September 14, 2006

Compromising
Child
Support

Effective September 5, 2006, child support arrearages cannot be compromised or ignored in settlements of personal injury or workers’ compensation claims. The Domestic Relations Code (specifically Section 4308.1) has been amended to establish that a child support arrearage will constitute a lien against the proceeds of any claim for settlement of or award for damages in bodily injury or death cases.

This amendment was scheduled for implementation as of September 5, 2006.

Take heed that a child support arrearage lien must now be satisfied out of the proceeds of any lump sum settlement, verdict, arbitration award, or workers’ compensation or occupational disease award over $5,000.00.

Bizarrely, the now statutory lien, without explanation, is not applicable to structured settlements.

Defining a “net proceed” as any money in excess of $5,000.00, after deduction of attorneys’ fees and costs, the lump sum proceeds are now subject to attachment in satisfaction of a child support arrearage lien.

The Domestic Relations Code amendment saddles the Plaintiff/Claimants’ attorneys with the affirmative obligation to insure satisfaction of the arrearages.

Perhaps as importantly, the Domestic Relations Code amendment requires the Plaintiff/Claimants’ attorneys to provide proff of the lien, or absence of one, and to attest to its satisfaction. In pro se cases involving unrepresented Plaintiffs/Claimants, the insurance carrier issuing the lump sum settlement payment carries the responsibility of protecting and paying the support lien.

Arrearage payments must be deposited with the Pennsylvania State Collection and Disbursement Unit (PASCDU). Its offices are in Harrisburg. Its website is www.childsupport.state.pa.us. The lien satisfaction payment must reflect the Plaintiff/Claimant’s name, social security number, date of birth, and the child support case number (PACSES No.).

Arrearage disputes require that funds be escrowed in satisfaction of the disputed arrearage.

Arrearage disputes nevertheless require that funds be escrowed in satisfaction of the disputed arrearage, with the undisputed arrearage being paid from the settlement/verdict proceeds. Plaintiff/Claimants must prove that sufficient funds have been escrowed to satisfy any arrearage disputes.

Practical Tips

Without disputing the urgency or necessity of this familial amendment, it could well nevertheless increase the administrative hurdles that need to be vaulted to effectuate claim settlements, be it in personal injury or workers’ compensation cases.

The burden of proof has been placed on Plaintiff/Claimants’ counsel.

Clearly, the burden of proof, correctly so, has been placed on Plaintiff/Claimants’ counsel. Counsel must submit a sworn certification attesting to the absence of support arrearages, in avoidance of future disturbances or dislocations.

In personal injury cases, it is recommended that the personal injury Release include terms and provisions providing for such an attestation that no arrearages exist.

In workers’ compensation claims, it is recommended that specific language be included in Compromise and Release Agreement documentation for purposes of confirming Berkley’s axiom, questioning whether a sound is made when a tree falls in the forest and no one is present, the answer to which is, of course, “what was that?”

For all too obvious reasons, all clients are encouraged to be familiar with this amendment to personal injury and workers’ compensation practice and procedure.

Like with most newly-diapered statutes, there are, or will be, as many opinions on what evidence/proof will satisfy the statute, as there are, or will be, squinting bifocaled readers.

Safe to say that few courts, excluding in workers’ compensation, will be prompted, or asked, to review and approve settlements sequestering support liens, compelling practitioners to think through protecting settlements from collateral attack by child support authorities.

Suggesting that more is indeed not less, be empowered to demand higher levels of proof from Plaintiffs/Claimants’ attorneys, and do not be shy!

Understand further that this amendment incorporates benevolent public policy trumping the “we need more money” refrain, with its stated intent to protect the unprotected.

Questions concerning this amendment, its impact, or any other issues with regard to casualty or workers’ compensation litigation, can be directed to our attorneys.

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