GORETTA VAN METER v. CHARLES EDWARD SMITH
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RENDERED: February 18, 2000; 10:00 a.m.
TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1997-CA-003047-MR
GORETTA VAN METER
APPELLANT
APPEAL FROM EDMONSON CIRCUIT COURT
HONORABLE RONNIE C. DORTCH, JUDGE
ACTION NO. 89-CI-00063
v.
CHARLES EDWARD SMITH
APPELLEE
OPINION
AFFIRMING IN PART, VACATING IN PART, AND REMANDING
** ** ** ** **
BEFORE:
COMBS, HUDDLESTON, AND KNOPF, JUDGES.
KNOPF, JUDGE:
This is a domestic relations matter in which the
former wife, Goretta Van Meter, appeals from a July 8, 1997,
order of the Edmonson Circuit Court.
The trial court awarded the
former husband, Charles Smith, a refund of nearly $11,000.00 for
child support he was held to have twice paid.
The court also
modified in Smith’s favor the medical expense provisions of the
parties’ child support arrangement.
Van Meter maintains that the
trial court misconstrued controlling law in arriving at both of
these results.
We are not persuaded that the child support
reimbursement was improper.
We agree with Van Meter, however,
that the trial court’s findings do not establish the requisite
foundation for modifying the decree’s health care provisions.
To
that extent, accordingly, we vacate the July 8, 1997, order and
remand for additional proceedings.1
The parties do not dispute the pertinent facts.
In
March 1987, their marriage of some fifteen years was dissolved by
decree.
The marriage had produced one child, a daughter, Keegan,
who at the time of the dissolution was not yet a year old.
was ordered to pay child support of $100.00 per month.
Smith
That
order remained in effect until May 1991, when Smith’s support
obligation was increased to $300.00 per month.
In September
1991, the decree was further modified by the incorporation of
medical expense provisions.
Smith was ordered to provide medical
insurance for Keegan, and with one exception the parties were
ordered to divide equally any uninsured medical or dental
expenses.
The exception was counseling expenses for Keegen,
which were assigned to the party who incurred them.
In November
1995, the court again modified the decree by ordering the child
and both parents to undergo psychological evaluation and
counseling.
The order imposing counseling does not say how the
counseling expenses were to be divided, but presumably Smith
would have borne at least a portion of them.
1
Smith has moved to dismiss Van Meter’s appeal as untimely.
He concedes that within ten days of the judgment Van Meter filed
a CR 59.05 motion and that she filed her appeal within thirty
days of the ruling on that motion. Her appeal would thus appear
to be timely. Smith maintains, however, that Van Meter’s CR 59
motion was not filed in good faith and so should not be given the
usual effect of tolling the time for appeal. As our discussion
will make clear, we find Van Meter’s attack upon the judgment,
which is essentially the same attack she raised in her CR 59.05
motion, to be far from meritless or lacking in good faith.
Smith’s motion to dismiss is therefore denied.
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In late 1993 or early 1994, Smith became disabled.
He
was awarded workers’ compensation benefits pursuant to KRS
Chapter 342; he also received disability benefits under his
employer’s pension plan.
The pension plan guaranteed Smith an
income of approximately $3,000.00 per month by paying him the
difference between that amount and the total of his other sources
of income.
The plan apparently included a coordination of
benefits clause whereby Smith was required either to apply for
social security disability benefits or to have his pension
benefits reduced according to the plan’s estimate of what his
social security benefit would be.
Smith duly applied for social
security, and, while he awaited a ruling, his pension benefits
helped him to fulfill his child support obligation.
In December
1996, the Social Security Administration approved Smith’s
disability claim and awarded him benefits (SSD) effective as of
January 1994.
It paid him his accrued benefits in a lump sum.
It also awarded dependant’s benefits to Keegan on Smith’s account
(about $650.00 per month) and paid to Van Meter Keegan’s accrued
benefits, which ultimately totaled about $21,000.00.
Smith
notified the pension plan’s administrator of his social security
award, and the plan thereupon demanded that Smith repay the
pension benefits to the extent of the social security back
awards, including the back award to Keegan.
His social security status having been determined,
Smith moved the trial court to modify his support obligation in
light thereof and to order Van Meter to reimburse him for the
child support he had paid during the pendency of his social
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security claim.
An appropriate amount of Keegan’s back award was
placed into escrow, and the court referred the matter to a
domestic relations commissioner.
The commissioner recommended,
and the court agreed, that Smith was entitled to recover the
nearly $11,000.00 he had paid in child support since January
1994, that he was entitled to credit Keegan’s monthly SSD
benefits against his ongoing child support obligation, and that
Van Meter should thenceforth be responsible for “the child’s
entire cost of health and psychiatric care--including expenses of
court-ordered counseling[.]”
It is from this order that Van Meter appeals.
She does
not dispute that Keegan’s SSD benefits may be applied
prospectively toward Smith’s continuing child support liability.
She maintains, however, that, by reimbursing Smith for support
already paid, the trial court modified the support order
retrospectively, contrary to KRS 403.213(1).
She also maintains
that the trial court’s modification of Smith’s liability for
health care did not comply with KRS 403.211(7) and (8).
We are
satisfied that the trial court did not retrospectively modify the
child support provisions of the order and that its awarding Smith
reimbursement for twice-paid support was appropriate in the
circumstances.
We agree with Van Meter, however, that any
modification of the order, including its provisions for health
care, requires more thorough findings than those so far made.
Accordingly, we must vacate that portion of the order and remand
for additional proceedings.
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As are most other aspects of domestic relations law,
the establishment, modification, and enforcement of child support
are prescribed in their general contours by statute and are
largely left, within the statutory parameters, to the sound
discretion of the trial court.
KRS 403.211 - KRS 403.213;
Wilhoit v. Wilhoit, Ky., 521 S.W.2d 512 (1975).
is far from unlimited.
This discretion
Price v. Price, Ky., 912 S.W.2d 44
(1995); Keplinger v. Keplinger, Ky. App., 839 S.W.2d 566 (1992).
But generally, as long as the trial court gives due consideration
to the parties’ financial circumstances and the child’s needs,
and either conforms to the statutory prescriptions or adequately
justifies deviating therefrom, this Court will not disturb its
rulings.
Bradley v. Bradley, Ky., 473 S.W.2d 117 (1971).
The trial court found that
[t]he payment of $10,800 by the respondent
from January of 1994 through December of 1996
constituted a double payment of child support
and a windfall to the petitioner, and the
respondent should recover $10,800 from the
petitioner or from the account at the Bank of
Edmonson County, which was created by an
award for the benefit, care and support of
the child duplicating payment by the
respondent.
In conjunction with this finding and the reimbursement
order, the court cited Miller v. Miller, Ky. App., 929 S.W.2d 202
(1996).
In that case, a divorced father with child support
obligations had applied for social security disability benefits
and during the application period had fallen into child support
arrears.
When his SSD claim was approved, he moved to have the
benefits paid directly to his child credited toward his
liability.
This Court held that he was entitled to a credit for
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any regular monthly dependent’s benefits his child had or would
receive, but that further findings were necessary to determine
whether the lump-sum award for the application period should, to
any extent, be applied toward the arrearage.
Van Meter concedes that, under Miller, Keegan’s monthly
SSD benefit may be credited toward Smith’s support obligation for
that month.
Miller does not, however, Van Meter maintains,
support the further conclusion that Smith is entitled to
reimbursement for child support already paid and spent.
She
insists that “[t]he fact that the United States Government paid
Keegan Smith, the parties[’] infant child, has no bearing upon
the issues before this Court.
That payment, from the United
States taxpayers, did not come from the Appellee.
did not ‘overpay.’”
Therefore, he
If Smith’s reimbursement is based, not on an
overpayment, but, retrospectively, on a change in Keegan’s
circumstances, then the trial court’s order amounts to a
retroactive modification of Smith’s support obligation, a result
Van Meter correctly notes would be contrary to Kentucky law.
Guthrie v. Guthrie, Ky., 429 S.W.2d 32 (1968).
Van Meter’s argument raises a point that merits
clarification.
If Keegan’s social security benefit is her
income, as it plainly is, then how can Smith be given credit for
it?
Not so long ago, at least two courts held that he could not.
See Casper v. Casper, 593 N.W.2d 709, 712 (Minn. App. 1999)
(discussing In re Marriage of Haynes, 343 N.W.2d 679 (Minn. App.
1984) (“a child’s receipt of social security benefits from the
obligor’s account ‘[did] not constitute payment[] from that
-6-
parent.’”), rev’d, Holmberg v. Holmberg, 578 N.W.2d 817 (Minn.
App. 1998). See also In re Marriage of Cowan, 928 P.2d 214 (Mont.
1996) (discussing a similar case history).
The more common view,
however, is that SSD benefits are like the income received from
an insurance policy or a trust.
If Smith had transferred assets
to a trust that paid income to Keegan, although the income would
be hers, Smith clearly would be entitled to child support credit
for it.
Similarly Smith’s purchase of an insurance policy that
paid benefits to Keegan would be another indirect transfer of
income from Smith to Keegan for which Smith would be entitled to
credit.
Smith’s contributions to the social security system and
his employer’s contributions on his behalf are an analogous
transfer of assets.
Although there are numerous differences
between the social security system and either an insurance policy
or a private trust, the similarities warrant the conclusion that
Keegan’s SSD benefits come, at least indirectly, from Smith.
Board v. Board, Ky., 690 S.W.2d 380 (1985).
The reimbursement
ordered in this case is thus genuinely a reimbursement and not a
retrospective modification of Smith’s support liability.
Does this fact alone entitle Smith to a reimbursement?
Van Meter says no because child support is owed not just in a
particular amount, but also with a particular regularity.
Smith
owed Keegan regular support during his social security
application period.
To his credit he provided that support, but,
in a very real sense, the social security back payment now cannot
replace or substitute for the amounts due then.
The back payment
is simply extra now, and “extra” support payments are commonly
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deemed to be gifts.
Newman v. Newman, 451 N.W.2d 843 (Iowa
1990); Children and Youth Services of Allegheny County v. Chorgo,
491 A.2d 1374 (Pa. Super. Ct. 1985).
In different circumstances, especially if an arrearage
unrelated to Smith’s disability were involved, this reasoning
might be compelling, but it omits a key consideration in this
case.
As discussed above, Smith’s income during the social
security application period consisted in significant part of
pension/disability benefits provided by his employer.
benefits must be repaid.
Those
They are similar in that regard to
public assistance benefits sometimes provided while social
security applications are pending.
Such benefits, however, are
routinely recouped from social security awards before they are
paid to recipients, including recipients of dependency awards.
Baez v. Bane, 674 N.E.2d 268, 651 N.Y.S.2d 338 (1996).
They are similar as well to other “coordinated
benefits.”
Benefit coordination is an attempt by insurance
companies and government agencies to lower the cost of benefit
programs and policies by eliminating double awards.
Benefits are
said to be coordinated when receipt of a second award for a
single claim gives rise in the payer of the first award to a
right to reimbursement.
1293 (7th Cir. 1993).
Cutting v. Jerome Foods, Inc., 993 F.2d
Such coordinated benefits provisions are
common features of employee pension policies.
Porter v.
Continental Casualty Company, 753 P.2d 178 (Ariz. App. 1988);
Murzyn v. Amoco Corporation, 925 F.Supp. 594 (N.D. Ind. 1995).
Although the parties here did not develop this aspect of the case
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(the bearing on this situation, if any, of the Employee
Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et
seq., is an interesting question for another day), there is no
dispute that Smith’s pension benefits are subject to repayment.
Smith, therefore, will not reap a windfall from reimbursement of
the child support he paid during the pendency of his SSD
application.
On the contrary, if he is not reimbursed, he will
have paid that amount twice, once to Keegan and now again to his
pension plan.
In a similar case, the Court of Appeals of Ohio
recently upheld the reimbursement of pension benefits from a
dependent’s social security award.
702 N.E.2d 145 (Ohio App. 1997).
Fruchtnicht v. Fruchtnicht,
We concur with the Ohio court.
See also In re Marriage of Cowan, supra (collecting cases and
arriving at a result in harmony with ours although on facts
slightly different).
The interim pension benefits in this case
served Keegan and Van Meter’s interest as well as Smith’s.
Repayment of a portion of those benefits from Keegan’s lump-sum
SSD award is neither alleged nor shown to be unduly detrimental
to Keegan or Van Meter.
It will prevent an inequity to Smith,
and will promote the efficient operation of the employer’s
coordinated benefits program.
In these circumstances,
we are
not persuaded that the trial court abused its discretion by so
ordering.
We noted above that the trial court did not modify
Smith’s support obligation when it ordered Keegan and Van Meter
to reimburse him.
The order provides, by necessary implication,
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that Smith’s support obligation remains $300.00 per month.2
The
court did, however, modify the decree’s health care provisions.
It shifted the entire burden of health insurance and other health
related expenses to Van Meter.
In doing so, the court cited KRS
403.211(7)(a), which mandates that the costs of health care be
specifically apportioned in the child support order.
As noted by
Van Meter, however, KRS 403.211(8) further mandates that “[t]he
cost of extraordinary medical expenses [uninsured expenses in
excess of $100 per child per calendar year] shall be allocated
between the parties in proportion to their adjusted gross
incomes.”
The modification of child support provisions,
moreover, including health care provisions, is also governed by
KRS 403.213(1).
This statute provides in part that
[t]he provisions of any decree respecting
child support may be modified only as to
installments accruing subsequent to the
filing of the motion for modification and
only upon a showing of a material change in
circumstances that is substantial and
continuing.
In explaining the standard of our review, we observed
that this state’s domestic relations law is founded upon general
statutory guidelines and presumptions within which the trial
court has considerable discretion.
The trial court has
discretion in many instances, moreover, to deviate from the
statutory parameters, but only if it makes findings clearly
justifying the deviation.
Cf. KRS 403.211(2) (providing for
2
In their briefs, the parties both suggest that Smith’s
obligation has been increased to $657.00 per month, the amount of
Keegan’s monthly SSD benefit. The order does not say this, and,
in the absence of adequate findings as discussed in the text, it
could not.
-10-
deviation from the Child Support Guidelines of KRS 403.212).
Rainwater v. Williams, Ky. App. 930 S.W.2d 405 (1996).
The trial
court has deviated here from the statutory requirement that
extraordinary medical expenses be allocated in proportion to the
parties’ incomes, and it has done so without expressly justifying
the deviation.
The court also modified the health care
provisions of the decree without discussing how substantial
changes in the parties’ circumstances have made that modification
necessary.
The obvious changes in Smith’s circumstances and
those of Van Meter and Keegan make us unwilling to say that the
court’s modification of the support decree was an abuse of
discretion, but at the same time we are unable to affirm that
modification in the absence of the mandatory findings.
v. Rasnick, Ky. App., 982 S.W.2d 218 (1998).
Rasnick
Cf. Board, supra
(noting that a non-custodial parent’s receipt of social security
benefits might well justify a modification of the support order,
but only following and in light of the required procedures), and
Fruchtnicht, supra (discussing Ohio’s similar rules for the
modification of a support order).
We are obliged, therefore, to
vacate the portion of the July 8, 1997, order that shifts all of
Keegan’s health care costs to Van Meter, and to remand the matter
for additional proceedings consistent with this opinion.
In sum, we reject Van Meter’s assertion that the trial
court retroactively modified her child support decree.
In
ordering Van Meter to reimburse Smith from Keegan’s back award of
social security benefits, the court has only required her to
acknowledge the prior receipt of that amount of support and to
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cooperate with Smith’s pension program in a manner the program
reasonably expects.
discretion.
This was not an abuse of the trial court’s
Nor are we willing to say that the trial court
abused its discretion by ordering Van Meter to assume sole
responsibility for Keegan’s health care.
Keegan’s SSD benefits
and Smith’s disability may well justify such a modification of
the support decree.
Because KRS 403.211(8) plainly intends,
however, that the parties will, as a general rule, share
extraordinary health care costs in proportion to their incomes,
the trial court may not deviate from that intention without
expressly justifying the deviation in its findings and
conclusions.
The court’s order fails to satisfy this
requirement.
It also fails to satisfy the more general
requirement that any modification of a support decree be
expressly justified in relation to substantial and lasting
changes in the parties’ circumstances.
For these reasons, we
affirm the July 8, 1997, order of the Edmonson Circuit Court in
all respects except its assignment of health care
responsibilities to Van Meter.
We vacate that portion of the
order and remand for additional proceedings.
Further, for the
reasons stated in footnote 1, Smith’s motion to dismiss is
denied.
ALL CONCUR.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
B. Alan Simpson
Pierce, Simpson & Shadoan
Bowling Green, Kentucky
Natty Bumppo
Brownsville, Kentucky
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