(a)

(1) Any benefits paid to, or on behalf of, any recipient cannot be recovered from such a beneficiary unless such assistance has been incorrectly paid, or unless the recipient or beneficiary recovers or is entitled to recover from a third-party reimbursement for all or part of the costs of care or treatment for an injury or illness for which the assistance is paid.

(2) To the extent of payments of assistance, the state shall be subrogated to all rights of recovery, for the cost of care or treatment for an injury or illness for which assistance is provided, contractual or otherwise, of the recipients against any person.

(3) Payments to a provider of services shall not be withdrawn or reduced to recover funds obtained by the recipient from third parties for services rendered by such provider if these funds were obtained without the knowledge or direct assistance of the provider of assistance.

(4) When the state asserts its right to subrogation, the state shall notify the recipient, in language understandable to all recipients, of such recipient's rights of recovery against third parties and that such recipient should seek the advice of an attorney regarding those rights of recovery to which such recipient may be entitled.

(5) If, while receiving assistance, the recipient becomes possessed of any resource or income in excess of the amount stated in the application for the assistance provided, it is the duty of the recipient immediately to notify the agency designated to determine eligibility for the assistance of the receipt or possession of such resource or income.

(6) When it is found that any person has failed to so notify the agency that such person is or was possessed of any resource or income in excess of the amount allowed, or when it is found that within three (3) years prior to the date of that person's application, or as otherwise provided by policy or state plan, a recipient made an assignment or transfer of property for the purpose of rendering the recipient eligible for assistance as provided in this part, any amount of assistance paid in excess of the amount to which the recipient was entitled shall constitute benefits incorrectly paid. Any benefits incorrectly paid shall be recoverable from the recipient, while living, as a debt due to the state and, upon the recipient's death, as a claim classified with taxes having preference under the laws of this state.

(b)

(1) Upon accepting assistance from the programs designated in this part, the recipient shall be deemed to have made an assignment to the state of the right to third-party insurance benefits to which the recipient may be entitled.

(2) Failure of the recipient to reimburse the state for the assistance received from any third-party insurance benefits received as a result of an illness or injury for which the assistance was paid may be grounds for removing the recipient from future participation in the benefits available under these programs as provided by policy or state plan; provided, that:

(A) Any removal from participation shall be after appropriate advance notice to the recipient;

(B) The provider of service shall not be prevented from receiving payment from the state for assistance services previously furnished the recipient; and

(C) Nothing in this subsection (b) shall require an insurer to pay benefits to the state that have already been paid to the recipient.

(c)

(1) The right of subrogation by the state to the recipient's right to recovery shall be subject to ordinary and reasonable attorney fees.

(2) Where a recipient has retained an attorney, the attorney shall not be considered liable unless the attorney has notice from the state of the state's claim of subrogation prior to disbursement of the funds to the recipient.

(d) This section shall apply to all programs provided by the department pursuant to the Social Security Act (42 U.S.C.), as amended, and the federal Rehabilitation Act (29 U.S.C § 701 et seq.), as amended, and as provided in the Vocational Rehabilitation Law of Tennessee, compiled in title 49, chapter 11, part 6.