TITLE 1. ADMINISTRATION

PART 3. OFFICE OF THE ATTORNEY GENERAL

CHAPTER 55. CHILD SUPPORT ENFORCEMENT

SUBCHAPTER M. INTERCEPT OF INSURANCE CLAIMS

1 TAC §§55.601 - 55.605

The Office of the Attorney General, Child Support Division, proposes amendments to §§55.601 - 55.605 regarding the insurance reporting and intercept pursuant to Texas Family Code §231.015. The proposed amendments are revised to reflect the initial data match or filing of a claim must be reconfirmed before payment by the insurer.

Mara Friesen, Deputy Attorney General for Child Support (IV-D Director), has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended section.

Ms. Freisen has also determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the amended section will be the clarification of the process for intercept of insurance claims under Family Code §231.015. There will not be an effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the amendments as proposed.

Comments on this proposed amendment should be submitted to Ildefonso Ochoa, Deputy Director for Policy, Legal and Program Operations, Child Support Division, Office of the Attorney General, (physical address) 5500 East Oltorf, Austin, Texas 78741 or (mailing address) P.O. Box 12017, Mail Code 044, Austin, Texas 78711-2017. Comments on this proposed amendment must be submitted no later than 30 days from the date of this publication.

The proposed amendments are authorized under Texas Family Code §231.015, (requiring the Title IV-D agency by rule to operate an insurance intercept program), and by §231.003, which authorizes the Title IV-D agency to by rule promulgate procedures for the implementation of Chapter 231.

The proposed amendment implements the Texas Family Code §231.015.

§55.601.Scope.

(a) - (b) (No change.)

(c) The following economic benefits are not considered economic benefits that require reporting [need not be reported]:

(1) "first party actual property damage claims " defined as benefits payable under an insurance policy arising out of covered damage for actual repair, replacement or loss of use of insured property. Examples include a payment issued to:

(A) physical damage coverage under a personal automobile policy for actual repair, replacement, loss of use or other associated costs including, but not limited to, towing, storage, vehicle rentals, or costs to an insured vehicle and sent directly to a vendor or repair facility for the actual repair or replacement of the damaged property;

(B) coverage for loss of damage to an insured dwelling and contents under a residential, homeowners, farm and ranch owners, condominium owners, tenant property insurance policy, other similar policies including additional living expenses payable under such a policy [the claimant after the claimant presents a final bill or signed invoice from a vendor or repair facility showing payment made by the claimant for repair or replacement of the damaged property in an amount at least as much as the insurance payment]; or

(C) benefits paid to the mortgagee or lienholder of the property including payments issued jointly to the insured and mortgagee; or[.]

(D) coverage for physical loss or damage to commercial property or business personal property insured under a commercial property, farm, inland marine, builder's risk or other similar policies.

(2) - (10) (No change.)

(11) "third party property damage claims" defined as benefits paid or payable to:

(A) a vendor or repair facility for the actual repair, replacement or loss of use of:

(i) a dwelling, condominium, or other improvements on real property;

(ii) a vehicle, including a motor vehicle, motorcycle, or recreational vehicle; or

(iii) other tangible property that has sustained actual damage or loss; or

(B) a claimant for reimbursement of the claimant for payments made by the claimant to a vendor or repair facility for the actual repair, replacement or loss of use of:

(i) a dwelling, condominium, or other improvements on real property;

(ii) a vehicle, including a motor vehicle, motorcycle, or recreational vehicle; or

(iii) other tangible property that has sustained actual damage or loss

(12) Benefits paid or payable to a claimant under workers compensation coverage where the claimant has paid a healthcare provider's bill and payment is no greater than the amount owed for the treatment rendered.

(d) All insurers are subject to the matching and reporting requirements under this subchapter and must match and report any claim seeking an economic benefit, in which:

(1) the owner of a life policy or annuity that was issued to an individual resides [located or residing] in Texas;

(2) the beneficiary making a claim on a life policy or annuity resides in Texas;

(3) a first party claimant making a claim resides in Texas;

(4) a third party claimant making a third party claim, as defined in subsection (b)(4) of this section, resides in Texas; or

(5) a [the] liability insurer [providing coverage to an insured on a third party claim is licensed ] or [is] an eligible surplus lines insurer is providing coverage to an insured on a third party claim and the claim occurs [authorized to provide liability insurance] in Texas.

(e) - (j) (No change.)

§55.602.Data Matching Options. [Child Support Lien Network.].

(a) The CSD has contracted with the State of Rhode Island and Providence Plantations to participate in the Child Support Lien Network (CSLN). CSLN provides an insurer with two methods of matching: an Automated Data Match, or an Interactive Lookup. An insurer subject to the requirements of this subchapter may choose to provide or obtain matching information using either or both the CSLN Automated Data Match process and the CSLN Interactive Lookup.

(b) As an alternative to an automated data match with CSLN, an insurer can participate in a similar automated data match with the federal Office of Child Support Enforcement (OCSE). An insurer may obtain information about the OCSE match program, including enrollment in it, by going to the OCSE website at http://www.acf.hhs.gov/programs/cse/ and opening "Insurance Companies" under "Other Partners" on the website's main page or the insurer may contact OCSE directly at insurancematch@acf.hhs.gov. An insurer or agent of an insurer participating in OCSE's automated, data match process may either submit information on claims to OCSE or receive a file from OCSE containing information about individuals who owe past-due support (delinquent obligor information) and generate a match file to OCSE. [In lieu of performing an automated data match at the time a claim for economic benefits is submitted, an insurer can perform periodic data matching in advance of such claims. Advance periodic data matching shall occur no less frequently than quarterly. In the event of a match, the insurer will not process the claim without first confirming with CSD that the match is still valid and 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.]

(c) A data match shall occur before any claim is paid. The data match shall be made at or after a claim is filed but before the claim has been paid. In addition to this match, an insurer can perform periodic data matching in advance of such claims. In the event of a match prior to a claim, the insurer will not pay the claim without first confirming with CSD that the match is still valid and receiving and processing either a notice of child support lien or an income withholding order to secure payment of the amount of past-due support or a release.

§55.603.Insurance Service Office [Automated] Data Match.

(a) - (d) (No change.)

§55.604.Interactive Lookup.

(a) - (f) (No change.)

(g) As an alternative to CSLN, a life insurance company can use OCSE's web-based application, the Debt Inquiry Service (DIS), to submit information about life insurance beneficiaries who have filed a claim prior to making a payout to determine if a beneficiary owes past-due support. The information may be provided through individual look-ups or by uploading a single file containing information about multiple individuals. The information provided by the life insurance companies is compared with individuals who owe past-due child support. If there is a match, the life insurance company receives the name of the State(s) where the individual owes past-due support and contact information for that State. If the match identifies an individual subject to a child support order being enforced by the CSD, the life insurance company may either contact the CSD or await notice from the CSD concerning the match; however, no payout shall be made to the claimant unless authorized by the CSD.

(h) (No change.)

§55.605.Protection from Liability; Remittance of Funds.

(a) (No change.)

(b) An insurer should remit funds in satisfaction of a child support lien 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 should identify [providing] the name of the claimant/obligor and the CSD's case number(s) as shown on the Notice of Lien.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 19, 2016.

TRD-201606679

Amanda Crawford

General Counsel

Office of the Attorney General

Earliest possible date of adoption: January 29, 2017

For further information, please call: (512) 475-4163