South Dakota 4 - Bureau of Human Resources 500 E. Capitol Avenue Pierre, South Dakota 57501-5070 Phone: 605.773.3148 Fax: 605.773.4344 - .. July31,2018 Ms. Nancy] Turbak Berry Turbak Law Of?ce 26 S. Broadway, Suite 100 Watertown, SD 57201?3670 Re: Montego Trias Subrogation Claim Ms. Turbak Berry, The South Dakota State Employee Health Plan operated through the South Dakota Bureau of Human Resources, State of South Dakota (?State?) is in receipt of your letter dated July 20, 2018, regarding the State?s reimbursement rights in the underline Montego Trias matter. This correspondence states the position of the State and the Plan with respect to the Plan?s right to be reimbursed from compensation received by Montego Trias, in settlement of his personal injury claims arising from the magnet incident of March 2018. To date, the Plan has paid out approximately $380,000 in health bene?t claims arising from your client?s personal injuries, with future expenses likely to be incurred by your client. For the reasons stated below, Plan is entitled to 100% reimbursement of the $380,000 in health bene?t claims paid out for Montego Trias? care. The Plan is a self-funded group health plan authorized by the State Legislature, SDCL and The Commissioner of the Bureau of Human Resources has the authority, within applicable federal and state laws, to determine the bene?ts and obligations that will be provided to state employee participants and bene?ciaries under the Plan. See SDCL 3-6E-l3. Each year as part of the annual budget, the State Legislature appropriates funds for the Plan. The Plan is funded by contributions from participants and from both State and Federal revenue sources. Because the Plan is an employee bene?t plan created by the State and is self-?mded, the terms and conditions of the Plan govern the rights and obligations of the Plan participants. See US. Airways v. McCutc/ren, 113 S. Ct. 1537 (2013) (the terms ofa self?funded plan control the rights of the parties, as it is a contract). While you couch Montego Trias? legal position on his health bene?t claims as arising from the Plan?s ?subrogation? provisions, the Plan?s terms also give the Plan reimbursement rights. The Plan provides that each participant must reimburse the Plan 100% of any health bene?t claims? ll rug 0 :3 2013 paid by the Plan when the claims arise from personal injuries sustained by the actions of a third- party tortfeasor. The participant holds any money received by from such tortfeasor or any insurance company in trust for the Plan, and the Plan has a ?rst priority lien on such proceeds. The reimbursement rights of the Plan are separate from that of subrogation, that is, the right of the Plan to stand in the shoes of the participant and bring action against a tortfeasor to recover the sums paid out of the Plan due to the personal injuries of the Plan?s participant. It is within the Plan?s discretion whether to seek reimbursement to recover health bene?t claims or use subrogation to recover such claims. Most signi?cantly, the Plan is expressly not required to participate in the payment of any attorneys? fees or costs arising from a Plan participant?s legal efforts under the reimbursement provisions of the Plan to recover damages for personal injuries arising from the acts of a third- party tortfeasor. The ?common fund doctrine? is expressly disavowed by the Plan?s terms, and does not apply to the Plan?s reimbursement right in any event. Finally, the State is entitled to sovereign immunity from any claim by Montego Trias for his attorneys? fees and costs because the State has expressly declined to consent to pay for such fees and costs. See S.D. Const. art. 111 27. For these reasons, the State and the Plan expects your client, or the involved insurance carrier to reimburse the Plan, either personally or out of funds recovered in his personal injury action, the entire sum of $3 80,000 and any other future medical expenses paid by the Plan. Please do not hesitate to contact me if you have any questions or concerns regarding this correspondence. Sincerely, Aaron N. Amold Director of Legal and Human Resource Services Bureau of Human Resources cc: Tom Steckel, Director of Bene?ts, Bureau of Human Resources Troy Boeckholt, Subrogation Coordinator, DAKOTACARE Page 2 of2 Ms. Nancy Turbak Berry Turbak Law Of?ce July 31, 2018