Child Support Liens in Texas – What Every Insurer Should Be Doing Before Settlement
If you are an insurer or are settling a claim with insurance funds, and you are contemplating settling a case in Texas, identification of Plaintiff’s child support liens—if any—and proper payment of these liens is mandatory in Texas.
In Texas, a child support lien attaches to all real and personal property not exempt under the Texas Constitution or other law, including the proceeds of an insurance policy such as a settlement or award for the claim for compensation. See Tex. Fam. Code Ann. §157.317, also see §231.015 for types of claims the statute does not require an insurer to identify or report. Additionally, Texas Family Code §231.015 requires insurers to “cooperate with the Title IV-D agency in identifying obligors who owe child support arrearages and are subject to liens for child support arrearages to intercept certain insurance settlements or awards for claims in satisfaction of the arrearage amount.” (Tex. Fam. Code §231.015(a)).
What does this mean for insurers?
First, because the law requires an insurer to match and report any claim which seeks an economic benefit for the claimant, all insurers should run a child support judgment search to determine if there is a match regardless of whether or not the claimant is represented by counsel. (See 1 Tex. Admin. Code §55.601).
How do I search for a match?
The Texas Office of the Attorney General Child Support Division (CSD) participates in the Child Support Lien Network (CSLN), which provides an insurer two methods of searching and matching: (1) an Automated Data Match, or (2) an Interactive Lookup. For instructions on how to register, see 1 Tex. Admin. Code §55.603 and §55.604.
What if there is a match?
In the event of a match, the insurer will not process the claim without first confirming with the CSD that the match is still valid and is receiving and processing either a notice of child support lien, an income withholding order to secure payment of the amount of past-due support, or a release. (See 1 Tex. Admin. Code §55.602(b)).
Am I, as the insurer, potentially liable for any reporting actions?
Yes and no. No, as to reporting, but yes as to potential monetary liability.
Reporting Liability: “[a]n insurer that provides information or responds to a notice of child support lien or levy under Subchapter G, Chapter 157, or acts in good faith to comply with procedures established by the Title IV-D agency under this section is not liable for those acts under any law to any person.” (Tex. Fam. Code §231.015(b) states; see also 1 Tex. Admin. Code §55.605(a)).
Monetary Liability: However, failure to comply with a child support lien, including the remittance of funds, may result in liability to the child support division as the child support lien claimant in an amount equal to the amount of funds payable under the insurance claim—not to exceed the amount of arrearages for which the lien was issued. (See 1 Tex. Admin. Code §55.605(a)).
How do I remit funds in satisfaction of a child support lien?
Per 1 Tex. Admin. Code §55.605, an insurer should remit funds in one of the following ways:
(1) On receipt of a signed agreement between the CSD and a claimant and/or claimant’s attorney, the insurer should remit the funds agreed to be paid to satisfy the child support lien to: Texas State Disbursement Unit, Insurance Intercept, P.O. Box 245996, San Antonio, Texas 78224-5996. The funds should be made payable to the Office of the Attorney General, and the remittance should identify the name of the claimant/obligor and the CSD’s case number(s) as shown on the Notice of Lien.
(2) If the claimant is represented by an attorney but the insurer has not received a copy of any signed agreement between the attorney and the CSD, the insurer should remit all the funds directly to the claimant’s attorney and must include the Office of the Attorney General as a co-payee and provide the Office of the Attorney General with written notice of the data and amount of the payment sent to the attorney.
(3) If the claimant has no attorney and the insurer has not received a copy of any signed agreement between the claimant and the CSD, the insurer must remit all the funds to the Texas State Disbursement Unit, Insurance Intercept, P.O. Box 245996, San Antonio, Texas 78224-5996, with the funds being made payable to both the Office of the Attorney General and the claimant and the remittance providing the name of the claimant/obligor and the CSD’s case number(s) as shown on the Notice of Lien.
If you have any questions, please do not hesitate to contact us. Happy new year, and be on the lookout for more e-Alerts from our Aviation group this year.
Litigation partner Katherine A. Staton serves large and small aviation and corporate clients and companies in Texas and nationally. She is a CPA and represented plaintiffs before joining Jackson Walker. She is also a private pilot, owned an aircraft, and she completed an aircraft engine course to better understand her clients’ operations and case issues. This diverse background gives Katherine an advantage in understanding complex litigation issues, assisting clients with buying and selling aircraft, and helping clients with strategic decisions and challenging legal issues.
Morgan E. Schweinzger is an associate in the aviation section of the Dallas office. Prior to joining Jackson Walker, Morgan was an intern for Republic Airways and American Airlines. Morgan also worked for Southwest Airlines as an analyst in both Flight Operations and Regulatory Programs & Compliance. Morgan is a Certified Flight Instructor and Commercial Pilot.