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Pacana v. Child Support Enforcement Agency (7/25/97), 941 P 2d 1263
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska, 99501,
telephone (907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
HENRY ABELLA PACANA, )
) Supreme Court No. S-7594
) Superior Court No.
v. ) 3AN-87-3275 CI
STATE OF ALASKA, DEPARTMENT ) O P I N I O N
OF REVENUE, CHILD SUPPORT )
ENFORCEMENT DIVISION, ex rel, ) [No. 4854 - July 25, 1997]
BETTY LEE WATTS PACANA, )
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Joan Woodward, Judge.
Appearances: Mark Regan and James J. Davis,
Jr., Alaska Legal Services Corporation, Anchorage, and Robert K.
Hickerson, Anchorage, for Appellant. Terisia K. Chleborad,
Assistant Attorney General, Anchorage, and Bruce M. Botelho,
Attorney General, Juneau, for Appellee.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, and Fabe, Justices.
Henry Pacana appeals a superior court ruling denying him
credit against his child support obligations for Social Security
disability benefits paid on his behalf to his children. We
conclude that the credit should have been allowed.
II. FACTS AND PROCEEDINGS
Henry Pacana and Betty Lee Watts were married in May
1980. They had three children: Patrick, born in 1983, Nathan, born
in 1984, and Sabrina, born in 1986. Henry and Betty were divorced
in January 1988.
At the divorce proceedings the trial court granted Betty
sole legal and physical custody of the children. It also ordered
Henry to pay monthly child support of $250 per child, for a total
monthly obligation of $750. The court determined that the support
obligation should begin effective May 4, 1987.
Henry became disabled in 1990. A year later he was
awarded Social Security disability benefits, which became his
primary income. Because Henry seldom paid his child support
obligations, the Alaska Child Support Enforcement Division (CSED)
began garnishing his permanent fund dividends and half of his
Social Security payments in September 1993. Henry's monthly
disability benefit was $1,062, so the garnished amount did not meet
his $750 monthly child support obligation.
Henry's disability and his participation in the Social
Security insurance system entitled the children to Social Security
disability dependent benefits, also known as children's insurance
benefits (CIB), as of November 1991. In December 1992 each child
was awarded ongoing CIB and back CIB to November 1991. The monthly
CIB per child in 1991 was $171; it increased annually and was $193
In October 1995 CSED sent Henry a child support account
statement showing that Henry owed $57,374.39 in past due child
support. CSED had not credited the CIB payments, totaling $26,544,
against Henry's support obligation.
Henry moved to modify the child support order in November
1995. He argued that the CIB payments should be credited against
his child support arrearage. The superior court gave Henry credit
for the ongoing CIB payments, reducing his ongoing, out-of-pocket
child support to $61 per month. However, the court refused to
credit prior CIB payments, worth approximately $26,544, towards the
support arrearage, reasoning that the credit would require an
impermissible retroactive modification of support.
A. Standard of Review
Whether Henry is entitled to have his child support
arrears reduced by CIB paid to his children is a question of law
that we review de novo. Miller v. Miller, 890 P.2d 574, 576
(Alaska 1995). Under this standard our duty is "to adopt the rule
of law that is most persuasive in light of precedent, reason and
policy." Barber v. Barber, 915 P.2d 1204, 1209 n.10 (Alaska 1996)
B. Offset for CIB Paid before Obligor Moves to Modify
We have not previously decided whether a parent can
receive credit for CIB payments made before the parent moves to
modify child support, although we have previously discussed credit
for disability benefits paid directly to the children. See State
of Alaska, CSED v. Fry, 926 P.2d 1170 (Alaska 1996); Miller v.
Miller, 890 P.2d 574 (Alaska 1995).
In Miller we held that "a divorced parent who is required
to pay support to a child . . . is entitled to child support credit
for social security payments the child receives on the parent's
behalf." 890 P.2d at 575. Miller stated that Social Security
retirement benefits [Fn. 1] are not considered welfare benefits;
rather, they are earned when one participates in the Social
Security system. Id. at 578. We also held that the CIB payments
should be counted as income to the noncustodial parent for purposes
of calculating child support under Civil Rule 90.3. Id. We
declined to decide whether CIB payments can be credited
retroactively against a child support arrearage. Id. at 577-78
We have since reaffirmed Miller and held that ongoing
support obligations of obligor parents are offset by CIB payments
made to their children, including children who have received AFDC
assistance. Fry, 926 P.2d at 1174. We there again declined to
decide whether CIB payments can be credited against child support
arrearage. Id. at 1173-74.
Unlike some other states, [Fn. 2] Alaska has no statute
that gives credit to the obligor parent for Social Security
benefits paid directly to the children. [Fn. 3] A court rule
provides that child support arrearages may not be modified
retroactively, except when paternity is disestablished. Alaska R.
Civ. P. 90.3(h)(2). [Fn. 4] See also 42 U.S.C. sec. 666(a)(9)
Henry argues in favor of the majority rule, which is
that CIB payments made prior to a motion to modify are credited
against child support obligations. See, e.g., In re Marriage of
Henry, 622 N.E.2d 803, 809 (Ill. 1993); Weaks v. Weaks, 821 S.W.2d
503, 507 (Mo. 1991); Children and Youth Servs. of Allegheny County
v. Chorgo, 491 A.2d 1374, 1377 (Pa. Super. 1985). See generally
Michael A. DiSabatino, Annotation, Right to Credit on Child Support
Payments for Social Security or Other Government Dependency
Payments Made for Benefit of Child, 34 A.L.R.5th 447, 469-76
(1995). More than ten states follow this rule in some form. Id.
Henry argues that denying a credit would be unfair to the
obligor, who has actually contributed much more to his children
than CSED recognizes. Henry claims that since CSED has also been
garnishing his disability benefits, his children have been
receiving much more than the original child support order awarded
Responding to the superior court's observation that Rule
90.3(h)(2) prohibits a retroactive credit, Henry explains that a
credit for CIB payments does not retroactively modify the child
support award. He compares this crediting procedure to the law of
judgments where a debtor would be allowed to assert that he has
paid his creditor greater payments, which have not been recognized.
Betty argues in favor of the minority rule which strictly
construes the prohibition against retroactive modification of child
support arrearages. See, e.g., Newman v. Newman, 451 N.W.2d 843,
845 (Iowa 1990); In re Marriage of Malquist, 880 P.2d 1357, 1360
(Mont. 1994) (ruling that a court cannot credit CIB payments until
the obligor parent moves to modify); Hinckley v. Hinckley, 812 P.2d
907, 913 (Wyo. 1991). See generally DiSabatino, supra, at 482-84.
Betty contends that allowing a credit would result in an
impermissible retroactive modification because Henry's past support
obligation would change based on the Social Security benefit income
Betty also argues that the minority rule is more
equitable. For example, where the CIB payments exceed the support
obligation and where they substantially increase the obligor's
income, the children should get the benefit of that increase.
Betty also asserts that modification hearings are
required when, as here, the obligor wants to change his obligation
based on a change in income. She concludes that the fairer rule
would require the obligor to make a timely motion to modify.
We find Henry's arguments more persuasive. We read Rule
90.3(h)(2) to allow an automatic credit against child support
arrearage for CIB. See Weaks, 821 S.W.2d at 506-07. Additionally,
we find a credit warranted under the circumstances.
Rule 90.3(h)(2) only restricts the retroactive
modification of a child support order. The commentary to Rule 90.3
states, "The prohibition against retroactive modification limits
both requested decreases and increases in child support." Alaska
R. Civ. P. 90.3 cmt. X. The comments to the Bradley Amendment
state, "Federal law and regulations do not prohibit the correction
of improperly calculated arrearages." 54 Fed. Reg. 15762 (1989).
The Rule 90.3(h)(2) restriction only applies to retroactive changes
in the amount of the child support award.
Moreover, Rule 90.3(h)(2) does not address non-conforming
payments that CSED does not recognize as child support payments.
See generally J. Eric Smithburn, Removing Nonconforming Child
Support Payments from the Shadow of the Rule against Retroactive
Modification, 28 J. Fam. L. 43 (1990) (analyzing different
approaches to retroactive credits against child support arrearage).
Examples of non-conforming payments besides CIB payments are cash
the obligor sends directly to the children or monies for school
supplies or medical expenses.
Alaska cases occasionally have credited nonconforming
payments. See Arndt v. Arndt, 777 P.2d 668, 671 (Alaska 1989);
Young v. Williams, 583 P.2d 201, 203 (Alaska 1978). Young states:
The majority position is that payments
voluntarily made to the children are not to be credited against
child support obligations. The rationale is that such voluntary
payments to the children quite often are intended for particular
purposes whereas the manner in which child support payments are
used to meet the children's basic needs is left to the discretion
of the parent or guardian with custody. In those few cases in
which credit has been granted, it is for payments made at the
request of the parent or guardian with custody or for cash gifts
used for child support, the disbursement of which was controlled by
the parent or guardian with custody.
583 P.2d at 203 (footnotes omitted). Because the CIB payments are
regular monthly payments and the custodial parent is aware of them,
they can be credited against a child support obligation.
Our holding here does not conflict with our rulings in
Miller. 890 P.2d at 577-78 & n.5. In Miller, we found "it
necessary to include social security benefits payable to [the
child] on [the obligor's] behalf as income for purposes of the Rule
90.3 calculation of income." Id. at 578. However, Miller only
requires a prospective recalculation of the child support order.
Additionally, Henry's fairness arguments are stronger
than Betty's. Such arguments are the primary reason many courts
have followed the majority rule. The Missouri Supreme Court
strongly approves of a credit:
To impose the requirement of a court
proceeding, i.e., modification hearing, on a party seeking to
credit disability payments received by the custodial parent for the
benefit of the parties' children is overly harsh. In situations
involving disability benefits, the party seeking credit most likely
faces a reduction of income, financial uncertainty, physical or
mental impairment and other attendant consequences of the
disability. The additional burden of petitioning the court for a
modification typically wastes time and money and helps no one.
Weaks, 821 S.W.2d at 506-07. We agree that in most cases the
obligor parent who qualifies for Social Security disability
payments will have significant health and financial problems. It
may be difficult for a disabled obligor to make a formal and timely
modification motion in order to receive a credit. If the parent
has been incapacitated, it may be impossible. Moreover, the
process for receiving disability payments is long and complex, and
the likelihood of filing a timely motion to receive proper credit
is low. See Moore v. Beirne, 714 P.2d 1284, 1286 & n.5 (Alaska
1986) (noting that decision on eligibility for Social Security
disability can take up to two years). Henry's children qualified
for CIB in November 1991, but did not begin receiving the payments
until December 1992. Henry had no income before his disability
benefits began. To receive a complete prospective credit under the
minority rule, Henry would have had to have moved for a
modification in November 1991, thirteen months before his
children's eligibility was determined.
Betty claims that the minority rule is more equitable if
monthly CIB payments exceed the awarded child support. In this
circumstance, obligor parents might wish to credit the overpayment
amount against a future support obligation or force the custodial
parent to repay this amount. [Fn. 5] Nonetheless, most courts
following the majority rule treat the excess payment during the
obligor's disability as a gratuity to the children, so that the
custodial parent does not owe the obligor. See, e.g., Weaks, 821
S.W.2d at 507 ("Any excess is deemed a gratuity to the extent that
it exceeds the amount of support mandated by the decree."); Andler
v. Andler, 538 P.2d 649, 654 (Kan. 1975); Chorgo, 491 A.2d at 1379.
An overpayment issue is present here. It is the result
of CSED's garnishments rather than any CIB payments that exceed the
support order. After approximately September 1993, CSED was
garnishing Henry's disability benefits and his permanent fund
dividend. Between the garnished benefits and the CIB payments,
Henry was effectively paying his children more than $1,000 per
month, although the support order awarded only $750. We conclude
that Henry's arrearage accruing after September 1993 should be
canceled. Henry's overpayments after that date will offset other
arrearages. [Fn. 6]
We hold that Henry's child support obligation may be
offset by the Social Security benefits paid to his children on his
behalf without a prior modification motion. We REVERSE and REMAND
the case for further proceedings to calculate the reduction in
Miller noted that for the purposes of this analysis there is
no reason to distinguish between Social Security retirement
benefits and Social Security disability benefits. Miller, 890 P.2d
Several states have statutes that specifically provide that
Social Security disability payments are to be credited against a
disabled parent's child support obligation. See, e.g., Cal. Fam.
Code sec. 4504; Utah Code Ann. sec. 78-45-7.5[b]; Wash. Rev.
One child support enforcement statute discusses Social
Security disability payments. See AS 25.27.062 (CIB payments may
affect the timing and size of income withholding order).
Alaska Civil Rule 90.3(h)(2) states:
Child support arrearage may not be modified
retroactively, except as allowed by AS 25.27.166(d)
[disestablishment of paternity]. A modification which is effective
on or after the date that a motion for modification, or a notice of
petition for modification by the Child Support Enforcement
Division, is served on the opposing party is not considered a
The obligor parent may also wish to credit any overpayment
against an arrearage that arose prior to the parent's disability.
See Children and Youth Servs. of Allegheny County v. Chorgo, 491
A.2d 1374, 1379-80 (Pa. Super. 1985). Since this issue is not
directly before us, we decline to address it.
The record is not sufficiently clear that we can make an
accurate accounting of Henry's overpayments. Thus, we cannot say
by how much Henry's arrearage should be reduced. We leave that
calculation to the superior court on remand.