(a) A judgment, an award, or a settlement in any action or claim by a medical assistance recipient to recover damages for injuries, disease, disability, or death in which the Department of Human Services has an interest, shall not be satisfied without first giving the department notice and a reasonable opportunity to establish its interest.
(b) If a recipient, his or her guardian, attorney, or personal representative disposes of the funds that are to be held for the benefit of the department under this section without the written approval of the department, that person shall be liable to the department for any amount that, as a result of the disposition of the funds, is not recoverable by the department.
(c) In addition to the amount of the department's claim, a recipient, his or her guardian, attorney, or personal representative who knowingly fails to obtain written approval from the department before disposing of funds under this section is liable to the department for:
(1) A penalty equal to ten percent (10%) of the amount of the department's claim; and
(2) Reasonable costs and attorney's fees.