October 6, 2004, Introduced by Senator HAMMERSTROM and referred to the Committee on Families and Human Services.
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, distribution from a decedent's estate, a claim for
2 negligence or personal injury, and funds due a payer from a
3 settlement, civil judgment, worker's compensation order,
4 settlement, or voluntary payment, or arbitration award. The lien
5 is effective at the time that the support is due and unpaid and
6 shall continue until the amount of past due support is paid in
7 full or the lien is terminated by the title IV-D agency.
8 (2) Liens that arise in other states shall be accorded full
9 faith and credit when the requirements of section 25b or 25c are
10 met.
11 (3) A lien created under subsection (1) is subordinate to a
12 prior perfected lien. All liens created under subsection (1) and
13 described in subsection (2) have equal priority.
14 (4) Before a lien is perfected or levied under this act, the
15 title IV-D agency shall send a notice to the payer subject to the
16 support order informing the payer of the imposition of liens by
17 operation of law and that the payer's real and personal property
18 can be encumbered or seized if an arrearage accrues in an amount
19 that exceeds the amount of periodic support payments payable
20 under the payer's support order for the time period specified in
21 this act.
22 (5) The title IV-D agency or another person required to
23 provide notice under this section or sections 25b to 25i shall
24 provide notice by paper, unless the person to be notified agrees
25 to notice by other means. The title IV-D agency or other person
26 providing notice under this section or sections 25b to 25i shall
27 complete and preserve proof of service of the notice in a form
1 substantially conforming to the requirements for proof of service
2 under the Michigan court rules.
3 (6) A lien under subsection (1) is not created against any of
4 the following:
5 (a) Financial assets pledged to a financial institution as
6 collateral.
7 (b) Financial assets to which a financial institution has a
8 prior right of setoff or other lien.
9 (c) Property or allowances described in sections 2401 to 2404
10 of the estates and protected individuals code, 1998 PA 386, MCL
11 700.2401 to 700.2404.
12 (d) Trusts regulated under article VII of the estates and
13 protected individuals code, 1998 PA 386, MCL 700.7101 to
14 700.7511.
15 (e) Funds from a claim for negligence or personal injury or
16 from a settlement, civil judgment, worker's compensation order,
17 settlement, or voluntary payment, or arbitration award that are
18 owed for any of the following:
19 (i) For attorney fees.
20 (ii) For court costs.
21 (iii) To the medicaid program under the social welfare act,
22 1939 PA 280, MCL 400.1 to 400.119b.
23 (iv) For medical services and reimbursements for payments
24 made for medical services either to or by a nonprofit health care
25 corporation, health maintenance organization, health insurer, or
26 self-funded health plan.
27 (v) For an administrative fee for processing the lien.
1 (vi) For other costs related to the award, redemption, order,
2 settlement, or voluntary payment.
3 Sec. 25b. (1) A remedy provided by this section is
4 cumulative and does not affect the availability of another remedy
5 under this act or other law.
6 (2) Except for a
financial asset financial assets or funds
7 to which section 25c applies, the title IV-D agency may perfect a
8 lien created under section 25a upon the real or personal property
9 of the payer when an arrearage has accrued in an amount that
10 exceeds 2 times the monthly amount of periodic support payments
11 payable under the payer's support order.
12 (3) If the arrearage under subsection (2) is reached and the
13 title IV-D agency has determined that the delinquent payer holds
14 real or personal
property, other than a financial asset for
15 financial assets or funds to which section 25c applies, the title
16 IV-D agency may perfect the lien. The title IV-D agency shall
17 perfect a lien on property to which this section applies in the
18 same manner in which another lien on property of the same type is
19 perfected.
20 (4) The title IV-D agency shall notify the payer when the
21 title IV-D agency has perfected a lien against real or personal
22 property of the payer. The notice shall be sent by ordinary mail
23 to the payer's last known address, and a copy of the notice shall
24 be sent by ordinary mail to the recipient of support. A notice
25 under this subsection shall include all of the following:
26 (a) The amount of the arrearage.
27 (b) That a lien is in effect on the real or personal property
1 of the payer.
2 (c) That the property is subject to seizure unless the payer
3 responds by paying the arrearage or requesting a review within 21
4 days after the date of mailing the notice.
5 (d) That, at the review, the payer may object to the lien and
6 to proposed action based on a mistake of fact concerning the
7 overdue support amount or the payer's identity.
8 (e) That, if the payer believes that the amount of support
9 ordered should be modified because of a change in circumstances,
10 the payer may file a petition with the court for modification of
11 the support order.
12 (5) Within 21 days after the date on which the notice
13 described in subsection (4) is mailed to a payer, the payer may
14 request a review on the lien and the proposed action. If the
15 payer requests a review under this subsection, the title IV-D
16 agency shall conduct the review within 14 days after the date of
17 the request.
18 (6) If, at the review, the payer establishes that the lien is
19 not proper because of a mistake of fact, the title IV-D agency
20 shall terminate the lien and, within 7 days, notify the
21 applicable entity that the lien is terminated.
22 (7) If the payer fails to request a review, to appear for a
23 review, or to establish a mistake of fact, the title IV-D agency
24 may collect the arrearage by levy upon any property belonging to
25 the payer as provided in this section. The title IV-D agency
26 shall notify the payer at the review or by written notice of its
27 intent to levy.
1 (8) To enforce a lien on real property or personal property,
2 the title IV-D agency may sell the real property in the manner
3 provided by law for the judicial foreclosure of mortgage liens;
4 apply to the circuit court for an order to execute the judgment,
5 to appoint a receiver of the real and personal property subject
6 to the lien, and to order the property and its income to be
7 applied to the amount of the judgment; or take any other
8 appropriate action to enforce the judgment. The title IV-D
9 agency shall mail a copy of orders under this subsection to the
10 payer and recipient of support at his or her last known address.
11 (9) A payer may request that the title IV-D agency terminate
12 a lien against the real and personal property of the payer on the
13 basis that the payer is no longer in arrears. If the payer is no
14 longer in arrears, the title IV-D agency shall terminate the lien
15 in accordance with law.
16 (10) An entity is not liable under any federal or state law
17 to any person for any disclosure of information to the title IV-D
18 agency under this section or for any other action taken in good
19 faith to comply with the requirements of this section.
20 Sec. 25c. (1) A remedy provided by this section is
21 cumulative and does not affect the availability of another remedy
22 under this act or other law.
23 (2) If a payer's financial assets held by a financial
24 institution or if a payer's funds owed pursuant to a worker's
25 compensation order, settlement, or voluntary payment are subject
26 to a lien under section 25a and an arrearage has accrued in an
27 amount that exceeds 2 times the monthly amount of periodic
1 support payments payable under the payer's support order, the
2 title IV-D agency may
levy against the payer's those financial
3 assets held by a
financial institution or funds. To levy
4 against a payer's financial assets or funds, the title IV-D
5 agency shall serve the financial institution holding the
6 financial assets or the carrier with a notice of the lien and
7 levy, directing the financial institution or carrier to freeze
8 the payer's those financial assets held by the
financial
9 institution or funds.
10 (3) The office of child support, in consultation with the
11 state court administrative office, shall create the form that is
12 required for the notice to a financial institution or carrier
13 under subsection (2). The form shall include, or provide for
14 inclusion of, at least all of the following:
15 (a) The levy amount.
16 (b) Information that enables the financial institution or
17 carrier to link the payer with his or her financial assets or
18 funds and to notify the payer.
19 (c) Information on how to contact the title IV-D agency.
20 (d) Statements setting forth the rights and responsibilities
21 of the financial institution or carrier and payer.
22 (4) A title IV-D agency may withdraw a levy under this
23 section at any time before the circuit court considers or hears
24 the matter in an action filed under section 25f. The title IV-D
25 agency shall give notice of the withdrawal to the payer and
26 financial institution or carrier. Upon receiving notice of a
27 withdrawal of a levy, the financial institution or carrier shall
1 release the payer's financial assets or funds by the close of
2 business on 1 of the following days:
3 (a) If the notice is received before noon, the first business
4 day after the business day on which the notice is received.
5 (b) If the notice is received at noon or later, the second
6 business day after the business day on which the notice is
7 received.
8 (5) As used in this section and sections 25d to 25i,
9 "carrier" means any of the following:
10 (a) "Carrier" as that term is defined in section 601 of the
11 worker's disability compensation act of 1969, 1969 PA 317, MCL
12 418.601.
13 (b) The second injury fund created under section 501 of the
14 worker's disability compensation act of 1969, 1969 PA 317, MCL
15 418.501.
16 (c) The self-insurers' security fund created under section
17 501 of the worker's disability compensation act of 1969, 1969 PA
18 317, MCL 418.501.
19 Sec. 25d. (1) A financial institution or carrier incurs no
20 obligation or liability to a depositor, account holder, or other
21 person arising from the furnishing of information under sections
22 25c to 25i or from the failure to disclose to a depositor,
23 account holder, or other person that the person's name as a
24 person with an interest in the financial assets or funds was
25 included in the information provided.
26 (2) A financial institution or carrier incurs no obligation
27 or liability to the title IV-D agency or another person for an
1 error or omission made in good faith compliance with sections 25c
2 to 25i.
3 (3) A financial institution or carrier incurs no obligation
4 or liability for blocking, freezing, placing a hold upon,
5 forwarding, or otherwise dealing with a person's financial assets
6 or funds in response to a lien or levy imposed or information
7 provided under sections 25c to 25i.
8 (4) A financial institution or carrier is not obligated to
9 block, freeze, place a hold upon, forward, or otherwise deal with
10 a person's financial assets or funds until served with the notice
11 of levy in accordance with section 25c. A financial institution
12 or carrier that forwards financial assets to the title IV-D
13 agency in response to a levy under section 25c is discharged from
14 any obligation or liability to the depositor, account holder, or
15 other person with an interest in the financial assets or funds
16 that are forwarded to the title IV-D agency.
17 Sec. 25e. (1) When a financial institution or carrier
18 receives a notice of levy on a payer's financial assets held by
19 the financial institution or funds owed pursuant to a worker's
20 compensation order, settlement, or voluntary payment under
21 section 25c, the financial institution or carrier shall freeze
22 those financial assets or funds. If the payer's financial assets
23 held by a financial institution or funds owed pursuant to a
24 worker's compensation order, settlement, or voluntary payment
25 exceed the levy amount, the financial institution or carrier
26 shall freeze those financial assets or funds up to the levy
27 amount. A financial institution or carrier shall execute the
1 freeze of a payer's financial assets or funds under this section
2 by the close of business on 1 of the following days:
3 (a) If the notice is received before noon, the first business
4 day after the business day on which the notice is received.
5 (b) If the notice is received at noon or later, the second
6 business day after the business day on which the notice is
7 received.
8 (2) After complying with subsection (1), a financial
9 institution or carrier shall give notice of that compliance to
10 the title IV-D agency, the payer, and each other person with an
11 interest in the financial assets or funds as shown in the
12 financial institution's or carrier's records. A financial
13 institution's or carrier's notice to a payer under this
14 subsection shall include a copy of the title IV-D agency notice
15 to the financial institution or carrier.
16 Sec. 25f. (1) A payer whose financial assets or funds are
17 levied on under section 25c or a person with an interest in those
18 assets or funds may challenge the levy by submitting a written
19 challenge with the title IV-D agency at the location specified in
20 the title IV-D agency notice. A payer or other person with an
21 interest must submit a written challenge under this section
22 within 21 days after the financial institution or carrier sends
23 the payer a copy of the title IV-D agency notice as required by
24 section 25e. A challenge to a levy under section 25c is governed
25 by this act and is not subject to chapter 4 of the administrative
26 procedures act of 1969, 1969 PA 306, MCL 24.271 to 24.287. A
27 payer or other person with an interest who submits a challenge
1 under this subsection may withdraw the challenge at any time by
2 giving notice of the withdrawal to the title IV-D agency.
3 (2) If the title IV-D agency receives a written challenge
4 from a payer or other person with an interest within the time
5 limit required by subsection (1), the title IV-D agency shall
6 notify the financial institution or carrier about the challenge
7 and, within 7 days, shall review the case with the challenger.
8 The title IV-D agency shall consider only a mistake in the
9 payer's identity or in the amount of the payer's past due
10 support, or another mistake of fact, as cause to release or
11 modify the levy. If the title IV-D agency determines that a
12 mistake of fact occurred, the title IV-D agency shall do 1 of the
13 following:
14 (a) If the mistake is the payer's identity or that the payer
15 does not owe past due support in an amount equal to or greater
16 than 2 times the payer's monthly support amount under a support
17 order, notify the financial institution or carrier and the payer
18 that the levy is released.
19 (b) If the payer does owe past due support in an amount equal
20 to or greater than 2 times the payer's monthly support amount
21 under a support order, but the amount in the notice to levy is
22 more than the payer owes, notify the payer of the corrected
23 amount.
24 (c) If the mistake concerns a fact other than those described
25 in subdivisions (a) and (b), take action appropriate to the
26 mistake.
27 (3) If the title IV-D agency finds no mistake of fact, the
1 title IV-D agency shall notify the payer or other person with an
2 interest of that finding.
3 (4) If the payer or other person with an interest disagrees
4 with the title IV-D agency review determination under this
5 section, the payer or other person with an interest may challenge
6 the levy under section 25c by filing an action in the circuit
7 court that issued a support order that is an underlying basis for
8 the levy. A payer or other person with an interest must file an
9 action under this subsection within 21 days after the title IV-D
10 agency sends notice of its review determination and shall give
11 the title IV-D agency notice of the action.
12 (5) If an action is not filed in the circuit court within the
13 time limit required by subsection (4), the title IV-D agency
14 shall notify the financial institution or carrier, directing the
15 financial institution or carrier to act in accordance with the
16 title IV-D agency review determination under this section. If an
17 action is filed in the circuit court within the time limit
18 prescribed in subsection (4), the title IV-D agency shall notify
19 the financial institution or carrier, directing the financial
20 institution or carrier to act in accordance with the court
21 decision.
22 Sec. 25g. (1) A financial institution or carrier that
23 receives a notice of levy under section 25c shall forward money
24 in the amount of past due support as stated in the notice, or in
25 the corrected amount if notified of a corrected amount, to the
26 state disbursement unit, along with information necessary to
27 identify the payer as required by the notice.
1 (2) A financial institution or carrier shall forward money as
2 required by subsection (1) no sooner than the next day and no
3 later than the seventh day after 1 of the following takes place:
4 (a) The financial institution or carrier notifies the payer
5 and the title IV-D agency that the payer's financial assets or
6 funds are frozen as required by section 25e and has not received,
7 within 28 days after the day on which the financial institution
8 or carrier sent the notices, a notice from the title IV-D agency
9 that the payer or another person with an interest in the
10 financial assets or funds has submitted a challenge to the levy
11 under section 25f.
12 (b) The financial institution or carrier receives, within the
13 time limit prescribed in subdivision (a), a notice from the title
14 IV-D agency that the payer or another person with an interest in
15 the financial assets or funds submitted a challenge to the levy
16 and receives the subsequent title IV-D agency notice required by
17 section 25f, directing the financial institution or carrier to
18 act in accordance with either the title IV-D agency review
19 determination or the circuit court decision.
20 (3) If, in order to forward sufficient money to the SDU, the
21 financial institution must convert 1 or more financial assets to
22 cash, the financial institution shall execute the conversion,
23 assessing a resulting fee or other cost or penalty against the
24 payer. If the payer's financial assets are insufficient to pay
25 the past due support amount plus resulting fees and other costs
26 or penalties, the financial institution may deduct the fees,
27 costs, and penalties before forwarding the balance of the money.
1 Sec. 25h. (1) If an action is filed in circuit court within
2 the time limit prescribed in section 25f, the circuit court shall
3 review the matter de novo. The action is governed by this
4 section and the Michigan court rules. The circuit court review
5 is not limited to mistakes of fact.
6 (2) All of the following apply in an action governed by this
7 section:
8 (a) The circuit court shall only address the issues of the
9 propriety of the levy and whether the levy amount is correct.
10 (b) The circuit court shall not admit evidence or consider an
11 issue that is related to custody, parenting time, or the amount
12 of support under a support order unless that evidence is related
13 to the levy against a payer's financial assets or funds.
14 (c) The circuit court shall not modify a support order. A
15 court finding regarding a monthly or past due support amount does
16 not modify the underlying support order.
17 Sec. 25i. (1) If, after a financial institution forwards
18 money to the state disbursement unit, all of the forwarded money
19 is returned to the payer due to a mistake of fact or court order,
20 the title IV-D agency shall reimburse the payer for a fee, cost,
21 or penalty that the financial institution assessed against the
22 payer under section 25g.
In addition, the The title IV-D
23 agency shall also compensate the payer for the amount of interest
24 that the financial assets or funds would have earned had they not
25 been converted and forwarded to the SDU, to the extent that the
26 interest can be determined with a reasonable degree of
27 certainty.
1 (2) If the total amount of past due support the payer owes
2 under all support orders subject to levy under section 25c is
3 more than the amount of money a financial institution or carrier
4 forwards the SDU under section 25g, the SDU shall allocate the
5 money among those support orders by multiplying the total amount
6 of money forwarded by the percentages arrived at by dividing the
7 past due support amount under each of those support orders by the
8 total of the past due support amounts under all of those support
9 orders.
10 Enacting section 1. This amendatory act takes effect June
11 1, 2005.