In the past, it was a relatively rare occurrence when Child Support agencies collected a payment from an insurance settlement. Child support officials collected monies from insurance claims only after the happenstance of coming upon the knowledge of such claim settlement information provided by the custodial parents or third parties. Often, opportunities to collect from the claim settlement were missed because the claim was paid before a lien or income withholding order could be issued.
The Child Support Lien Network (CSLN) was conceived in and created by the State of Rhode Island as the best way to implement the state’s child support insurance claim intercept law. It was designed, developed and implemented by claims handlers and adjusters from major insurers working together with insurance trade associations, vendors and state officials.
CSLN – Redefining the Public/Private Partnership Model
Before CSLN, it was really about who had the power on an issue when it came to legislation involving P&C insurers. And it was the side with the biggest hammer that usually won. So what was different about the CSLN situation was that even though the state had all the power it didn’t just implement the solution it wanted. Instead, it listened. It listened to a new way of intercepting payments that has become the standard across the country. This form of responsible government led to an increase in corporate responsibility among insurers as over a thousand companies and affiliates decided to participate in CSLN over the past decade. The committed partnership continues today as CSLN maintains a healthy retention rate of 99% for both state and company members that are under no obligation to participate.
Most telling of the impact CSLN has had was a comment made by a retiring insurance trade association representative. He said the success of the child support partnership between government and industry made them rethink and change how they dealt with government. They became more proactive and started to suggest changes and work with legislators before bills were introduced instead of reacting to them later. In short, they began working together more because the child support insurance intercept project showed them it could be advantageous for both sides if they did.
The CSLN partnership model works as it has collected hundreds of millions of dollars in child support while becoming the largest and most successful consortium in the child support community.
Child Support Collection Tools
Since 1996, the US Congress gradually provided state child support officials with a battery of legal and administrative tools that allow them to take extraordinary measures to collect a burgeoning past due child support debt. Several of the measures enacted gave child support agencies the administrative powers to:
- Obtain information through administrative subpoena
- To suspend professional, occupational and drivers licenses
- To suspend hunting and fishing licenses
- To suspend motor vehicle registrations
- To intercept bank accounts, insurance settlements and stock funds with administrative liens and levies
- To intercept both federal and state tax refunds, as well as lottery prizes
- To implement immediate income withholding orders for support payments from wages paid by employers
- To require all employers to report every employee hired to a state directory of new hires
How CSLN Works
States combine delinquent child support cases into the CSLN database. The database is matched daily with personal injury and workers compensation claims registered by insurers with the ISO ClaimSearch. CSLN performs quality assurance on the matched data and then alerts the member state. The state and / or CSLN provide follow up enforcement action with insurer. Liens or withholding orders are issued to insurer. Arrears are collected by the state from insurer at time of settlement. Many states opt to let CSLN file the appropriate notices for them.
CSLN Collection Numbers- As of May 2015
- CSLN has returned over 620,000 matches to states for enforcement actions.
- CSLN Collections from insurance interceptions are averaging $2,100 per case.
- Estimated CSLN collections to Date – Over $1.3 billion to children and families.
How Efficient is CSLN?
The CSLN / ISO interface of a single database of millions of delinquent child support obligors matched daily to millions of claims is much more efficient than individual states making requests to insurers or issuing subpoenas for this information from insurance companies.
- The process is much less intrusive upon insurers and operations.
- Interface is much less costly. One single interface more economic and timely than multiple interfaces by individual states.
- System design results in greater efficiency – design was developed and implemented by both state government officials and insurance claims examiners and adjusters.
- Centralization of process reduces costs – the sharing of costs is spread out over many states.
- Centralized process enables states to concentrate their resources on other child support activities.
- CSLN’s specialization in insurance intercept results in greater efficiency through quality assurance and reductions in redundant errors.
How Much Collection Potential Does Insurance Claim Intercept Have?
Obtaining access to all insurance companies’ claimant information has the potential for more than $150 million in annual collections.
- CSLN currently has approved access to over 70% of our nation’s claims filed annually with the insurance industry. New States and insurers are joining the CSLN ISO process every month.
- Single case collections can be substantial – Examples: IL $265,000, HI $132,000, CT $73,000, TX $45,000. Average collections are $2,100 per offset (TX).
- Texas amassed over $63 million in CSLN collections in FY 2014.
- Georgia doubled their FIDM collections during their first year in CSLN collecting almost $4 Million.
- Data to date shows terrific potential for collections on hard to collect TANF arrears cases.
- Insurance claim intercept has potential to be the biggest source of arrears collections nationwide.
How Does CSLN Do It Without More Mandates?
Experience has shown that approximately 3% - 4% of delinquent obligors in this country will match to an insurance claim each year, but the impact on individual insurance companies will be minimal as the CSLN QA process will filter out an additional 1.5% – 2.0% before releasing correct matches to the states.
- Insurers are protected from liability from the claimant when cooperating with state IV-D (includes child support) agencies and providing claim data to child support under existing state and federal laws.
- The non-liability provision provides the much needed incentive for insurers to share their data with CSLN and its state members.
- Individual state mandates cause insurers huge implementation problems nationwide, as the laws and requirements may differ from state to state. Insurers prefer states adopt the CSLN process into any new laws for insurance claim interception.
- Since its inception 16 years ago, CSLN has demonstrated professionalism and built a wealth of trust with the insurance industry.
How is CSLN Getting More Insurers to Participate?
Outreach and education is the key to getting more insurers on board with the CSLN / ISO process. CSLN addressed the following insurers' concerns over the years to increase participation:
- Insurers' cost to join the ISO CSES interface is zero. CSLN assumes all ISO fees for the daily interface thereby reducing a major obstacle to participation by insurers.
- Insurers were worried about the privacy of their information. CSLN reduced the data required for enforcement to just a few pieces of information about the claimant and has provided insurers over the last fifteen years with the confidence that CSLN can keep such data secure.
- CSLN’s demonstrated professionalism and responsibility has alleviated the fears of insurers regarding potential litigation coming from claimants.
- Some insurers do not conduct a lot of business in some states and initially declined to provide access to claim information in those states. They now know that upwards of one-third of all delinquent obligors do not live in the same states as their children. Through outreach and education, CSLN has convinced them that all state child support agencies need to be able to match to all insurance claims filed in every state. Insurers are now familiar with the child support laws that require interstate recognition of liens and income withholding instruments and the corresponding interstate authority that has been established by federal and state statutes.
- Insurers initially thought that child support agencies would intrude on their operations and increase their labor costs. The CSLN / ISO process, along with a quality review of all matches before contact with the insurer, reduces such impact to a minimum.