Child Support Obligation • Support Lien • Workers' Compensation Settlement

Coffman v. Kline, PICS Case No. 17-1244 (Pa. Super. July 24, 2017) Bowed, J. (18 pages).

The trial court erred in determining that the procedure for distribution of the settlement proceeds outlined in 23 Pa. C. S. § 4308.1 applied to father's settlement for workers' compensation benefits and that neither a workers' compensation judge nor a claims servicer were required to comply with an otherwise valid nondisbursement order. The court reversed and remanded.

The parties are the parents of a minor child born in 2011. In early 2015, the trial court ordered father to pay mother $602 per month in child support and arrearages of $13,890. Thereafter, the Lehigh County Domestic Relations Section (DRS) learned that father was negotiating a compromise and release settlement with his employer relating to an injury he suffered at work. DRS issued a nondisbursement order pursuant to 23 Pa. C. S. § 4305 and served it on third-party workers' compensation claim servicer Sedgwick Claims Management. The order precluded Sedgwick from disbursing any settlement owed to father until directed by the court. Ultimately, father entered a settlement agreement with his employer. A workers' compensation judge approved the settlement. The WCJ found that father had a child support lien against him for arrearages of $14,938, but noted that father's settlement of $3,400 fell below the statutory threshold of $5,000 in 23 Pa. C. S. § 4308.1. Thus, the WCJ found that there was no recoverable child support lien by operation of law. Sedgwick released the entire settlement to father. DRS filed a petition for contempt against Sedgwick. The trial court found that since Sedgwick had followed the procedure for distribution of a settlement as outlined in § 4308.1, the company was not in contempt of court. On appeal, the appellate court noted that DRS's powers and duties were enumerated in § 4305 while § 4308.1 governed the collection of overdue support for monetary awards. Sedgwick conceded that DRS had authority under in § 4305 to enforce and collect child support arrearages by seizing lump sum settlements under a workers' compensation claim, but argued that such power was limited by § 4308.1, which specifically controlled workers' compensation matters. The appellate court found that its holding in Campbell v. Walker, 982 A.2d 1013 (Pa. Super. 2009) expressly rejected the claim that the language in § 4308.1 superseded the language in § 4305. Thus, the automatic statutory lien imposed by § 4308.1 only applied to the net proceeds of father's award. Father did not receive such an excess; thus, there was no lien for the WCJ to automatically disburse pursuant to § 4308.1. Accordingly, the appellate court found that the trial court erred in determining that the procedure for distribution of the settlement proceeds outlined in § 4308.1 applied to father's $3,400 settlement and that neither the WCJ nor Sedgwick were required to comply with the DRS's otherwise valid nondisbursement order. The court also found that the immunity provision of § 4308.1 did not apply to actions taken under in § 4305. Moreover, mother demonstrated by a preponderance of the evidence that Sedgwick willfully violated a court order. As such, the trial court abused its discretion in dismissing mother's petition for contempt with prejudice.

Child Support Obligation • Support Lien • Workers' Compensation Settlement

Coffman v. Kline, PICS Case No. 17-1244 (Pa. Super. July 24, 2017) Bowed, J. (18 pages).