment may result in foreclosure of the association lien and that the homestead protection under this chapter shall not apply. An association has complied with this notice requirement by mailing the notice, by first class mail, to the address of the owner's lot or unit. The notice required in this subsection shall be given within thirty days from the date the association learns of a new owner, but in all cases the notice must be given prior to the initiation of a foreclosure. The phrase "learns of a new owner" in this subsection means actual knowledge of the identity of a homeowner acquiring title after June 9, 1988, and does not require that an association affirmatively ascertain the identity of a homeowner. Failure to give the notice specified in this subsection affects an association's lien only for debts accrued up to the time an association complies with the notice provisions under this subsection.

Sec. 6   RCW 43.20B.010 and 1987 c 75 s 42 are each amended to read as follows:
     The definitions in this section apply throughout this chapter:
     (1) "Department" means the department of social and health services.
     (2) "Secretary" means the secretary of the department of social and health services.
     (3) "License" means that exercise of regulatory authority by the secretary to grant permission, authority, or liberty to do or to forbear certain activities. The term includes licenses, permits, certifications, registrations, and other similar terms.
     (4) "Vendor" means an entity that provides goods or services to or for clientele of the department and that controls operational decisions.
     (5) "Overpayment" means any payment or benefit to a recipient or to a vendor in excess of that to which is entitled by law, rule, or contract, including amounts in dispute.
     (6) "Recipient" means any individual or entity receiving benefits, either directly or indirectly, from the department or other state agency.

Sec. 7   RCW 43.20B.030 and 2003 c 207 s 1 are each amended to read as follows:
     (1) Except as otherwise provided by law, there will be no collection of overpayments and other debts due the department after the expiration of ((six)) twenty years from the date of notice of such overpayment or other debt ((unless the department has commenced recovery action in a court of law or unless an administrative remedy authorized by statute is in place. However, any amount due in a case thus extended shall cease to be a debt due the department at the expiration of ten years from the date of the notice of the overpayment or other debt unless a court-ordered remedy would be in effect for a longer period)).
     (2) The department, at any time, may accept offers of compromise of disputed claims or may grant partial or total write-off of any debt due the department if it is no longer cost-effective to pursue. The department shall adopt rules establishing the considerations to be made in the granting or denial of a partial or total write-off of debts.

Sec. 8   RCW 43.20B.080 and 1999 c 354 s 2 are each amended to read as follows:
     (1) The department shall file liens, seek adjustment, or otherwise effect recovery for medical assistance correctly paid on behalf of an individual consistent with 42 U.S.C. Sec. 1396p.
     (2) Liens may be adjusted by foreclosure in accordance with chapter 61.12 RCW.
     (3) In the case of an individual who was fifty-five years of age or older when the individual received medical assistance, the department shall seek adjustment or recovery from the individual's estate, and from nonprobate assets of the individual as defined by RCW 11.02.005, but only for medical assistance consisting of nursing facility services, home and community-based services, other services that the department determines to be appropriate, and related hospital and prescription drug services. Recovery from the individual's estate, including foreclosure of liens imposed under this section, shall be undertaken as soon as practicable, consistent with 42 U.S.C. Sec. 1396p.
     (4) The department shall apply the medical assistance estate recovery law as it existed on the date that benefits were received when calculating an estate's liability to reimburse the department for those benefits.
     (5)(a) The department shall establish procedures consistent with standards established by the federal department of health and human services and pursuant to 42 U.S.C. Sec. 1396p to waive recovery when such recovery would work an undue hardship.
     (b) Recovery of medical assistance from a recipient's estate shall not include property made exempt from claims by federal law or treaty, including exemption for tribal artifacts that may be held by individual Native Americans.
     (6)(a) A lien authorized under subsections (1) through (5) of this section relates back to attach to any real property that the decedent had an ownership interest in immediately before death and is effective as of that date or date of recording, whichever is earlier.
     (b) A lien authorized under this section shall be enforceable against a decedent's life estate or joint tenancy interest in real property immediately prior to the decedent's death, shall not end, and shall continue as provided in this section. Such a lien shall be effective whether filed prior or subsequent to the recipient's death.
     (i) The value of the life estate subject to the lien shall be the value of the decedent's interest in the property subject to the life estate immediately prior to the decedent's death.
     (ii) The value of the joint tenancy interest subject to the lien shall be the value of the decedent's fractional interest the recipient would have owned in the jointly held interest in the property had the recipient and the surviving joint tenants held title to the property as tenants in common on the date of the recipient's death.
     (7) The department is authorized to adopt rules to effect recovery under this section. The department may adopt by rule later enactments of the federal laws referenced in this section.
     (8) It is the responsibility of the department to fully disclose in advance verbally and in writing, in easy to understand language, the terms and conditions of estate recovery to all persons offered long-term care services subject to recovery of payments.
     (9) In disclosing estate recovery costs to potential clients, and to family members at the consent of the client, the department shall provide a written description of the community service options.
     (10) The department of social and health services shall develop an implementation plan for notifying the client or his or her legal representative at least quarterly of the types of services used and the cost of those services (debt) that will be charged against the estate. The estate planning implementation plan shall be submitted by December 12, 1999, to the appropriate standing committees of the house of representatives and the senate, and to the joint legislative and executive task force on long-term care.