Current through Register 1531, September 27, 2024
(1)
Purpose, General Rule, and
Outline
(a)
Purpose. The purpose of 830 CMR 175.24D.1.1 is to
implement M.G.L. c. 175, § 24D, under which the Department of Revenue
identifies insurance payments on which there are child support liens, and
intercepts such payments to satisfy the liens in full or in part.
(b)
General Rule.
Prior to making a non-recurring payment of $500 or more under a liability
insurance policy or under the liability coverage portion of a multiperil policy
or to a beneficiary under a life insurance contract, a company shall compare
the claimant's identifying information to child support lien information
maintained by DOR to determine whether there is a child support lien on the
payment. If, based on information exchanged between the company and DOR, there
is a child support lien on the payment, DOR shall issue a Notice of Lien and
Levy to the company and the company shall distribute the proceeds according to
the priorities listed in 830 CMR 175.24D.1.1(6). A payment meets the $500
threshold if the entire payment, prior to any deductions allowed under 830 CMR
175.24D.1.1(6)(a), is equal to or greater than $500.
(c)
Outline. 830 CMR
175.24D.1.1 is organized as follows:
1.
Purpose, General Rule, and Outline
2. Definitions
3. Exempt payments
4. Collection of claimant's Social Security
number
5. Methods of Searching
Child Support Lien Information
6.
Priorities
7. Process for Issuing
Payments
8. Audits
9. Penalties for Failure to Comply
(2)
Definitions. For the purposes of 830 CMR 175.24D.1.1
the following terms have the following meanings:
Claimant, an individual 13 years of
age or older or an estate who brings a claim against an insured party under a
liability insurance policy issued in the Commonwealth or under the liability
coverage portion of a multiperil policy issued in the Commonwealth, a
beneficiary 13 years of age or older under a life insurance contract issued in
the Commonwealth, or a beneficiary 13 years of age or older living in the
Commonwealth who is designated to receive payment under a life insurance
contract issued by a company licensed in the Commonwealth.
Company, all corporations,
associations, partnerships or individuals engaged as principals in the business
of insurance including reciprocal exchanges as defined in M.G.L. c. 175, §
1.
DOR, the Child Support Enforcement
Division of the Department of Revenue, which is the single state agency for the
Commonwealth responsible for establishing parentage and establishing, modifying
and enforcing child support orders pursuant to Title IV, Part D of the Social
Security Act,
42 U.S.C. §
651
et seq., and M.G.L. c.
119A.
Non-recurring Payment, payment of a
liability settlement or award in a lump sum, payment of a liability settlement
or award under a structured settlement, payment to the issuer of an annuity by
a liability insurer under a structured settlement of a liability claim, payment
of a life insurance death benefit in a lump sum, or payment of a life insurance
death benefit under a life insurance contract authorizing payment in
installments. Periodic disability insurance payments, payments under annuity
contracts, Workers' Compensation payments and life insurance dividend payments
are not non-recurring payments, and are not subject to 830 CMR 175.24D.1.1.
Such payments are subject to reporting and intercept through other means,
pursuant to M.G.L. c. 62E and M.G.L. c. 119A.
Obligee, an individual to whom support
is or may be owed or in whose favor a support order has been issued or a
judgment of paternity has been or may be rendered, or a state or political
subdivision to which rights under a child support obligation have been assigned
or which has independent claims based on financial assistance provided to an
individual obligee.
Service Provider, an individual or
entity which documents that it has provided or will provide a benefit or
service related to the claim, including but not limited to an attorney, a
repair shop, a health care facility, a funeral home, a medical doctor or other
health care professional.
(3)
Exempt Payments.
Payments based on damage to or loss of real property are not subject to 830 CMR
175.24D.1.1.
(4)
Collection of Claimant's Identifying Information. An
individual making a claim governed by 830 CMR 175.24D.1.1 shall provide his
current address, date of birth and Social Security number to the insurance
company, upon the request of the company. If a Social Security number has not
been issued to the claimant, the company shall make and retain a photocopy of
an identification card issued by a governmental agency bearing the claimant's
likeness and date of birth. Any claimant who refuses to provide the information
required by 830 CMR 175.24D.1.1(4) shall not receive payment on the claim, and
the company that declines payment on this basis shall be exempt from suit and
immune from liability.
(5)
Methods of Searching Child Support Lien Information.
(a)
Instant Match
Method. Except as provided in 830 CMR 175.24D.1.1(5)(b), no more
than 30 days before making a non-recurring payment of $500 or more to a
claimant or to the claimant's attorney or agent, a company shall search child
support lien information provided through such means as shall be prescribed by
DOR, to determine whether there is a child support lien on the payment. In
conducting the search, the company shall compare the claimant's Social Security
number to DOR's child support lien information. If, based on information
provided by the company to DOR, there is a child support lien on the payment,
DOR shall immediately forward a Notice of Child Support Lien and Levy to the
company. Upon receipt of the Notice of Child Support Lien and Levy, the company
shall distribute the funds according to the priorities listed in 830 CMR
175.24D.1.1(6).
(b)
Ten
Business Day Wait Method. Companies that do not access child
support lien information using the means prescribed by DOR pursuant to 830 CMR
175.24D.1.1(5)(a) shall use the Ten Business Day Wait Method. No more than 30
days before making a non-recurring payment of $500 or more, a company using the
Ten Business Day Wait Method shall forward the name and Social Security number
of the claimant to DOR, using a form and means of transmittal prescribed by
DOR. If the company is unable to use a form and means of transmittal prescribed
byDOR, it shall cooperate with DOR to identify another form and means of
transmittal. If a Social Security number has not been issued to the claimant,
the company shall forward the claimant's name, address and date of birth to
DOR. DOR shall compare the information received from the company against child
support lien information. If there is a child support lien on the payment, DOR
shall forward a Notice of Child Support Lien and Levy to the company within ten
business days of receiving the claimant information from the company, and the
company shall distribute the funds according to the priorities listed in 830
CMR 175.24D.1.1(6). If, upon expiration of the ten business days, the company
has not received a Notice of Child Support Lien and Levy, the company may issue
payment on the claim in accordance with its usual practice.
(6)
Priorities. In issuing payments pursuant to 830 CMR
175.24D.1.1(7), a company or claimant's attorney shall apply the following
priorities to the payment:
(a)
First Priority. The first priority of payment is to
any service provider as compensation for benefits or services related to the
claim. The service provider's right to be compensated for benefits or services
unrelated to the claim shall be junior to any child support lien.
(b)
Second Priority.
The second priority of payment is to DOR, up to the amount of the child support
lien, if any funds remain.
(c)
Third Priority. The third priority of payment is to
holders of liens not arising from benefits or services related to the claim, if
any funds remain.
(d)
Fourth Priority. The fourth priority of payment is to
the claimant, if any funds remain. Payments made by insolvent companies shall
be governed by M.G.L. c. 175, §§ 180A through 180Q.
(7)
Process for
Issuing Payments.
(a)
Funds Remitted Directly to DOR. When allocating a
payment pursuant to the priorities listed in 830 CMR 175.24D.1.1(6), the
company shall remit funds directly to DOR, and shall not include any other
party as a payee on the instrument remitted to DOR. The company shall include
the claimant's name and Social Security number on the instrument and attach a
copy of the child support lien. The company shall also submit a completed
insurance company remittance form prescribed by DOR. The company shall certify
on the remittance form that no funds payable to any service providers under 830
CMR 175.24D.1.1(6)(a) are included in the funds remitted to DOR. If a company
cannot make such a certification, the company shall remit funds in accordance
with 830 CMR 175.24D.1.1(7)(b) if the claimant is represented by an attorney or
in accordance with 830 CMR 175.24D.1. 1 (7)(c) if the claimant is not
represented by an attorney. When remitting funds to DOR, the company shall send
a copy of the Notice of Lien and Levy to the claimant or his or her attorney,
within two business days of remitting funds to DOR. A company that does not
allocate a payment pursuant to the priorities listed in 830 CMR 175.24D.1.1(6)
and fails to either notify the claimant's attorney of the existence of a child
support lien in accordance with 830 CMR 175.24D.1.1(7)(b) or to remit the funds
in accordance with 830 CMR 175.24D.1.1(7)(c) shall be subject to penalty
pursuant to 830 CMR 175.24D.1.1(9)(b).
(b)
Funds Remitted to the
Claimant's Attorney. If a company cannot allocate a payment
pursuant to the priorities listed in 830 CMR 175.24D.1.1(6) and the claimant is
represented by an attorney, then the company shall remit the payment to the
claimant's attorney along with a copy of the Notice of Child Support Lien and
Levy and a memorandum regarding insurance claim payment intercept prescribed by
DOR. When remitting funds pursuant to 830 CMR 175.24D.1.1(7)(b), a company
shall not include the Commonwealth as a payee. The claimant's attorney shall
distribute the payment according to the priorities listed in 830 CMR
175.24D.1.1(6) within ten business days of receipt of the funds,
notwithstanding the claimant's right to request an administrative review
pursuant to M.G.L. c. 119A, § 17. The claimant's attorney shall transmit
to DOR a completed attorney remittance form prescribed by DOR, whether or not
funds remain after the claimant's attorney has satisfied debts owed to service
providers pursuant to 830 CMR 175.24D.1.1(6)(a). The claimant's attorney shall
transmit the attorney remittance form to DOR with the payment. In cases where
there is no payment to DOR, the claimant's attorney shall transmit the
completed attorney remittance form within 20 business days of the attorney's
receipt of the funds from the company. The claimant's attorney shall certify on
the remittance form that he or she has distributed the payment according to the
priorities listed in 830 CMR 175.24D.1.1(6). The claimant's attorney shall not
apply an insurance payment towards his or her services rendered in connection
with the claim prior to disbursing any funds due DOR.
(c)
Remittance of Funds When
Claimant Not Represented by Attorney. If a company cannot allocate
a payment pursuant to the priorities listed in 830 CMR 175.24D.1.1(6) and the
claimant is not represented by an attorney, the company shall request that the
claimant provide a signed statement that no funds are payable to any service
providers under 830 CMR 175.24D.1.1(6)(a) or a signed statement that funds are
payable to service providers under 830 CMR 175.24D.1.1(6)(a), accompanied by
sufficient identifying information about such service providers to enable the
company to allocate a payment. Upon receipt of the claimant's signed statement,
the company shall allocate the payment pursuant to the priorities listed in 830
CMR 175.24D.1.1(6) and remit any funds due to DOR. The insurance company shall
also submit to DOR the insurance remittance form and the claimant's signed
statement. If the claimant fails to return a signed statement to the company
within 30 days of the company's request, the company shall remit any funds due
to DOR and shall certify on the insurance remittance form that it has requested
a signed statement from the claimant pursuant to 830 CMR 175.24D.1.1(7)(c) and
the claimant has failed to provide such a statement. When remitting funds to
DOR, the company shall send copies of the Notice of Lien and Levy and the
insurance remittance form to the claimant within two business days of remitting
funds to DOR.
(d)
Funds
Erroneously Remitted to DOR. A company that sends funds to DOR in
error shall immediately send written notice thereof to DOR personnel with
operational responsibility for the program authorized by M.G.L. c. 175, §
24D and 830 CMR 175.24D.1.1 Upon receiving such written notice, DOR shall
return any such funds in its possession to the company. Notwithstanding the
foregoing, DOR shall not be liable to the company, claimant, claimant's
attorney or service provider for any funds sent in error to DOR which DOR sent
to the obligee prior to the date that is two business days from the date on
which DOR received notice of the erroneous remittance.
(8)
Audits. DOR or
an agent acting on its behalf may periodically audit a company's compliance
with 830 CMR 175.24D.1.1. Pursuant to M.G.L. c. 119A, § 14, DOR or its
agent may request, and a company shall provide, a list of non-recurring
payments made during a time period specified by DOR or its agent. The list
shall be in a format designated by DOR or its agent, and shall include the name
and Social Security number of each claimant for whom a non-recurring payment of
$500 or more was made, the date and amount of each such payment, the name of
the claimant's attorney, if any, and any other information DOR or its agent may
request. The list shall include all non-recurring payments of $500 or more made
during the specified time period, or a random sample of such payments, as
specified by DOR or its agent. If the company is unable to use the format
designated by DOR or its agent, the company shall cooperate with DOR or its
agent to determine another format by which the information may be furnished. A
company shall not be required to provide such a list more frequently than once
a calendar quarter. The list shall be subject to examination by DOR, its agent
and the Division of Insurance. Pursuant to M.G.L. c. 119A, § 15, DOR may
subpoena any information necessary to determine whether a company or claimant's
attorney is in compliance with 830 CMR 175.24D.1.1.
(9)
Penalties for Failure to
Comply.
(a)
Failure
to Determine Whether Payments are Subject to Child Support Liens.
A company that has knowingly failed to ascertain whether payments are subject
to a child support lien, as determined by DOR or its agent through an audit,
shall be subject to a penalty assessed by DOR, as follows:
|
Failure Rate |
Penalty |
|
5 % - 9.9 % |
$1,000 |
|
10 % - 14.9 % |
$2,000 |
|
15 % - 19.9 % |
$3,000 |
|
20 % - 24.9 % |
$4,000 |
|
25 % - 29.9 % |
$5,000 |
|
30 % - 49.9 % |
$10,000 |
|
50 % or higher |
$25,000 |
The "failure rate" for any consecutive 12-month period under
audit is the number of claims for which the company knowingly failed to
ascertain whether a payment was subject to a child support lien and which
would, in fact, have been subject to a child support lien had such search been
made, divided by the number of claims for which the company knowingly failed to
ascertain whether a payment was subject to a child support lien.
(b)
Failure by a
Company to Comply with a Child Support Lien. A company that
distributes funds that are subject to a child support lien directly to a
claimant, or that distributes funds that are subject to a child support lien to
a claimant's attorney without notifying the attorney of the existence of a
child support lien in accordance with 830 CMR 175.24D.1.1(7)(b), shall be
subject to penalties in accordance with M.G.L. c. 119A, § 6. These
penalties may be imposed whether or not the company determined if a payment was
subject to a child support lien and are separate and distinct from any
penalties under 830 CMR 75.24D.1.1(9)(a) for failure to determine if a payment
is subject to a child support lien.
(c)
Failure by a Claimant's
Attorney to Comply with a Child Support Lien. An attorney in
receipt of unallocated funds pursuant to 830 CMR 175.24D.1.1(7)(b) who has been
notified of a child support lien on the funds, but fails to distribute the
funds in accordance with the priorities listed in 830 CMR 175.24D.1.1(6) within
ten business days of receipt of the funds, shall be subject to penalties in
accordance with M.G.L. c. 119A, § 6.
(d)
Administrative and Judicial
Review. DOR shall provide written notice of a penalty assessed
pursuant to 830 CMR 175.24D.1.1. Such notice shall inform the company or
individual subject to the penalty that the company or individual must either
pay the penalty within 30 days of the date of the notice, or request an
administrative hearing by DOR within 30 days of the date of the notice. Failure
to request an administrative hearing within 30 days of the date of the notice
shall constitute a waiver of any and all administrative remedies, which waiver
shall preclude the company or individual from any further review of or appeal
from the agency action. Any administrative hearing shall be conducted by a
Hearing Officer designated by DOR, and shall be governed by M.G.L. c. 30A,
§§ 10 and 11. Judicial review of the decision of the Hearing Officer
shall be governed by G.L. c. 30A, § 14.
REGULATORY AUTHORITY
830 CMR 175.24D.1.1: M.G.L. c. 175, §
24D
