Can Child Support Touch My Workers Compensation Benefits?

Can I protect my Maryland Workers Compensation award from a child support lien?

The answer to this question is both yes and no. You will be able to protect seventy five percent of the permanency award or full and final settlement only. The balance of the award may be subject to a garnishment for a child support arrearage. (arrearage means you are at least 30 days behind in child support payments. Md. Family Law Code Annotated Section 10-121.) Attorney Marc Atas explains if they can take child support from workers compensation.

However, to claim the 25% exemption a motion must be filed with the Circuit Court that issued the child support garnishment within 30 days or you will not be able to claim the 25% exemption and then all of the award will be subject to seizure for child support. Filing for the exemption at the Maryland Workers Compensation Commission will be ineffective. If there is no arrearage, the law is less clear. There has been no appellate case that states that temporary total benefits or vocational rehabilitation benefits in the form of temporary total are subject to a wage lien for non- arrears child support payments or alimony.

However, there are Maryland appellate cases that suggest that wage liens that applied to benefits that were similar to the workers compensation statute were attachable even though those statutes that created those benefits stated those benefits were not assignable. See United States v. Williams, 279 Md. 673, 370 A.2d 1134 (1977). In addition, theses cases seem to suggest that the 75% exemption that applies to wage attachments as provided in Commercial Law Article of the Annotated Code of Maryland provides in section 15-601.1 does not apply and the entire temporary total check could be subject to garnishment.

The relevant case that established this procedure is R. K. GROUNDS CARE, ET AL. V. KEVIN D. WILSON   IN THE COURT OF SPECIAL APPEALS of Maryland No. 1452 September Term, 2016. The Court of Special Appeals held the circuit court should have ruled that the Commission lacked subject matter jurisdiction to decide whether money that was in the hands of an insurer for settlement of a workers’ compensation claim was exempt from garnishment to pay a judgment in a child support action. Only a circuit court has subject matter jurisdiction over garnishments. In the child support garnishment proceeding, Wilson, as judgment debtor, was entitled to file a motion within 30 days of when the garnishment was served on the insurance company asking the court to find that his share of the settlement monies (or part of his share) was exempt from garnishment under CJ section 11-504. He failed to do so. Instead, he sought relief from the Commission, which did not have jurisdiction over the matter.

The R.K. Grounds care case involved a child support arrearage. A child support arrearage means there was an overdue amount of child support that had not been paid on time. The R.K. Grounds care case does not involve a child support order that was paid up to date and on time. In the R.K. Grounds care case there was a settlement approved by the Maryland Workers Compensation Commission. The Insurance carrier paid the attorney fees, attorney expenses and ratings fees to the attorney and Doctors but sent the balance of the settlement without deducting the potential 75% exemption directly to child support based upon the writ of garnishment that was filed in the Circuit court and served on the insurance company.

Courts and Judicial Proceedings Article of the Annotated code of Maryland provides in section 11-504 (b)(2) provides:

(b) The following items are exempt from execution on a judgment:

(2) Except as provided in subsection (i) of this section, money payable in the event of sickness, accident, injury, or death of any person, including compensation for loss of future earnings. This exemption includes but is not limited to money payable on account of judgments, arbitrations, compromises, insurance, benefits, compensation, and relief.

There is a worker’s compensation exception to this section in Courts and Judicial Proceedings Article § 11-504(i)(2) which states: “twenty-five percent of the net recovery by the debtor on a claim for personal injury is subject to execution on a judgment for a child support arrearage.”

The R.K. Grounds care case outlines the procedure governing garnishment of property generally is set forth in Maryland Rule 2-645.6 This rule covers garnishments of any property other than wages and partnership interests subject to a charging order. Md. Rule 2-645(a). The judgment creditor may obtain a writ of garnishment by filing a request in the same action in which the judgment was entered. Md. Rule 2-645(b). The clerk of court issues the writ, directed to the garnishee (insurance company), and containing all the information in the request. Md. Rule 2-645(c). Among other things, the writ directs the garnishee to hold the property of the judgment debtor (claimant in workers compensation case) and, significantly, notifies the judgment debtor “that federal and state exemptions may be available” and “of the right to contest the garnishment by filing a motion asserting a defense or objection.” Md. Rule 2-645(c). The writ must be served upon the garnishee, and, once served, must be mailed to the judgment debtor at his or her last known address. Md. Rule 2-645(d). The garnishee must file a timely answer, or risk entry of a judgment of default. Md. Rule 2-645(e) and (f).

Within 30 days after service on the garnishee, and before entry of any judgment, the judgment debtor “may seek release of the garnished property in accordance with Rule 2-643.” Md. Rule 2-645(i). One of the grounds for a motion to release property under Rule 2-643 is “the property is exempt from levy[.]” Md. Rule 2-643(c)(2). Thus, in the case at bar, upon receipt of the writ of garnishment, … judgment debtor, was entitled to file a motion challenging the garnishment on the ground that the money held by Chesapeake (insurance company) as his share of the settlement and payable to him was exempt from garnishment under CJP section 11-504(b)(2). An exemption would not apply automatically; he had to take action in the garnishment proceedings to seek an exemption he believed was applicable. He did not do so. Instead, he waited until the garnishment proceedings were over and then filed “Issues” with the Commission, complaining that the settlement monies had not been paid to him.

In the R.K. Grounds care the Court of Special Appeals ruled the Commission does not have the power to decide whether settlement money in the hands of a workers’ compensation insurer is exempt from garnishment for a judgment for child support. Only the circuit court has the jurisdiction to decide garnishment issues, and the precise issue could have and should have been raised by Wilson in the garnishment proceedings in the circuit court child support cases. What Wilson could not do was allow the garnishment proceedings to go forward, so that Chesapeake, as garnishee, had no option but to comply with the writs by paying his share of the settlement money to the Bureau, as judgment creditor, and then ask the Commission to order payment, thereby putting before it the exemption question that should have been raised in the garnishment proceedings. Indeed, once the court in the garnishment proceedings entered judgments without the exemption issue having been raised, the issue was foreclosed.

In summary, based upon the R.K. grounds case, in order to exempt 75% of any workers compensation permanency award or settlement from a child support garnishment, a motion must be filed within 30 days of when the insurance company is served with the garnishment, in the Circuit Court proceeding where the child support arrearage has been ordered and the writ of garnishment filed requesting the exemption. Failure to file a timely motion will result in a waiver of the exemption.

The next issue is whether regular temporary total benefits or vocational rehabilitation benefits in the form of temporary total are subject to a wage lien for non- arrears child support payments or alimony.

If there is no arrearage, the law is less clear. There has been no appellate case that states that temporary total benefits or vocational rehabilitation benefits in the form of temporary total are subject to a wage lien for non- arrears child support payments or alimony.

The relevant statute appears to be Courts and Judicial Proceedings Article of the Annotated code of Maryland 11-504 (b)(2) and11-504(i)(2)

Courts and Judicial Proceedings Article of the Annotated code of Maryland provides in section 11-504 (b)(2) provides:

(b) The following items are exempt from execution on a judgment:

(2) Except as provided in subsection (i) of this section, money payable in the event of sickness, accident, injury, or death of any person, including compensation for loss of future earnings. This exemption includes but is not limited to money payable on account of judgments, arbitrations, compromises, insurance, benefits, compensation, and relief.

Courts and Judicial Proceedings Article § 11-504(i)(2) which states: “twenty-five percent of the net recovery by the debtor on a claim for personal injury is subject to execution on a judgment for a child support arrearage.”

While this section provided the answer in the first part of this article which dealt with arrearages, it is silent on child support payments that are not arrearages. A good argument can be made that 11-504 (b)(2) applies and provides a complete exemption. Temporary total benefits or vocational rehabilitation benefits in the form of temporary total are “money payable in the event of … accident…injury… This exemption includes but is not limited to money payable on account of judgments, …insurance, benefits, compensation” Courts and Judicial Proceedings Article § 11-504(i)(2) does not apply because that only applies to arrearages.

Labor and employment article, Annotate Code of Maryland 9-732 provides,” Except as provided in Title 10 of the Family Law Article, before the issuance and delivery of a check or draft for any money payable under this title, the money may not be assigned, charged, or taken in attachment or execution.

Md Family Law Code Annotated Section 10-101- entitled definitions does not apply in this particular situation. While this section defines earnings to include workers compensation payments, this section only applies to arrearages. Subtitle one under which this falls only applies to enforcement of child support orders when there is an arrearage. This is supported by the legislature only authorizing Courts and Judicial Proceedings Article § 11-504(i)(2) to apply to arrearages.

Md Family Law Code Annotated Section 10-101- entitled definitions

 (a)  In general. —  In this title the following words have the meanings indicated.

(b)  Administration. —  “Administration” means the Child Support Administration of the Department of Human Services.

(c)  Earnings. —  “Earnings” includes:

  • (1) any form of periodic payment to an individual, including:
    • (i) an annuity;
    • (ii) a pension;
    • (iii) Social Security payments;
    • (iv) workers’ compensation payments; and
    • (v) unemployment insurance benefits; and
  • (2) any commissions or fees paid in connection with the obligor’s employment.

(d)  Employer. —

  • (1) “Employer” means any person who is paying earnings to an obligor.
  • (2) “Employer” includes a governmental entity.

(e)  Local support enforcement office. — “Local support enforcement office” means 1 of the following that is responsible for support enforcement:

  • (1) a county agency; or
  • (2) a component of the circuit court for a county.

(f)  Obligee. —

  • (1) “Obligee” means any person who is entitled to receive support.
  • (2) “Obligee” includes a state.

(g)  Obligor. –  “Obligor” means an individual who is required to pay support under a court order.

(h)  Support.   “Support” includes:

  • (1) child support;
  • (2) spousal support;
  • (3) support of destitute adult children; and
  • (4) support of destitute parents.
  • (i)  Support enforcement agency.  “Support enforcement agency” means 1 of the following that receives support payments under a court order:
  • (1) the Administration; or
  • (2) a local support enforcement office.

Another section of the law that bolsters the claim that the only workers compensation benefits that are attachable for child support are arrearages is Md Family Law Code Annotated Section 10-113.2. This section specifically applies to arrears only.

Md Family Law Code Annotated Section 10-113.2 entitled interception of state payments for child support arrearages. This section may come into play for employees injured on the job who are state employees. In addition, this section would apply when the Subsequent Injury Fund is involved since funds paid by the subsequent Injury Fund come from the state treasury.

(a)  Obligors in arrears $150 or more. — The Administration may certify to the State Comptroller any obligor who is in arrears under a child support order, if:

  • (1) the amount of arrears exceeds $ 150; and
  • (2) the Administration is providing services in the case under Title IV, Part D, of the federal Social Security Act.

(b)  Notice to obligor. — The Administration shall notify the obligor that:

  • (1) a certification has been made by the Administration; and
  • (2) the obligor has a right to request an investigation as provided under subsection (d) of this section.

(c)  Contents of certification. — The certification shall include, if known:

  • (1) the full name of the obligor, and any other names known to be used by the obligor;
  • (2) the address and Social Security number of the obligor; and
  • (3) the amount of the arrearage.

(d)  Investigation. —

  • (1) Within 30 days of the date of the notice of certification, an obligor who disputes the existence or amount of the arrearage may request that the Administration conduct an investigation of the arrearage.
  • (2)
    • (I) On receipt of a request for investigation from the obligor, the Administration shall conduct an investigation as to the existence or amount of the arrearage.
    • (ii) On completion of the investigation, the Administration shall notify the obligor of the outcome of the investigation.
    • (iii) If, after the investigation the Administration finds there is an error, the Administration shall correct the amount of the reported arrears, or, if appropriate, withdraw the certification.

(e)  Interception of payments to obligor; notice. — The State Comptroller shall:

  • (1) withhold the amount of the arrearage from:
    • (i) any payment due to the obligor; or
    • (ii) any abandoned property delivered to the State Comptroller under Title 17 of the Commercial Law Article in which the obligor has an interest;
  • (2) forward the amount withheld to the Administration; and
  • (3) notify the obligor of:
    • (i) the amount paid to the Administration; and
    • (ii) the right to appeal the intercept to the Office of Administrative Hearings as provided in subsection (g) of this section.

(f)  Handling of intercepted payment. — On receipt of the intercepted payment, the Administration shall:

  • (1) retain any part of the payment that does not exceed the amount of arrearage owed at the time the payment was received; and
  • (2) pay to the obligor any part of the payment that exceeds the amount of arrearage owed at the time the payment was received.

(g)  Hearings. —

  • (1) Within 30 days of the date of the notice of intercept from the State Comptroller, an obligor who disputes the existence or amount of the arrearage may appeal to the Office of Administrative Hearings.
  • (2) An appeal to the Office of Administrative Hearings shall be conducted in accordance with Title 10, Subtitle 2 of the State Government Article.

(h)  Regulations. — The Secretary of Human Services and the State Comptroller may adopt regulations to carry out this section.

Title 10 of the Family Law Article sections 10-119-suspension of driving privileges, section10-119.3 suspension of occupational privileges both only apply when there are arrearages. Title 10 of the Family Law Article 10-138 only allows a wage lien when the parties consent or the obligor is in arrears.

The case of Roseman v. Salsbury, Clements, Bekman, Marder & Adkins, LLC 412 Md. 308, 987 A.2d 48 (2010) seems to supply the answer with regard to attachments of workers compensation benefits for child support when there is no arrearage. This case originally found there was no authority in the statute to garnish workers compensation benefits when they were arrearages due. Because of the holding in this case the legislature amended 11-504 (b)(2) to include a section for arrearages, § 11-504(i)(2) which states: “twenty-five percent of the net recovery by the debtor on a claim for personal injury is subject to execution on a judgment for a child support arrearage.” However even though the legislature changed the statute after the Roseman case, the reasoning in Roseman can still be used to address the issue about whether workers compensation benefits can be garnished for regular child support payments that are not in arrears.

The Legislature has considered and amended the exemption statute many times since it was codified as § 11-504 of the Courts and Judicial Proceedings Article. 59*59 See Laws of Md., 1977, Ch. 356; Laws of Md., 1980, Ch. 546; Laws of Md., 1981, Ch. 765; Laws of Md., 1982, Ch. 703; Laws of Md., 1983, Chs. 175 and 554; Laws of Md., 1984, Ch. 255; Laws of Md., 1988, Ch. 613; Laws of Md., 1989, Ch. 549; Laws of Md., 1998, Ch. 375; Laws of Md., 2003, Ch. 21, § 1; Laws of Md., 2004, Ch. 463; Laws of Md., 2007, Ch. 238. Pertinent to the present case, in 2007, the Legislature considered § 11-504 in connection with child support and alimony and amended the statute to exempt from execution money paid or payable for child support or alimony. S.B. 712, Laws of Md., 2007, Ch. 238.

The amendment is codified at § 11-504(b)(6) and (7). In enacting that amendment, the Legislature recognized the impact this section may have on domestic support matters, yet did not create an exception to the personal injury monies exemption with regard to execution on a judgment for child support arrearages. We may not create judicially an exemption to the statute that the Legislature has not seen fit to impose. As demonstrated by the multiple amendments to § 11-504, the Legislature had ample opportunities to enact an exception permitting a judgment creditor to execute on exempted property where the judgment is for domestic support arrearages, but it has not done so. Roseman v. Salsbury, Clements, Bekman, Marder & Adkins, LLC 412 Md. 308, 987 A.2d 48 (2010)

While the statute has since been amended to cure the issue raised in Roseman with regard to arrearages, it was never amended to include regular temporary total benefits or vocational rehabilitation benefits in the form of temporary total that were not arrearages. The wording of the statute is clear. Courts and Judicial Proceedings Article § 11-504(i)(2) which states: “twenty-five percent of the net recovery by the debtor on a claim for personal injury is subject to execution on a judgment for a child support arrearage.”

If there are no arrearages, then any garnishment filed for attachment of workers compensation temporary total is exempt under Courts and Judicial Proceedings Article of the Annotated code of Maryland provides in section 11-504 (b)(2). However, in order to exempt the entire regular temporary total benefits or vocational rehabilitation benefits in the form of temporary total from a child support garnishment, a motion must be filed within 30 days of when the insurance company is served with the garnishment, in the Circuit Court proceeding where the child support arrearage has been ordered and the writ of garnishment filed requesting the exemption. Failure to file a timely motion will result in a waiver of the exemption.

If you fail to file for the exemption under Courts and Judicial Proceedings Article of the Annotated code of Maryland provides in section 11-504 (b)(2), then you may not be entitled to the limitation provided by Commercial Law Article § 16-602 either. Normally, wage attachments are limited to 25% of your net wages. However, this limitation will likely not apply to workers compensation regular temporary total benefits or vocational rehabilitation benefits in the form of temporary total if you do not timely file a request for exemption in the circuit court.

The exemption at issue provided that the following amount of wages were exempt from attachment:

(1) [T]he greater of:

(i) The product of $120 multiplied by the number of weeks in which the wages due are earned; or

(ii) 75 percent of the wages due;

In United States v. Williams, 279 Md. 673, 370 A.2d 1134 (1977) the Court of Appeals stated: We acknowledge, as we must, that we have held, under the facts and circumstances of other cases and statutes, that statutes exempting certain property from execution were found inapplicable where the underlying debt was for spousal support arrearages. In Unites States v. Williams, 279 Md. 673, 370 A.2d 1134 (1977) a former wife of a retired military officer filed a writ of attachment with the United States to affect a collection of arrearages of alimony.

The exemption at issue provided that the following amount of wages were exempt from attachment:

(1) [T]he greater of:

(i) The product of $120 multiplied by the number of weeks in which the wages due are earned; or

(ii) 75 percent of the wages due;

Id. at 676 n. 3, 370 A.2d at 1136 (quoting Md. Code (1975) Commercial Law Article § 16-602- today is 15-601.1). The United States argued that the retirement pay did not constitute wages and, even if it did, the amount that Mrs. Williams sought was in excess of the amount allowed under the exemption. We held first that federal military retirement pay constituted wages for the purposes of the statute. [7] Id. at 678, 370 A.2d at 1137. We held further that “the exemptions from attachment provided by § 15-602(b)(1)(i) and (ii) are inapplicable, because the underlying obligation is for intra-familial support and the very purpose of the statutory exemptions is to protect a family from being deprived of all support by attachment proceedings brought by an outsider.” In Blum v. Blum, 295 Md. 135,141-142, 453 A2d.824,828 (1983) we extended the holding of Williams to an obligation to pay contractual spousal support. We drew no distinction between a contractual obligation to pay spousal support and alimony, holding that “the obligation to pay contractual spousal support, like the obligation to pay alimony, is not a debt, but rather a duty to provide intra-familial support …” Id. Thus, the same statute we interpreted in Williams did “not apply to a wage lien for contractual spousal support….” Id. at 142, 453 A.2d at 828.

child support from workers compensation

In Pope v. Pope, 283 MD.531, 390 A.2d.1128 (1978) we interpreted a provision of the Unemployment Insurance Law that exempted unemployment benefits from execution. The statute at issue in Pope provided that “`rights to [unemployment] benefits shall be exempt from levy, execution, 58*58 attachment, or any other remedy whatsoever provided for the collection of debt….'” Id. at 534, 390 A.2d at 1130 (quoting Md.Code (1957, 1969 Repl. Vol.), Art. 16, § 16(c)). In Pope, the former wife of a recipient of unemployment benefits sought to enforce the provisions of a decree under which her husband was to pay her permanent alimony of $20 per week. Id. at 532-33, 390 A.2d at 1129.

The Circuit Court ordered a lien on the former husband’s unemployment benefits. Id. The Employment Security Administration opposed imposition of the lien, arguing that a lien on the benefits would violate the Unemployment Insurance Law. Id. at 533, 390 A.2d at 1129-30. Applying the holding in Williams, we held that the benefits were not exempt and that the statute did “not prohibit a lien for alimony….” Id. at 535, 390 A.2d at 1129-30. We acknowledged that our holding, as in Williams, “fail[ed] to adhere to the literal language of the statute,” id. at 536, 390 A.2d at 1131, but determined nonetheless that the purpose of the unemployment statute mandated our conclusion because “the very purpose of invalidating assignments of unemployment benefits and of exempting them from attachment … is `to lighten [the] burden which now so often falls with crushing force upon the unemployed worker and his family.'” Id. (quoting Md.Code (1957, 1969 Repl. Vol.), Art. 95 A, § 16(c)) (emphasis in original). In reaching this conclusion, we explained why contravention of the plain language of the statute was necessary to effectuate the legislative intent:

The courts which accept the principle we adopted in Williams are simply recognizing that the legislative purpose underlying such statutes is the protection of the various types of benefits involved from the claims of creditors—not from the claim of a former wife for alimony, which often, as in Maryland, is not considered a debt. See United States v. Williams, 279 Md. 673, 370 A.2d 1134 (1977).

Based upon the above reasoning, the 75% exemption that applies to wage attachments as provided in Commercial Law Article of the Annotated Code of Maryland provides in section 15-601.1 does not apply and the entire temporary total check could be subject to garnishment unless a request to exempt the whole amount is filed in the Circuit Court action.

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