As a matter of public policy, many states have adopted various measures to enforce outstanding child-support obligations among their citizens. Out of this strong public policy, we are now seeing a number of states adopt legislation and rules requiring insurers to take certain steps to prevent a non-compliant parent from concealing recovery of certain insurance proceeds. Consistent with this trend, the State of Washington has recently adopted a law requiring insurers to not only notify the State of certain pending claims and payments, but also to directly satisfy child support liens.
RCW 26.23.037 requires all insurers to exchange information with the State Division of Child Support within ten (10) days of the opening of a “tort liability claim” in a manner required by the Department. This statute has a number of provisions concerning how an insurer might comply with this obligation. For best reference, we recommend reviewing the Washington Child Support Lien Network.
Upon reporting a tort liability claim to the State, the Department will then notify the insurer as to whether there are any outstanding child support liens pending against the claimant. Once the insurer is on notice of an outstanding child-support lien, it is required under Washington law to withhold the lien amount from any claim payment and to remit the lien amount directly to the department within twenty (20) days.
The direct payment requirement in Washington is a departure from the requirements of many of the other jurisdictions that have adopted these types of reporting requirements. Based on the language in the statutes, it would appear that the State of Washington is attempting to create the type of “super lien” that are generally recognized in the Medicare environment.
It is also important to note that the statute applies only to claims for general (non-economic) damages and lost wages claims. The statute does not apply to property damage claims or for medical special damages. The statute also specifically carves out Underinsured Motorist claims.
Moreover, the statute specifically states that noncompliance by an insurer does not amount to a violation of Washington’s general child support noncompliance statute, which could subject a non-complying entity to loss of licensure, fines, and suspensions.
Importantly, it should also be noted that the statute contains an immunity provision stating that an insured cannot be held liable for any efforts to comply with the statute.
The statute, which contains twenty-seven (27) paragraphs and sub-paragraphs, has not yet been subject to judicial review in any Washington Appellate Court. It is a complex statute with many different requirements for both insurers and the State. It may take some time to work out how this statute will operate in real world applications.
Nonetheless, in the absence of caselaw further clarifying an insurer’s obligations, we recommend that insurers in Washington take any and all reasonable steps to comply with the statute as drafted and enacted.
Lether Law Group routinely monitors and reports on changes in Washington law and we are, as always, happy to assist any insurer in navigating through this new development and any others that may be coming in the future.
