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When a Medicaid recipient in South Dakota recovers money from a personal injury claim, the South Dakota Department of Social Services (DSS) has a statutory right to reimbursement for medical benefits paid. Understanding this process helps you negotiate settlements and protect your net recovery.

1. Statutory Basis for Medicaid Liens

Under South Dakota Codified Laws §28-7A-4, any medical assistance paid by Medicaid on behalf of an injured person creates a lien in favor of DSS against any third-party claim or settlement. The lien right is automatic and attaches as soon as Medicaid pays for treatment. Details are available at SDCL §28-7A-4.

2. Lien Priority and Calculation

The DSS lien takes priority over most creditors under SDCL §28-7A-6. That statute also outlines how to calculate the amount owed: generally the total of all benefits paid, less any share of fault or other recoveries that Medicaid statute permits to offset the lien. See SDCL §28-7A-6.

3. Distribution of Settlement Proceeds

SDCL §28-7A-9 governs how settlement funds are distributed. Typically, proceeds go first to attorney fees and costs, then to DSS to satisfy the lien, and finally to you for any remaining balance. Reviewing this statute at SDCL §28-7A-9 helps ensure you allocate funds correctly.

4. Step-by-Step Navigation

1. Identify all medical payments Medicaid has made for your injury by requesting a lien letter from DSS.
2. Alert your attorney to the lien requirement early so they can include DSS in settlement negotiations or escrow arrangements.
3. Negotiate the total lien amount if appropriate. DSS may agree to a reduction if full enforcement would create financial hardship.
4. Structure the settlement: instruct the payer to deposit funds into a trust or escrow account pending lien resolution.
5. Once DSS confirms the final lien amount in writing, authorize payment directly from escrow to DSS before distributing your net recovery.

Helpful Hints

• Request a written lien statement from DSS early to avoid last-minute surprises.
• Keep detailed records of all medical bills and Medicaid payments.
• Consider hiring counsel familiar with South Dakota Medicaid lien law to handle negotiations.
• Explore waiver or reduction options if the lien amount exceeds your total settlement.
• Verify that escrow instructions match distribution requirements in SDCL §28-7A-9.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. For personalized guidance, consult a qualified attorney licensed in South Dakota.