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Unofficial Opinion 2008-2

Unofficial Opinion 2008-2

November 18, 2008
To: 

Representative, District 18

Re: 

Georgia law prohibits the Office of Child Support Services from honoring a request from a custodial parent to disburse any portion of child support monies it receives to a private collection agency.

This responds to your letter inquiring about a recent policy change implemented by the Department of Human Resources, Office of Child Support Services (“OCSS”) regarding OCSS’s refusal to honor certain change of address requests and deposit account requests made by custodial parents receiving child support enforcement services from OCSS.  I am given to understand that OCSS is refusing to recognize change of address or account change requests submitted to it by custodial parents through a private child support collection agency (“PCA”) based upon OCSS’s interpretation of section 19-11-18(f) of the Official Code of Georgia Annotated.  You stated that the PCA contracts directly with custodial parents to collect child support amounts those parents are owed.  You further observed that the PCA obtains a “limited power of attorney” from those custodial parents it contracts with to change the payment address or direct deposit information “to an address or account agreed to between [the PCA] and the parent.”  You opined that OCSS’s recent policy change appears to be “contrary to Georgia law” and requested that I provide an opinion “as to whether Georgia law prohibits OCSS from recognizing a change of address provided by [a PCA] pursuant to a power of attorney executed by a custodial parent, provided [that] the custodial parent remains identified as the payee of the payments.”

For the reasons stated below, I conclude that the interpretation of section 19-11-18(f) of the Official Code of Georgia reached by OCSS is a correct statement of the law and that it would violate the public policy of the State of Georgia for OCSS to disburse child support payments collected by it to a PCA, even if so requested by a custodial parent. 

In order to address your questions, a brief overview of the structure of the interstate child support enforcement program under which OCSS operates is instructive.  Established under Title IV-D of the Social Security Act, 42 U.S.C. §§ 651-669, the joint federal-state Child Support Enforcement program is charged with locating noncustodial parents, establishing paternity, and obtaining and enforcing orders for support owed by noncustodial parents to their children.   Part IV-D of the Social Security Act places responsibility for the program at both federal and state levels, giving the Federal Office of Child Support Enforcement primary administrative, regulatory, and technical assistance responsibilities and delegating to state IV-D agencies the daily operational aspects of the program.   See 42 U.S.C. § 666, 45 C.F.R. § 301.1.  OCSS is Georgia’s IV-D agency.   See O.C.G.A. § 19-11-3(6).  All child support orders are deemed IV-D orders when “either party to the order submits a copy of the order for support and a signed application to the Department for IV-D services.”   See O.C.G.A. § 19-11-3(1).  Moreover, a custodial parent who either accepts public assistance from the state for the child or who applies to OCSS for child support enforcement services “shall be deemed to have made an assignment to the department of the right to any child support owed for the child” and OCSS “shall be subrogated to the right of the child or children” to recover any payments ordered for support of the child or children.   See O.C.G.A. §§ 19-11-6, 19-11-8.   In short, in carrying out its child support enforcement functions, OCSS is proceeding on behalf of the child or children, not the custodial parent.   See Department of Human Resources v. Fleeman, 263 Ga. 756 (1994).

Regarding the various PCA entities operating in the field of child support, it is imperative to note that these are for-profit entities, and they do not provide collection services free of charge or at de minimis cost as does OCSS.  Rather, such PCAs operate on a contingency fee basis and may impose additional charges.  For example, one such PCA “collects past-due payments on behalf of custodial parents, for a fee of $475 and 34% of any money that the parent or his/her employer receives from the non-custodial parent.”  Commonwealthof Virginia v. Supportkids, Inc., 2008 U.S. Dist. LEXIS 33474 at *1-2 (E.D. Va. 2008).  Thus, that particular PCA keeps for itself the first $475 of any child support monies collected by it, plus thirty-four percent of any amount collected thereafter.

Recently, some PCAs have come under attack for their trade practices, which allegedly include taking anywhere from thirty-four to fifty percent of any support collected even if a government agency collected the support and the PCA did nothing, drafting contracts that cannot be cancelled by the custodial parents, and taking fees from current support payments even if the PCA had contracted to collect arrears payments.    See Andrea Simakis, Firm Takes Questionable Fees From Moms, The Plain Dealer, June 30, 2002, at A1; Andrea Simakis, Collections ‘Queen’ Quit Supportkids in Disgust, The Plain Dealer, July 1, 2002, at A5; Chris Taylor, Mother’s Little Helpers, Smart Money, Aug. 2002, at 88.  Indeed, the Governor and the Attorney General of the Commonwealth of Virginia are currently pursuing litigation against one PCA, alleging that it “unlawfully collects its fees from payments to children that may not be assigned to third parties under Virginia law and deceives employers into sending child support payments withheld from their employee’s paychecks directly to” the PCA involved. Supportkids, Inc., supra at *1-2.  Some other states have regulated PCA activities through statute.  For example, the State of West Virginia mandates that child support collected by the state may not be sent to a PCA, otherwise limits the activities of PCAs, and even provides for fines and criminal sanctions against PCAs which violate the statute.   See W. Va. Code Ann. § 48‑1‑307.  Conversely, the State of Oregon does permit direct distribution to a PCA, although the statute does impose fee caps and certain other restrictions.   See Or. Rev. Stat. § 25.020.

In some jurisdictions, child support arrearages, as opposed to current child support, belong solely to the individual who provided the support to the child for the time period in which current support was due, usually the custodial parent.   Since the arrears debt in those jurisdictions does not belong solely to the child, the custodial parent is free to discharge, negotiate, or assign the debt to a PCA for collection.   See, e.g., State v. Sucec, 924 P.2d 882, 885-86 (Utah 1996); In re Marriage of Paul, 978 P.2d 136, 139-40 (Colo. Ct. App. 1998); In re Marriage of Searle, 1999 Wash. App. LEXIS 944 at *7-8 (Wash. Ct. App. 1999).  Thus, it appears that in some jurisdictions a PCA is permitted to collect past-due child support but not current child support.  However, the ability of a PCA to collect even child support arrears may be restrained where payment for collection services out of the child support is void as against public policy.  As discussed below, Georgia is one of the jurisdictions where such an agreement may be void as against public policy.

“The interpretation of a statute by an administrative agency which has the duty of enforcing or administering it is to be given great weight and deference.” Environmental Waste Reductions v. Legal Envtl. Assistance Fund., 216 Ga. App. 699, 702 (1995) (quoting Hosp. Auth. of Gwinnett County v. State Health Planning Agency, 211 Ga. App. 407, 408 (1993)). 

Agencies  provide a high level of expertise and an opportunity for specialization unavailable in the judicial or legislative branches. They are able to use these skills, along with the policy mandate and discretion entrusted to them by the legislature, to make rules and enforce them in fashioning solutions to very complex problems. Thus, their decisions are not to be taken lightly or minimized by the judiciary.

Dep’t of Cmty. Health v. Gwinnett Hosp. Sys., 262 Ga. App. 879, 882 (2003). 

Bearing these standards in mind, the statutory code section in question, section 19-11-18(f) of the Official Code of Georgia, provides:

Notwithstanding any other provision of this title to the contrary, any child support being held by the Child Support Enforcement Agency of the Department of Human Resources shall be paid to the custodial parent within 30 days from receipt of same by the enforcement agency.

“The use of plain and unequivocal language in a legislative enactment obviates any necessity for judicial construction, and indeed forbids an interpretation of the meaning of the words employed by the General Assembly.”    Sawnee Elec. Membership Corp. v. Ga. Pub. Serv. Comm’n, 273 Ga. 702, 705 (2001) (quoting County Bd. of Tax Assessors v. Catledge, 173 Ga. 656 (1) (1931)).   The language of section 19-11-18 is plain and unequivocal.  Thus, it appears that OCSS altered its child support distribution policy in order to more fully comply with the plain language of section 19-11-18(f).  Moreover, any construction of section 19-11-18(f) allowing OCSS to knowingly distribute child support payments to a PCA would appear to be contrary to public policy. 

“It is general contract law in Georgia that parties are free to contract about any subject matter, on any terms, unless prohibited by statute or public policy, and injury to the public interest clearly appears.” Rivergate Corp. v. McIntosh, 205 Ga. App. 189, 192 (1992).  However, child support occupies a special niche in Georgia law.  In Law Office of Tony Center v. Baker, 185 Ga. App. 809 (1988), the Georgia Court of Appeals addressed a situation in which an attorney who represented a custodial parent in a divorce action resulting in a child support award to that parent subsequently attempted to assert an attorney’s lien against child support monies paid to the clerk of the court by the child support obligor in order to secure payment of his legal fees.  The Court of Appeals held that “sums representing child support are held in trust by intervening parties and the party holding such child support payments cannot consent, in law, to a portion being used for payment of attorney fees in their collection.”   Id. at 810-11.  In its role as the recipient of child support funds, OCSS is similarly situated to the clerk of court involved in Baker; hence, by analogy OCSS cannot consent, in law, to any portion of those funds being used for payment to a PCA in return for its collection efforts.

Nor does it appear that under Georgia law a custodial parent can contract away a portion of those child support funds to a third party, including a PCA:

When alimony is awarded for the support of minor children, the mother acquires no interest in the funds, and when they are paid to her she is a mere trustee charged with the duty of seeing that they are applied solely for the benefit of the children.   She can not consent to a reduction or remission of the alimony, and ordinarily her conduct can not relieve the father of paying the same as directed by the court.

Stewart v. Stewart, 217 Ga. 509, 510 (1961).

In Thomas v. Holt, 209 Ga. 133 (1952), the Georgia Supreme Court combined the “trust” nature of child support with a claim for attorney fees and found:

Where an award is made in favor of a wife for permanent alimony in a final decree, to be paid to her by the husband for the maintenance and support of their minor child who is in the wife’s custody, upon receipt of each payment she should use the same solely for the benefit of the child.  In the receipt and use of such money, she acts as a trustee or guardian of the minor child…. [T]he mother has no power or authority to make a contract with an attorney at law whereby she agrees to pay him one-half of whatever sums he collects from the father by virtue of the decree.  Such an agreement, being contrary to the policy of the law, is void, and a court of equity will not aid the attorney in attempting to require the mother to account to him for payments she has received from the father…or as to any future payments.

Id. at 133-34.   See also Dep’t of Human Res. v. Prince, 198 Ga. App. 329, 331 (1991) (one parent cannot contract away the right of a child to be supported by the other parent, and such a provision is void).

Additionally, in Baker the Georgia Court of Appeals, citing authority collected from other states, observed that allowing an “attorney’s lien to be asserted against child support would necessarily result in counsel for the custodian taking from the children involved monies the court has determined to be necessary to assure their adequate support.” Baker, 185 Ga. App. at 811.  The contract contemplated by a PCA would, similarly, necessarily result in funds determined to be required for the support of the children to be taken from said children.

Moreover, where a PCA’s activities intersect child support enforcement activities undertaken by OCSS, because the right to collect support has already been statutorily assigned to OCSS by operation of law under sections 19-11-6 and 19-11-8, a contractual agreement whereby the custodial parent attempts to assign his or her right to child support to any entity other than OCSS would appear to be ineffectual.  OCSS is already statutorily subrogated to this right, thus providing nothing for the custodial parent to assign by contract to a third party.  Further, the type of contract entered into between a PCA and a custodial parent has been deemed to be a contingency fee arrangement as opposed to a true assignment of rights.   See, e.g., Smith v. Child Support Enforcement, 180 B.R. 648 (D. Utah 1995).  Additionally, relying heavily upon the Baker decision, the Supreme Court of New York, Bronx County, found that despite the durable power of attorney given by the child support obligee to her attorney, public policy prohibits a parent from assigning child support monies to an attorney and also prohibits the attorney lien from attaching to such funds.   See Shipman v. City of New York Support Collection Unit, 183 Misc. 2d 478, 487 (2000) (“Analogous to Baker, this court will not assist an attorney attempting to collect attorney’s fees from an award of child support.”). The Shipman court thus held that the New York child support agency had no legal duty to disburse any portion of the child support funds in its possession to the holder of the power of attorney. Id. at 488.  Thus, to the extent a PCA obtains a power of attorney pursuant to such a contract, it would appear that OCSS is within its discretion in refusing to accept a change of address form or deposit account change request submitted to it by a PCA.

Having reviewed the federal policy guidance issued by the Federal Office of Child Support Services referred to in your letter as “OCSE Policy Interpretation Question 02-02,” I note that while this federal guidance memorandum provides that nothing in federal law precludes states from sending child support payments to a PCA, the aforementioned federal guidance memorandum also noted that “[s]uch practices would be governed by State law” and would be permissible “unless state law provides otherwise.”   Having determined that section 19-11-18 does indeed provide otherwise, the aforementioned federal guidance is inapposite.  Further, I note that there is nothing in the federal guidance that addresses electronic banking transfers.  Because Georgia statutory law and binding precedent prohibit the type of collection agreement you asked about, I see no basis upon which to differentiate between payments that are physically mailed or those that are deposited electronically – in either case, the payments belong to the child, and it appears that those payments must be tendered to the custodial parent as the trustee of the child or children. 

Based upon the foregoing, and particularly the holdings in Law Office of Tony Center v. Baker, 185 Ga. App. 809 (1988), and Thomas v. Holt, 209 Ga. 133 (1952),   I believe that any contract between a child support obligee and a PCA purporting to turn over to the PCA a percentage of child support amounts is subject to attack as being contrary to public policy and would likely be so held. 

Given the public policy of this State as expressed above, and according to OCSS the weight and deference it is entitled in interpreting its enabling legislation, it is my unofficial opinion that the policy adopted by OCSS prohibiting the disbursement of child support collections to third parties is lawful and correct, and that Georgia law prohibits the Office of Child Support Services from honoring a request from a custodial parent to disburse any portion of child support monies it receives to a private collection agency.

Prepared by:

Mark J. Cicero

Assistant Attorney General