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PA ACT 109 AND ITS PRACTICAL EFFECTS: THE DELINQUENT PARENT IN CHILD SUPPORT AND PERSONAL INJURY LITIGATION
David A. Miller, Esquire and Steve Ledva, Jr., Esquire
PA Act 109 of 2006 became effective on September 5, 2006. The Act amends the PA Domestic Relations Code, Title 23 of the PA Statutes, by adding Section 4308.1 and permits the Department of Public Welfare to intercept overdue child support from lump sum monetary awards or settlements for third party claims for bodily injury or death as well as workers' compensation claims. Overdue child support becomes a lien by operation of law against the proceeds of any such monetary award or settlement which exceeds $5,000 net of certain permitted deductions.
The new law requires the beneficiary to provide his attorney with a statement that includes the beneficiary's personal information along with written documentation of arrears from the PA Child Support Enforcement System website before he can receive the proceeds of a monetary award or settlement. The law requires the beneficiary's attorney to obtain a copy of the statement and lien report at the time of delivery of the release. The lien report must be dated within 20 days of the date of the delivery of the release. If arrears exist, it is the beneficiary's attorney's duty to make payment of the lien. If the beneficiary is pro se, the beneficiary must provide the statement and lien report to the insurer and it is the insurer's duty to make payment of the lien.
In the workers' compensation arena, the law prohibits a workers' compensation judge from entering an order for payment unless the beneficiary provides the statement and lien report. If a lien exists, the judge will include payment of the lien from the net proceeds as part of the order. Many judges are including specific instructions with regard to Act 109 in their procedures which need to be adhered to during the litigation process.
Practically speaking, this new law requires consideration by insurers, self-insured entities and their counsel when contemplating settlement of a third party bodily injury claim or workers' compensation claim. Inquiry into whether a child support lien exists should be made as early as possible so that any such lien can be taken into consideration during settlement negotiations. Form releases should be amended to include language specific to child support liens. In every case, but especially where the beneficiary is pro se, great care should be taken to abide by the provisions of Act 109 so as to preserve immunity from any civil, criminal or administrative penalties for making an erroneous distribution of proceeds.
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