(a) The Texas Department of Human Services (DHS) will distribute third-party recoveries as follows:
  (1) DHS will receive an amount equal to DHS's Medicaid expenditures for the recipient or for another individual eligible for Medicaid benefits under the State Plan for whom the recipient can legally make an assignment to medical support and payment;
  (2) the federal government will receive the federal share of the Medicaid expenditures, minus any incentive payment authorized by federal law; and
  (3) the recipient will receive any remaining amount. Any amount distributed to the recipient is income or resources for purposes of establishing eligibility for Medicaid benefits.
(b) DHS may pay reasonable and necessary attorney fees of 15% of the entire amount recovered on behalf of DHS, and reasonable expenses, to a person authorized to recover amounts from third parties, other than a person contracted by DHS to recover on behalf of DHS, if the recovery is made in compliance with this subchapter.
(c) DHS may pay prorated expenses, not to exceed 10% of the entire amount recovered on behalf of DHS, if attorney fees are allowed under subsection (b) of this section.
(d) No attorney fees will be paid if the recovery made on behalf of the Medicaid program is waived in whole or in part by the commissioner under the provisions of §32.033(f) of the Human Resources Code and §79.1704 of this title (relating to Waiver Authority of the Commissioner).
(e) The amount recovered on behalf of DHS for which attorney fees are authorized under this section must be deducted from the total amount of the recovery before attorney fees and expenses are deducted under the terms of the recipient's contract.
(f) DHS may pay reasonable and necessary attorney fees and expenses to a person contracted by DHS to recover amounts from third parties on behalf of the Medicaid program.

Source Note: The provisions of this §357.503 adopted to be effective August 1, 2000, 25 TexReg 6779; transferred effective September 1, 2004, as published in the Texas Register September 17, 2004, 29 TexReg 9013