Clawback

A clawback or clawback provision is a special contractual clause typically included in employment contracts by financial firms. The term also is in use in bankruptcy matters where insiders may have raided assets prior to a filing. Also in Medicaid, when a state recovers costs of long-term care or covered medical expenses from the estates of deceased Medicaid patients. The aim of the clause is to secure an option for an employer or trustee to limit bonuses, compensation or other remuneration in case of catastrophic shifts in business, bankruptcy, and national crisis as the financial crisis of 2007–2010, and for states to recoup the cost of administering Medicaid services.