S07938'04 (S-2)

SB-1447, As Passed Senate, November 10, 2004

SUBSTITUTE FOR

SENATE BILL NO. 1447

A bill to amend 1982 PA 295, entitled

"Support and parenting time enforcement act,"

by amending sections 25a, 25b, 25c, 25d, 25e, 25f, 25g, 25h, and

25i (MCL 552.625a, 552.625b, 552.625c, 552.625d, 552.625e,

552.625f, 552.625g, 552.625h, and 552.625i), sections 25a and 25b

as amended and sections 25c, 25d, 25e, 25f, 25g, 25h, and 25i as

added by 2002 PA 565.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 Sec. 25a. (1) The amount of past due support that accrues

2 under a judgment as provided in section 3 or under the law of

3 another state constitutes a lien in favor of the recipient of

4 support against the real and personal property of a payer, ~~other~~

5 ~~than financial assets pledged to a financial institution as~~

6 ~~collateral or financial assets to which a financial institution~~

7 ~~has a prior right of setoff or other lien.~~ including, but not

1 limited to, money to be paid as a distribution from a decedent's

2 estate; as the result of a claim for negligence, personal injury,

3 or death; under an arbitration award; under a settlement of or

4 judgment issued in a civil action; or as compensation under a

5 worker's compensation order, settlement, redemption order, or

6 voluntary payment. The lien is effective at the time that the

7 support is due and unpaid and shall continue until the amount of

8 past due support is paid in full or the lien is terminated by the

9 title IV-D agency.

10 (2) Liens that arise in other states shall be accorded full

11 faith and credit when the requirements of section 25b or 25c are

12 met.

13 (3) A lien created under subsection (1) is subordinate to a

14 prior perfected lien. All liens ~~created~~ that arise under

15 subsection (1) and described in subsection (2) have equal

16 priority.

17 (4) Before a lien is perfected or levied under this act, the

18 title IV-D agency shall send a notice to the payer subject to the

19 support order informing the payer of the imposition of liens by

20 operation of law and that the payer's real and personal property

21 can be encumbered or seized if an arrearage accrues in an amount

22 that exceeds the amount of periodic support payments payable

23 under the payer's support order for the time period specified in

24 this act.

25 (5) The title IV-D agency or another person required to

26 provide notice under this section or sections 25b to 25i shall

27 provide notice by paper, unless the person to be notified agrees

1 to notice by other means. The title IV-D agency or other person

2 providing notice under this section or sections 25b to 25i shall

3 complete and preserve proof of service of the notice in a form

4 substantially conforming to the requirements for proof of service

5 under the Michigan court rules.

6 (6) A lien under subsection (1) does not arise against any of

7 the following:

8 (a) A financial asset pledged to a financial institution as

9 collateral.

10 (b) A financial asset to which a financial institution has a

11 prior right of setoff or other lien.

12 (c) Property or an allowance described in sections 2401 to

13 2404 of the estates and protected individuals code, 1998 PA 386,

14 MCL 700.2401 to 700.2404.

15 (d) Fifty percent of the amount of compensation due to a

16 payer under a worker's compensation order, settlement, redemption

17 order, or voluntary payment.

18 (e) That portion of money to be paid as a distribution from a

19 decedent's estate; as the result of a claim for negligence,

20 personal injury, or death; under an arbitration award; under a

21 settlement of or judgment issued in a civil action; or as

22 compensation under a worker's compensation order, settlement,

23 redemption order, or voluntary payment that is owed for any of

24 the following:

25 (i) Attorney fees.

26 (ii) Court costs and other litigation costs, including, but

27 not limited to, medical examination costs, expenses for reports,

Senate Bill No. 1447 as amended November 10, 2004

1 deposition fees, court reporter fees, and record copy fees.

2 (iii) The medicaid program under the social welfare act, 1939

3 PA 280, MCL 400.1 to 400.119b, unless medicaid is subordinated to

4 child support under federal law.

5 (iv) Medical services or a reimbursement for a payment made

6 for medical services either to or by an insurer, health

7 maintenance organization, or nonprofit health care corporation.

8 For the purposes of compensation under a worker's compensation

9 order, settlement, redemption order, or voluntary payment, as

10 used in this subparagraph, "medical services" means services as

11 described and regulated under sections 315 and 319 of the

12 worker's disability compensation act of 1969, 1969 PA 317, MCL

13 418.315 and 418.319, and the rules promulgated under those

14 sections.

15 (v) An amount to reimburse an insurance company for the

16 expense incurred by the insurance company in responding to a lien

17 and levy under sections 25b to 25i. A reimbursement amount under

18 this subparagraph shall not exceed the actual expense or $50.00

19 for a single lien and levy, whichever is less<<, for each lien and levy or each payment pursuant to a lien and levy>>.

20 (vi) Other costs related to the arbitration, civil action, or

21 worker's compensation order, settlement, redemption order, or

22 voluntary payment.

23 (vii) For reimbursements to which an employer or carrier is

24 entitled under section 827 of the worker's disability

25 compensation act of 1969, 1969 PA 317, MCL 418.827.

26 (viii) For vocational rehabilitation costs, reimbursements,

27 or credits incidental to long- or short-term disability programs

1 or to pension or welfare benefit funds.

2 (ix) For a medicare set aside account for future medical care

3 or for future medicaid, unless medicare or medicaid is

4 subordinated to child support under federal law.

5 (f) Money to be paid under an insurance policy for the repair

6 or replacement of real or tangible personal property.

7 (g) Money to be paid for allowable expenses that are payable

8 as benefits under section 3107(1)(a) of the insurance code of

9 1956, 1956 PA 218, MCL 500.3107.

10 Sec. 25b. (1) A remedy provided by this section is

11 cumulative and does not affect the availability of another remedy

12 under this act or other law.

13 (2) Except for a financial asset, money to be paid, or

14 compensation to which section 25c applies, the title IV-D agency

15 may perfect a lien created under section 25a upon the real or

16 personal property of the payer when an arrearage has accrued in

17 an amount that exceeds 2 times the monthly amount of periodic

18 support payments payable under the payer's support order.

19 (3) If the arrearage under subsection (2) is reached and the

20 title IV-D agency has determined that the delinquent payer holds

21 real or personal property, other than a financial asset, money to

22 be paid, or compensation to which section 25c applies, the title

23 IV-D agency may perfect the lien. The title IV-D agency shall

24 perfect a lien on property to which this section applies in the

25 same manner in which another lien on property of the same type is

26 perfected.

27 (4) The title IV-D agency shall notify the payer when the

1 title IV-D agency has perfected a lien against real or personal

2 property of the payer. The notice shall be sent by ordinary mail

3 to the payer's last known address, and a copy of the notice shall

4 be sent by ordinary mail to the recipient of support. A notice

5 under this subsection shall include all of the following:

6 (a) The amount of the arrearage.

7 (b) That a lien is in effect on the real or personal property

8 of the payer.

9 (c) That the property is subject to seizure unless the payer

10 responds by paying the arrearage or requesting a review within 21

11 days after the date of mailing the notice.

12 (d) That, at the review, the payer may object to the lien and

13 to proposed action based on a mistake of fact concerning the

14 overdue support amount or the payer's identity, or because the

15 lien does not arise against all or a portion of the property as

16 provided in section 25a(6).

17 (e) That, if the payer believes that the amount of support

18 ordered should be modified because of a change in circumstances,

19 the payer may file a petition with the court for modification of

20 the support order.

21 (5) Within 21 days after the date on which the notice

22 described in subsection (4) is mailed to a payer, the payer may

23 request a review on the lien and the proposed action. If the

24 payer is requesting the review because the lien does not arise

25 against all or a portion of the property as provided in section

26 25a(6), the payer shall include with the request an affidavit and

27 related documentation setting forth the amount the payer claims

1 is exempted under section 25a(6), itemized by category. If the

2 payer requests a review under this subsection, the title IV-D

3 agency shall conduct the review within 14 days after the date of

4 the request.

5 (6) If, at the review, the payer establishes that the lien is

6 not proper because of a mistake of fact or because the lien does

7 not arise against all or a portion of the property as provided in

8 section 25a(6), the title IV-D agency shall terminate or modify

9 the lien and, within 7 days, notify the applicable entity that

10 the lien is terminated against all or a portion of the property.

11 If all or a portion of the payer's or other person's claims based

12 on section 25a(6) are valid, the title IV-D agency shall notify

13 the payer of the amount of claims found to be valid, itemized by

14 category.

15 (7) If the payer fails to request a review, to appear for a

16 review, or to establish a mistake of fact or lien exemption, the

17 title IV-D agency may collect the arrearage by levy upon any

18 property belonging to the payer as provided in this section. The

19 title IV-D agency shall notify the payer at the review or by

20 written notice of its intent to levy.

21 (8) To enforce a lien on real property or personal property,

22 the title IV-D agency may sell the real property in the manner

23 provided by law for the judicial foreclosure of mortgage liens;

24 apply to the circuit court for an order to execute the judgment,

25 to appoint a receiver of the real and personal property subject

26 to the lien, and to order the property and its income to be

27 applied to the amount of the judgment; or take any other

1 appropriate action to enforce the judgment. The title IV-D

2 agency shall mail a copy of orders under this subsection to the

3 payer and recipient of support at his or her last known address.

4 (9) A payer may request that the title IV-D agency terminate

5 a lien against the real and personal property of the payer on the

6 basis that the payer is no longer in arrears. If the payer is no

7 longer in arrears, the title IV-D agency shall terminate the lien

8 in accordance with law.

9 (10) An entity is not liable under any federal or state law

10 to any person for any disclosure of information to the title IV-D

11 agency under this section or for any other action taken in good

12 faith to comply with the requirements of this section.

13 Sec. 25c. (1) A remedy provided by this section is

14 cumulative and does not affect the availability of another remedy

15 under this act or other law.

16 (2) ~~If a payer's financial assets held by a financial~~

17 ~~institution are subject to a lien under section 25a and an~~

18 ~~arrearage has accrued in an amount that exceeds 2 times the~~

19 ~~monthly amount of periodic support payments payable under the~~

20 ~~payer's support order, the title IV-D agency may levy against the~~

21 ~~payer's financial assets held by a financial institution.~~ If an

22 arrearage has accrued in an amount that exceeds 2 times the

23 monthly amount of periodic support payments payable under a

24 payer's support order, the title IV-D agency may levy against any

25 of the following items subject to a lien under section 25a to

26 which the payer is entitled:

27 (a) Financial assets held by a financial institution.

1 (b) Money to be paid by an insurer as the result of a claim

2 for negligence, personal injury, or death, under an arbitration

3 award, or under a settlement of or judgment issued in a civil

4 action.

5 (c) Compensation under a worker's compensation order,

6 settlement, redemption order, or voluntary payment.

7 (3) To levy against a payer's financial assets, money to be

8 paid, or compensation, the title IV-D agency shall serve the

9 financial institution holding the financial assets, the insurer,

10 or the carrier with a notice of the lien and levy, directing the

11 financial institution, insurer, or carrier to freeze ~~the~~

12 ~~payer's~~ those financial assets ~~held by the financial~~

13 ~~institution~~ or that money or compensation. ~~(3)~~ The office of

14 child support, in consultation with the state court

15 administrative office, shall create the form that is required for

16 the notice to a financial institution, insurer, or carrier under

17 this subsection. ~~(2).~~ The form shall include, or provide for

18 inclusion of, at least all of the following:

19 (a) The levy amount.

20 (b) Information that enables the financial institution,

21 insurer, or carrier to link the payer with his or her financial

22 assets, money to be paid, or compensation and to notify the

23 payer.

24 (c) Information on how to contact the title IV-D agency.

25 (d) Statements setting forth the rights and responsibilities

26 of the financial institution, insurer, or carrier and payer.

27 (4) A title IV-D agency may withdraw a levy under this

1 section at any time before the circuit court considers or hears

2 the matter in an action filed under section 25f. The title IV-D

3 agency shall give notice of the withdrawal to the payer and

4 financial institution, insurer, or carrier. Upon receiving

5 notice of a withdrawal of a levy, the financial institution,

6 insurer, or carrier shall release the payer's financial assets,

7 money to be paid, or compensation by the close of business on 1

8 of the following days:

9 (a) If the notice is received before noon, the first business

10 day after the business day on which the notice is received.

11 (b) If the notice is received at noon or later, the second

12 business day after the business day on which the notice is

13 received.

14 (5) As used in this section and sections 25d to 25i:

15 (a) "Carrier" means any of the following:

16 (i) "Carrier" as that term is defined in section 601 of the

17 worker's disability compensation act of 1969, 1969 PA 317, MCL

18 418.601.

19 (ii) A fund created under section 501 of the worker's

20 disability compensation act of 1969, 1969 PA 317, MCL 418.501.

21 (iii) The property and casualty guaranty association required

22 to be maintained by section 7911 of the insurance code of 1956,

23 1956 PA 218, MCL 500.7911.

24 (b) "Insurer" means that term as defined in section 106 of

25 the insurance code of 1956, 1956 PA 218, MCL 500.106.

26 Sec. 25d. (1) A financial institution, insurer, or carrier

27 incurs no obligation or liability to a depositor, account holder,

1 or other person arising from the furnishing of information under

2 sections 25c to 25i or from the failure to disclose to a

3 depositor, account holder, or other person that the person's name

4 as a person with an interest in the financial assets, money to be

5 paid, or compensation was included in the information provided.

6 (2) A financial institution, insurer, or carrier incurs no

7 obligation or liability to the title IV-D agency or another

8 person for an error or omission made in good faith compliance

9 with sections 25c to 25i.

10 (3) A financial institution, insurer, or carrier incurs no

11 obligation or liability for blocking, freezing, placing a hold

12 upon, forwarding, or otherwise dealing with a person's financial

13 assets, money to be paid, or compensation in response to a lien

14 or levy imposed or information provided under sections 25c to

15 25i.

16 (4) A financial institution, insurer, or carrier is not

17 obligated to block, freeze, place a hold upon, forward, or

18 otherwise deal with a person's financial assets, money to be

19 paid, or compensation until served with the notice of levy in

20 accordance with section 25c. A financial institution, insurer,

21 or carrier that forwards financial assets, money to be paid, or

22 compensation to the title IV-D agency in response to a levy under

23 section 25c is discharged from any obligation or liability to the

24 depositor, account holder, or other person with an interest in

25 the financial assets, ~~that are~~ money to be paid, or

26 compensation forwarded to the title IV-D agency.

27 Sec. 25e. (1) When a financial institution, insurer, or

1 carrier receives a notice of levy under section 25c on a payer's

2 financial assets held by the financial institution; ~~under~~

3 ~~section 25c~~ money to be paid by an insurer as the result of a

4 claim for negligence, personal injury, or death, under an

5 arbitration award, or under a settlement of or judgment issued in

6 a civil action; or compensation under a worker's compensation

7 order, settlement, redemption order, or voluntary payment, the

8 financial institution, insurer, or carrier shall freeze those

9 financial assets, money to be paid, or compensation. If the

10 payer's financial assets, ~~held by a financial institution~~

11 ~~exceed~~ money to be paid, or compensation exceeds the levy

12 amount, the financial institution, insurer, or carrier shall

13 freeze those financial assets, or that money to be paid or

14 compensation, up to the levy amount. A financial institution,

15 insurer, or carrier shall execute the freeze of a payer's

16 financial assets, money to be paid, or compensation under this

17 section by the close of business on 1 of the following days:

18 (a) If the notice is received before noon, the first business

19 day after the business day on which the notice is received.

20 (b) If the notice is received at noon or later, the second

21 business day after the business day on which the notice is

22 received.

23 (2) After complying with subsection (1), a financial

24 institution, insurer, or carrier shall give notice of that

25 compliance to the title IV-D agency, the payer, and each other

26 person with an interest in the financial assets, money to be

27 paid, or compensation as shown in the financial institution's,

1 insurer's, or carrier's records. A financial institution's,

2 insurer's, or carrier's notice to a payer under this subsection

3 shall include a copy of the title IV-D agency notice to the

4 financial institution, insurer, or carrier.

5 Sec. 25f. (1) A payer whose financial assets are, or money

6 to be paid or compensation is, levied on under section 25c or a

7 person with an interest in those assets, or that money to be paid

8 or compensation, may challenge the levy by submitting a written

9 challenge with the title IV-D agency at the location specified in

10 the title IV-D agency notice. A payer or other person with an

11 interest must submit a written challenge under this section

12 within 21 days after the financial institution, insurer, or

13 carrier sends the payer a copy of the title IV-D agency notice as

14 required by section 25e. A challenge to a levy under section 25c

15 is governed by this act and is not subject to chapter 4 of the

16 administrative procedures act of 1969, 1969 PA 306, MCL 24.271 to

17 24.287. A payer or other person with an interest who submits a

18 challenge under this subsection may withdraw the challenge at any

19 time by giving notice of the withdrawal to the title IV-D

20 agency.

21 (2) If the title IV-D agency receives a written challenge

22 from a payer or other person with an interest within the time

23 limit required by subsection (1), the title IV-D agency shall

24 notify the financial institution, insurer, or carrier about the

25 challenge and, within 7 days, shall review the case with the

26 challenger. The title IV-D agency shall consider only a mistake

27 in the payer's identity, or a mistake in the amount of the

1 payer's past due support, or another mistake of fact, or the fact

2 that the lien does not arise against all or a portion of the

3 property as provided in section 25a(6), as cause to release or

4 modify the levy. The title IV-D agency shall not consider a

5 challenge based on section 25a(6) unless the payer or other

6 person with an interest includes with the challenge an affidavit

7 and related documentation setting forth the amount the payer

8 claims is exempted under section 25a(6), itemized by category. If

9 the title IV-D agency determines that a mistake of fact occurred

10 or all or a portion of the payer's claims based on section 25a(6)

11 are valid, the title IV-D agency shall do 1 of the following:

12 (a) If the mistake is the payer's identity or that the payer

13 does not owe past due support in an amount equal to or greater

14 than 2 times the payer's monthly support amount under a support

15 order, notify the financial institution, insurer, or carrier and

16 the payer that the levy is released.

17 (b) If the payer does owe past due support in an amount equal

18 to or greater than 2 times the payer's monthly support amount

19 under a support order, but the amount in the notice to levy is

20 more than the payer owes, notify the payer of the corrected

21 amount.

22 (c) If the mistake concerns a fact other than those described

23 in subdivisions (a) and (b), take action appropriate to the

24 mistake.

25 (d) If all or a portion of the payer's or other person's

26 claims based on section 25a(6) are valid, notify the payer or

27 other person with an interest of the amount of claims found to be

1 valid, itemized by category.

2 (3) If the title IV-D agency finds no mistake of fact or no

3 valid claims under section 25a(6), the title IV-D agency shall

4 notify the payer or other person with an interest of that

5 finding.

6 (4) If the payer or other person with an interest disagrees

7 with the title IV-D agency review determination under this

8 section, the payer or other person with an interest may challenge

9 the levy under section 25c by filing an action in the circuit

10 court that issued a support order that is an underlying basis for

11 the levy. A payer or other person with an interest must file an

12 action under this subsection within 21 days after the title IV-D

13 agency sends notice of its review determination and shall give

14 the title IV-D agency notice of the action.

15 (5) If an action is not filed in the circuit court within the

16 time limit required by subsection (4), the title IV-D agency

17 shall notify the financial institution, insurer, or carrier,

18 directing the financial institution, insurer, or carrier to act

19 in accordance with the title IV-D agency review determination

20 under this section. If an action is filed in the circuit court

21 within the time limit prescribed in subsection (4), the title

22 IV-D agency shall notify the financial institution, insurer, or

23 carrier, directing the financial institution, insurer, or carrier

24 to act in accordance with the court decision.

25 Sec. 25g. (1) A financial institution, insurer, or carrier

26 that receives a notice of levy under section 25c shall forward

27 money in the amount of past due support as stated in the notice,

1 or in the corrected amount if notified of a corrected amount, to

2 the state disbursement unit, along with information necessary to

3 identify the payer as required by the notice.

4 (2) A financial institution, insurer, or carrier shall

5 forward money as required by subsection (1) no sooner than the

6 next day and no later than the seventh day after 1 of the

7 following takes place:

8 (a) The financial institution, insurer, or carrier notifies

9 the payer and the title IV-D agency that the payer's financial

10 assets are, or money to be paid or compensation is, frozen as

11 required by section 25e and has not received, within 28 days

12 after the day on which the financial institution, insurer, or

13 carrier sent the notices, a notice from the title IV-D agency

14 that the payer or another person with an interest in the

15 financial assets, money to be paid, or compensation has submitted

16 a challenge to the levy under section 25f.

17 (b) The financial institution, insurer, or carrier receives,

18 within the time limit prescribed in subdivision (a), a notice

19 from the title IV-D agency that the payer or another person with

20 an interest in the financial assets, money to be paid, or

21 compensation submitted a challenge to the levy and receives the

22 subsequent title IV-D agency notice required by section 25f,

23 directing the financial institution, insurer, or carrier to act

24 in accordance with either the title IV-D agency review

25 determination or the circuit court decision.

26 (3) If, in order to forward sufficient money to the SDU, the

27 financial institution must convert 1 or more financial assets to

1 cash, the financial institution shall execute the conversion,

2 assessing a resulting fee or other cost or penalty against the

3 payer. If the payer's financial assets are insufficient to pay

4 the past due support amount plus resulting fees and other costs

5 or penalties, the financial institution may deduct the fees,

6 costs, and penalties before forwarding the balance of the money.

7 Sec. 25h. (1) If an action is filed in circuit court within

8 the time limit prescribed in section 25f, the circuit court shall

9 review the matter de novo. The action is governed by this

10 section and the Michigan court rules. The circuit court review

11 is not limited to mistakes of fact or claims based on section

12 25a(6).

13 (2) All of the following apply in an action governed by this

14 section:

15 (a) The circuit court shall only address the issues of the

16 propriety of the levy and whether the levy amount is correct.

17 (b) The circuit court shall not admit evidence or consider an

18 issue that is related to custody, parenting time, or the amount

19 of support under a support order unless that evidence is related

20 to the levy against a payer's financial assets, money to be paid,

21 or compensation.

22 (c) The circuit court shall not modify a support order. A

23 court finding regarding a monthly or past due support amount does

24 not modify the underlying support order.

25 Sec. 25i. (1) If, after a financial institution forwards

26 money to the state disbursement unit, all of the forwarded money

27 is returned to the payer due to a mistake of fact or court order,

Senate Bill No. 1447 as amended November 10, 2004

1 the title IV-D agency shall reimburse the payer for a fee, cost,

2 or penalty that the financial institution assessed against the

3 payer under section 25g. ~~In addition, the~~ The title IV-D

4 agency shall also compensate the payer for the amount of interest

5 that the financial assets would have earned had they not been

6 converted and forwarded to the SDU, to the extent that the

7 interest can be determined with a reasonable degree of

8 certainty.

9 (2) If the total amount of past due support the payer owes

10 under all support orders subject to levy under section 25c is

11 more than the amount of money a financial institution, insurer,

12 or carrier forwards the SDU under section 25g, the SDU shall

13 allocate the money among those support orders by multiplying the

14 total amount of money forwarded by the percentages arrived at by

15 dividing the past due support amount under each of those support

16 orders by the total of the past due support amounts under all of

17 those support orders.

18 Enacting section 1. This amendatory act takes effect

19 October 1, 2005.

20 Enacting section 2. Before January 31, 2006, the title IV-D

21 agency and the <<worker's compensation agency>> shall report to

22 the standing committees of the senate and house of

23 representatives with primary responsibility for legislation

24 concerning child support enforcement on the status of, efficacy

25 of, and problems that have arisen in the implementation of the

26 provisions of the support and parenting time enforcement act that

27 were amended or added by this amendatory act and in the