(1) The department shall waive, in whole or in part, its recovery upon a lien under 53-6-171 through 53-6-188 , MCA, if the applicant demonstrates that recovery would result in an undue hardship to the applicant.

(a) A waiver may be granted under this rule only to forego or prevent recovery under a lien previously imposed under 53-6-171 , MCA. A waiver may not be granted under this rule to forego or prevent imposition of a lien under 53-6-171 , MCA.

(2) An applicant may request an undue hardship waiver of lien recovery by filing an application on the form prescribed by the department. Application forms may be obtained from and must be filed with the Department of Public Health and Human Services, Quality Assurance Division, Third Party Liability, 2401 Colonial Drive, P.O. Box 202953, Helena, MT 59620-2953. Application forms may also be obtained from county human services or welfare offices, but must be filed with the Quality Assurance Division Office in Helena at the above address.

(a) The department may require the applicant to submit any information and documentation regarding the applicant's finances, property, employment, liabilities, expenses, and other matters relevant and necessary to determine whether an undue hardship would result from recovery.

(3) The persons entitled to apply for an undue hardship waiver as provided in this rule are:

(a) a person who has succeeded or would succeed to part or all of the recipient's interest in the liened property but for recovery by the department, including a person who has received or would have received a beneficial interest in the liened property but not legal title; or

(b) a person who is dependent upon the liened property for shelter or if the recipient is deceased, was, for a substantial period of time during the recipient's lifetime and after the decedent's death remains dependent upon the liened property for shelter.

(4) Department recovery will result in an undue hardship to the applicant if:

(a) The liened property is part of a business, including a working farm or ranch, upon which the applicant was dependent for applicant's livelihood during the recipient's lifetime, lien recovery by the department would deprive the applicant of their sole means of livelihood, and the applicant has no other means of satisfying the department's claim;

(b) The applicant is an aged (age 65 or older), blind or disabled relative of the recipient who for one year or more before the recipient's death had been continuously and lawfully living in the liened property and continues to reside there, and who would have significant difficulty establishing an alternative living arrangement, obtaining financing (such as a home equity loan) to repay the department or arranging other means to repay the department;

(c) The applicant is a relative of the recipient who for one year or more before the recipient's death had been continuously and lawfully living in the liened property and continues to reside there, and who would have no means of providing or obtaining alternative shelter and there is no person legally responsible or assets otherwise available to provide the person shelter;

(d) Without lien recovery by the department, the applicant would receive or be permitted to retain liened property that the applicant transferred to the recipient for no consideration, as demonstrated by clear and convincing evidence, including appropriate title documents, agreements, and other documentation; or

(e) The liened property is needed by the applicant for shelter and there are no other assets or means available to the applicant to satisfy in full or in part the department's claim.

(5) An undue hardship does not exist if:

(a) the recipient or applicant created the hardship by using estate planning, gifting or other methods to divert or shelter assets to avoid estate recovery; or

(b) the circumstances indicate that the hardship was created for purposes of avoiding or defeating recovery.

(6) The department may limit an undue hardship waiver to a partial or temporary waiver of lien recovery and/or may condition a waiver upon the applicant's agreement and provision of security for repayment in appropriate cases if the limited waiver would address reasonably the applicant's hardship.

(7) To the extent that there currently is, or later comes into existence, a conflict between the provisions of this rule and standards promulgated by the Secretary of the U.S. Department of Health and Human Services, the federal standards shall control.

(8) The department shall provide the applicant written notice of its determination on an application for an undue hardship waiver of lien recovery.

(9) An applicant aggrieved by an adverse determination on an application for an undue hardship waiver of lien recovery may assert a claim of entitlement to an undue hardship waiver as provided in 53-6-180 (1)(c), MCA, rather than through an administrative review, fair hearing or contested case hearing under the Montana Administrative Procedure Act or the department's rules.