Recovery of misapplied child support payments

(a) Definitions (1) The definitions of "BCSE", "CCSES", "cooperating agency", "custodial party", "department", "IV-D", "non-assistance case", and "SED" in section 17b-179(a)-1 of the Regulations of Connecticut State Agencies and the definitions of "fair hearing", "obligor", and "past-due support" in section 52-362d-1 of the Regulations of Connecticut State Agencies shall apply to this section. (2) As used in this section: (A) "Child support collection" means child and spousal support received from an obligor by BCSE, SED, or the state disbursement unit, as defined in subdivision (a)(3) of section 17b-179(m)-6 of the Regulations of Connecticut State Agencies, pursuant to operation of the IV-D program or the state disbursement unit. (B) "Misapplied payment" means a child support collection or refund posted to the account of the wrong obligor or obligee, or the amount of which exceeds that due the obligor or obligee. (C) "Misapplied payment recipient" means the custodial party in a non-assistance IV-D case or a case in which payments are directed to the state disbursement unit pursuant to subsection (p) of section 52-362 of the Connecticut General Statutes, to whose account a misapplied payment has been posted or an obligor who has received a misapplied payment in the form of a refund. (D) "Repayment agreement" means a document signed by the misapplied payment recipient which shall state the amount of the misapplied payment, the repayment schedule established in accordance with subdivision (d)(2) of this section, and a statement that failure to abide by such schedule shall result in the establishment of a wrong account posting. (E) "Wrong account posting" means a CCSES entry that results in the automatic interception of all or a part of any future child support collections made in behalf of the misapplied payment recipient for the purpose of repayment of such misapplied payment. (b) Notice of misapplied payment BCSE shall provide written notice to the misapplied payment recipient which notice shall contain, at a minimum, the following information: (1) the alleged amount of the misapplied payment; (2) a demand for repayment; (3) a description of the available methods for repayment; (4) a statement of the department's intent to establish a wrong account posting or make a referral to the Department of Administrative Services if such recipient fails or refuses to cooperate in the voluntary repayment of the misapplied payment; (5) a statement of such recipient's right to request a fair hearing, and the method and timeframe for doing so; and (6) a list of possible reasons for requesting a fair hearing. (c) Right to a fair hearing An individual who receives notice of a misapplied payment shall have the right to a fair hearing. Reasons for requesting a hearing, and defenses which may be raised at a hearing, include, but are not limited to, the following: (1) the individual who received the notice is not the person identified as having received the misapplied payment; (2) the alleged amount of the misapplied payment is incorrect; and (3) the misapplied payment was not received. (d) Recovery methods BCSE, a cooperating agency, or the State Disbursement Unit shall attempt to recover a misapplied payment from the misapplied payment recipient using the methods described in this subsection. (1) Lump sum recovery Recovery by lump sum repayment equal to the full amount of the misapplied payment shall be attempted first. (2) Repayment agreement (A) In general If the misapplied payment recipient fails or refuses to repay the full amount of such payment in one lump sum, such recipient shall be given an opportunity to sign a repayment agreement. Such repayment agreement shall specify either the establishment of a wrong account posting or regular installment payments in the amount specified in subparagraph (B) in this subdivision. (B) Amount The amount of the installment payments shall be not less than three percent (3%) but not more than ten percent (10%) of the sum of the amounts described in subparagraphs (B) (i) and (B) (ii) of this subdivision. The following factors shall be considered in determining the appropriate percentage: the total liquid assets available to the misapplied payment recipient, shelter costs relative to such recipient's household income, unreimbursable medical expenses, and support or alimony payments regularly made by such recipient. (i) The first amount is "net income" as defined in subdivision (15) of section 46b-215a-1 of the Regulations of Connecticut State Agencies. (ii) The second amount is the average periodic payment, as determined over the preceding thirteen week or three month period, of any current or past-due child support received by the misapplied payment recipient. (C) Exception The installment payment may exceed the amounts specified in subparagraph (B) of this subdivision at the sole option of the misapplied payment recipient. (3) Wrong account posting BCSE shall establish a wrong account posting pursuant to the terms of a repayment agreement or in the case of any individual who fails to respond to the notice of misapplied payment, or fails or refuses to abide by the terms of a repayment agreement. The wrong account posting shall be established no earlier than 60 days after the mailing date of the notice of misapplied payment. (4) Referral to the Department of Administrative Services (A) Agreement and purpose Referral under this subdivision shall be made to the Department of Administrative Services, Collection Services Business Center, for the purpose of debt collection or Governor's cancellation, as appropriate, provided an agreement is reached in accordance with subdivision (a) (4) of section 4a-12 of the Connecticut General Statutes. (B) Referral criteria Cases referred under this subdivision shall be limited to those in which the misapplied payment recipient has failed or refused to repay the misapplied payment and in whose case either (i) or (ii) applies: (i) No payments have been applied to the wrong account posting for a period of at least six months. (ii) The establishment of a wrong account posting is inappropriate.