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Blue Cross could owe $5 million for spurning child support order

After three years of litigation, repeated court orders and a ruling by a state appellate court, the insurance company Blue Cross Blue Shield of Illinois is apparently still ready to fight its legal obligation to withhold child support from payments it makes to a therapist who owes between $20,000 and $30,000. In the meantime, his ex-wife has lost a home to foreclosure and is on the verge of losing another. Two of their three children have reached adulthood.

While the case doesn’t involve Massachusetts law, its outcome could be crucial to child support enforcement efforts across the nation involving non-compliant parents who are paid through third parties.

The case involves a couple who divorced in 2008. When the wife wasn’t reliably receiving her $930 a month in court-ordered child support, health insurance premiums and alimony, she did exactly what the law expects. She filed a withholding notice with Blue Cross.

Shockingly, the insurance company responded by saying, "We do not become involved in personal cases and are not allowed to set up this type of convenience for the provider." Even a copy of the state law clearly requiring the withholdings failed to persuade the insurer.

After an initial loss at trial, the mom appealed to the Illinois Appellate Court in 2010. That court absolutely rejected Blue Cross’s contention that it was not required to withhold child support because the father was its employee. Illinois’ law says “payor” and specifically includes insurance proceeds, and Blue Cross was clearly in the wrong.

Nevertheless, the insurer is still refusing. That year, "under protest," it forked over some $93,600 -- its estimate of two years of back child support. Since then, however, it has withheld and paid irregularly and in amounts “not enough to raise children” on, according to the mom.

Blue Cross is now facing the prospect of an extraordinary legal penalty for what the family court judge calls the “audacity and arrogance” of its continued refusal. Illinois law requires penalties of up to $100 a day for each violation of a withholding order -- and each week of noncompliance counts as a separate violation. The mom’s lawyer estimates that Blue Cross may owe as much as $5 million in penalties.

The exasperated judge expects the company to drag out appeals “because it can.” In his latest order he snapped that child support withholding "is not an issue of convenience. It is the law. Who was or who is the authority that said Blue Cross was above the law?"

Source: Chicago Tribune, “Woman battling Blue Cross over child support,” Lisa Black, Sept. 1, 2013

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