I. INTRODUCTION
In 1996, Congress passed the “Personal Responsibility and Work Opportunity Reconciliation Act” (PRWORA) of 1996, legislation designed in part to improve the enforcement and collection of child support obligations across the United States by requiring designated state agencies and financial institutions to develop a program to automate data matches and levies to assist in the enforcement of child support obligations.
Under the PRWORA, the state agency responsible for child support enforcement (in Nebraska, the Department of Health and Human Services or “NDHHS”) must enter into agreements with financial institutions doing business in the state to develop and operate a financial institution data match system. The term “financial institution” includes state and federally chartered banks, savings banks, savings and loan associations, cooperative banks, credit unions, benefit associations, insurance companies, safe deposit companies, money-market mutual funds, brokers, brokerage firms, trust companies, unit investment trusts or any other similar entity doing business or authorized to do business in the state.
In 1997, the Nebraska Legislature enacted legislation to establish the “financial institution data match system” in Nebraska. The state law was effective January 1, 1998, but implementation was delayed until March 2001. The NDHHS contracted with individual financial institutions for the conduct of the financial institution data match. Financial institutions operating in multiple states may be exempt from the in-state data match program if they have chosen to report data to a single multi-state data match program.
The financial institution’s role is to compare child support enforcement data match tapes provided by the state to the bank’s customer information file and report any matches. The type of account information that must be reported in response to data match requests from the NDHHS include name, record address, social security number or taxpayer ID number and “other identifying information” from non-custodial parents who owe past-due support.
The Nebraska statutes were drafted with the retention of a two-step process for enforcement of the levy/lien process. Initially, the state identifies account holder/delinquent child support obligor matches and subsequently and separately issues interrogatories to obtain information for purposes of pursuing a levy on the account of the delinquent child support obligor. Included in Nebraska law are additional “due process” steps which must be recognized between the data match and levy stage of the process. The law also requires financial institutions to “freeze” the assets once a data match is found and the state issues an “Order To Withhold and Deliver” and to deliver or release the assets once the state issues a “Notice Of Disposition Of Property Withheld.”
II. FEDERAL DEVELOPMENTS
The U.S. Department of Health and Human Services drafted a Financial Data Match Specification Handbook to include standardized reporting formats, contract language, policy statements, fee schedules and outreach plans for use in child support data matching. The handbook is designed to standardize data matching among the states.
The handbook is the result of efforts by a task force composed of representatives from the Federal Office of Child Support Enforcement, state agencies, technical support companies, financial institutions and financial institution trade groups.
III. FINANCIAL INSTITUTION DATA MATCH IMPLEMENTATION
A. Quarterly Data Match
Under the financial institution data match program, financial institutions are required to conduct data matches on a quarterly basis. Financial institutions are required to internally match open accounts against a list of delinquent child support obligors provided by NDHHS. “Account” is defined as a demand deposit account, checking or negotiable withdrawal order account, savings account, time deposit account, or money-market mutual fund account.
The NDHHS submits a magnetic tape to each financial institution that includes the names and social security numbers or taxpayer identification numbers of “child support obligors” who owe at least three months in past due support. A financial institution must forward its list of “matched” accounts to the NDHHS. The data match may be performed manually or by electronic means.
The only option for reporting data match information to the NDHHS is commonly referred to as the “matched accounts” method. Under this system, the NDHHS submits to a financial institution a magnetic tape listing delinquent child support obligors within thirty days after the end of each calendar quarter following the commencement of the data match program. The financial institution is required to match the listing to its records of accounts held in one or more individuals’ names which are open accounts and any such accounts closed within the proceeding calendar quarter within thirty days after receiving the listing and must provide the NDHHS with a match listing of all matches made within five working days of the match. The match listing provided to the NDHHS by the financial institution must include the name, address and social security number or taxpayer identification number of each obligor matched and the balance of each account. The financial institution is also required to provide the names and addresses of all other owners of accounts in the match listing as reflected on a signature card or other similar documents on file with the financial institution. The financial institution may submit all match listings by disk, magnetic tape or any other medium approved by the NDHHS.
IV. BANK PROTECTIONS
A. Confidentiality
In performing the financial institution data match and forwarding match listings to the NDHHS, the financial institution is not required to disclose the account number assigned to the account of any individual nor does the match listing itself serve to encumber the ownership interest of any person in or impact any right of setoff against such account. The financial institution is obligated to maintain the confidentiality of all records supplied and shall use the records only for the purpose of performing the match. State law requires the NDHHS to implement appropriate security provisions for the listing and match listing that are as stringent as those established under the federal tax information security guidelines for federal, state and local agencies.
B. Immunities
Both state and federal laws protect financial institutions from liability when they participate in the state data match program and, in good faith, provide data or information to state child support enforcement authorities. A financial institution may want its privacy policy to include the possibility of disclosure of data to child support enforcement authorities.
Specific provisions of state law provide that a financial institution shall not be liable under any state or local law to any individual or to the NDHHS for disclosing or releasing information to the NDHHS in connection with the establishment, modification or enforcement of a support order or for any other action taken in good faith to comply with the requirements of the financial institution data match program. The financial institution is neither responsible nor liable to any extent for assuring that the NDHHS maintains the confidentiality of information which it discloses to the NDHHS pursuant to the bank data match program.
V. REIMBURSEMENT OF FINANCIAL INSTITUTIONS
The Nebraska Financial Institution Data Match provides for reimbursement of financial institutions, as follows: (1) a financial institution may charge a “reasonable fee”, not to exceed actual costs, to be paid by the NDHHS for the service of reporting matches as required by the financial institution data match law; (2) the financial institution may also charge a fee, not to exceed actual costs, to be paid by the NDHHS for necessary upgrades to an existing system that are directly related to compliance with the financial institution data match program and that have been approved by the NDHHS; and (3) payment of fees for processing a levy once a match occurs, in the amount of $10 per levy.
The NDHHS surveyed Nebraska financial institutions to determine the estimated cost of performing the quarterly data match and to determine the estimated costs for system upgrades that are associated with conducting the data match. The NDHHS agreement provides that a standard “quarterly match” fee in an amount equal to “actual costs”, not to exceed $250 per quarter will be provided for all financial institutions, while the reimbursement for “necessary upgrades to an existing system that are directly related to compliance” with the financial institution data match program are limited to “actual costs” not to exceed $750. Fees for “necessary upgrades” were required to be approved by NDHHS and to be specifically designated in the agreement entered into between the financial institution and NDHHS.
VI. ADMINISTRATIVE ATTACHMENT OF CHILD SUPPORT OBLIGATOR'S BANK ACCOUNT
The provisions of the Nebraska Financial Institution Data Match program allow for administrative attachment of personal assets of an obligor held by a financial institution for the collection of unpaid support from obligors who are not in compliance with support orders.
In any case where an individual is receiving welfare assistance when the Director of the NDHHS has made reasonable efforts to verify and has reason to believe that payment on a support order is in arrears in an amount equal to the support due and payable for more than a three-month period of time or upon the request of the state agency of another state which administers their welfare program and determines to seize a child support obligor’s property, the Director must send a written notice of arrearage to the child support obligor by first-class mail to the last-known address of the obligor or to the last-known address of the obligor available to the Court. For purposes of enforcing this section, reasonable efforts to verify means reviewing the case file and having written or oral communication with the Clerk of the District Court.
The notice of arrearage shall: (a) specify the court or agency which issued the support order; (b) specify the arrearage under the support order which the obligor owes as of the date of the notice or other date certain; (c) specify that any enforcement action will incorporate any arrearage which may accrue in the future; (d) state clearly, “Your property may be seized without further notice if you do not respond or clear up the arrearage”; and (e) specify that within 20 days after the notice is mailed, the obligor may request, in writing, a hearing to contest a “mistake of fact.” “Mistake of fact” means an error in the amount of the arrearage or an error in the identity of the obligor.
If the child support obligor files a written request for a hearing based upon a mistake of fact within twenty days after the notice is mailed, the NDHHS must provide an opportunity for a hearing and stay any further enforcement action until the administrative appeal process is completed.
VII. ORDER TO WITHHOLD AND DELIVER
The Director of the NDHHS may send a financial institution an “Order To Withhold And Deliver” specifically identified property of any kind due, owing or belonging to an obligor if: (a) the Director has reason to and does believe that there is in the possession of the financial institution property which is due, owning or belonging to an obligor; (b) payment on a support order is in arrears; (c) the Director has sent a notice of arrearage to the obligor as required by the financial institution data match law at least thirty days prior to sending the “Order To Withhold And Deliver”; and (d) no hearing was requested or after a hearing the NDHHS determined that an arrearage did exist or that there was no mistake of fact. A sample “Order To Withhold And Deliver” is found in Exhibit A.
The “Order To Withhold And Deliver” must state that notice has been mailed to the obligor in accordance with the requirements of the financial institution data match law and that the obligor has not requested a hearing or, after a hearing, the NDHHS has determined that an arrearage exists or that there was no mistake of fact, the amount in arrears, the social security number of the obligor, the court or agency to which property needs to be delivered, instructions for transmitting the property, and information regarding the requirements of complying with an order to withhold and deliver. The “Order To Withhold And Deliver” will include written questions regarding the property of every description, including whether or not any other person has an ownership interest in the property, and the credits of the obligor which are in the possession or under the control of the financial institution at the time the order is received.
A. Financial Institution Duties
Upon receipt of an “Order To Withhold And Deliver”, the financial institution must: (a) hold (or “freeze”) property subject to the order to the extent of the amount of the arrearage stated in the order until receiving further notice from the Director of the NDHHS; (b) answer all of the questions asked of the financial institution in the order, supply the name and address of any person that has an ownership interest in the property sought to be reached, and return such information to the Director within five business days after receiving the order; and (c) upon further notice from the Director, deliver any property which may be subject to the order to the court or agency designated in the order or release such property or portion thereof.
As indicated above, a financial institution may deduct and retain a processing fee from any amounts turned over to the Department pursuant to an “Order To Withhold And Deliver.” The processing fee shall not exceed $10 for each account turned over to the NDHHS.
B. Notice of Disposition of Property Withheld
The notice to be provided by the director following the receipt of an “Order To Withhold And Deliver” has been designated as a “Notice Of Disposition Of Property Withheld.” Upon receipt of a “Notice Of Disposition Of Property Withheld”, the financial institution must deliver or release the property as directed. A sample “Notice Of Disposition Of Property Withheld” is found in Exhibit B.
C. Third Party Rights in Account
Within five days after the issuance of an “Order To Withhold And Deliver,” the Director of the NDHHS must send written notice to the obligor by first-class mail. The notice must be dated and must specify the financial institution to which an order to withhold and deliver was sent, the amount due, the steps to be followed to release the property, the time period in which to respond to such notice, and the court or agency of competent jurisdiction which issued the support order.
The obligor may request a hearing to contest a mistake of fact by sending a written request to the Director of the NDHHS within seven days after the date of the notice. The NDHHS shall provide an opportunity for a hearing within ten days after receipt of the written request and shall stay enforcement actions under the financial institution data match law until the administrative appeal process is completed.
If the information provided to the NDHHS by a financial institution pursuant to an “Order To Withhold And Deliver” reflects that another person has an ownership interest or may claim an ownership interest in any property sought to be reached which is in the possession or under the control of the payor as the property of the obligor, the Director must send written notice to such person or persons by certified mail, return receipt requested. Such notice must be dated and must specify why the “Order To Withhold And Deliver” was issued, the financial institution to which the “Order To Withhold And Deliver” was sent, and that the person has a right to request a hearing by the NDHHS within 15 days after the date of the notice to establish that the property or any part thereof is not the property of the obligor. The NDHHS shall provide an opportunity for hearing to a person making such a request and shall stay enforcement actions under the financial institution data match law until the administrative process is completed. In the event that the property or any part of the property which is in the possession or under the control of the financial institution is not the property of the obligor, the financial institution is discharged as to that property which is not the obligors.
D. Financial Institution’s Failure to Deliver
If a financial institution fails or refuses to withhold or deliver property subject to an “Order To Withhold And Deliver,” judgment may be entered by the court which issued or registered the support order for the amount of the arrearages stated in the order or the amount of the property or credits of the obligor in the possession or under the control of the financial institution at the time the “Order To Withhold And Deliver” was received, whichever is less, unless the financial institution can show cause as to why the property was not withheld or delivered. Compliance with the order by the financial institution operates as a discharge of the financial institution’s liability to the obligor or beneficiary as to the portion of the obligor’s property withhold or delivered.
A financial institution is not liable to any individual or to the NDHHS for responding to an “Order To Withhold And Deliver” or for holding, refusing to release to the obligor, or delivering any property of an obligor’s in compliance with an “Order To Withhold And Deliver” or for any other action taken in good faith to comply with the requirements of the financial institution data match program regardless of whether such action was specifically authorized or described by the financial institution data match law.
EXHIBIT A
ORDER TO WITHHOLD & DELIVER
State: «COURT_CASE_STATE»
Caption: «CAPTION»
County: «COURT_CASE_COUNTY_NAME»
Court Case Number: «COURT_CASE_NUMBER»
Obligor: «OBLIGOR_FULL_NAME» Date of Order :
Obligor’s SSN: «OBLIGOR_SSN»
TO: «ASSET_ORG_NAME»
«ASSET_ORG_ADDRESS_LINE_1»
«ASSET_ORG_ADDRESS_LINE_2»
«ASSET_ORG_ADDRESS_LINE_3»
«ASSET_ORG_CITY_STATE_ZIP»
FROM: «S_ATNY_FULL_NAME»
«S_ATNY_ATTORNEY_TYPE_CDE_DESC»
«S_ATNY_LINE_1_ADDRESS»
«S_ATNY_LINE_2_ADDRESS»
«S_ATNY_LINE_3_ADDRESS»
«S_ATNY_CITY_STATE_ZIP»
«S_ATNY_PHONE_NBR»
(1) Pursuant to Neb.Rev.Stat. §43-3334 (1998) you are ordered to:
(2) A Notice of Arrearage pursuant to §43-3333 was mailed to the above named obligor at least 30 (thirty) days prior to sending this Order and the obligor either did not request an administrative hearing or did request an administrative hearing and at the hearing it was determined that an arrearage does exist or that a mistake of fact does not exist.
(3) The Clerk of the District Court of «Court_Case_County_Name» County, «Court_Case_State» certifies that as of DATE was AMOUNT delinquent in child/spousal/medical support payments.Answer the following questions and return within 5 (five) business days of receipt of this Order to:
«S_ATNY_FULL_NAME»
FROM: «ASSET_ORG_NAME»
RE: State «COURT_CASE_STATE»
Caption «CAPTION»
County «COURT_CASE_COUNTY_NAME»
Court Case Number «COURT_CASE_NUMBER»
«OBLIGOR_FULL_NAME»
Obligor Date of Order
«OBLIGOR_SSN»
Specified Property:
Does any other person have an ownership interest in the specified property and if so what are the names and addresses of such person(s)
What credits of the obligor are in your possession or under your control?
EXHIBIT B
NOTICE OF DISPOSITION OF PROPERTY WITHHELD
Obligor: «OBLIGOR_FULL_NAME»
CSE Case Number: «IVD_CASE_NBR»
FROM:«S_ATNY_FULL_NAME»
«S_ATNY_ATTORNEY_TYPE_
CDE_DESC»
Pursuant to Neb.Rev.Stat. §43-3334 (1998) with regard to the following property which you were previously ordered to withhold:
you are hereby notified to:
Deliver all the property withheld to:
Releaseand deliver to:
Release all of the property withheld.
WHEN DELIVERING PROPERTY, INDICATE THE SUPPORT ORDER NUMBER LISTED ON THIS FORM OR ATTACH/SEND COPY OF THIS FORM.
If you are a financial institution as defined in Neb.Rev.Stat. § 43-3329(6) (1998), you may deduct and retain a processing fee, not to exceed ten dollars, from any amounts delivered pursuant to this notice.