BILL REQ. #:  Z-0167.2 

Read first time 02/06/13.   Referred to Committee on Early Learning & Human Services.

     AN ACT Relating to the enforcement powers of the office of financial recovery; amending RCW 43.20B.010 and 43.20B.030; and adding new sections to chapter 43.20B RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 43.20B.010 and 1987 c 75 s 42 are each amended to read as follows:
     The definitions in this section apply throughout this chapter:
     (1) "Department" means the department of social and health services.
     (2) "Secretary" means the secretary of the department of social and health services.
     (3) "License" means that exercise of regulatory authority by the secretary to grant permission, authority, or liberty to do or to forbear certain activities. The term includes licenses, permits, certifications, registrations, and other similar terms.
     (4) "Vendor" means an entity that provides goods or services to or for clientele of the department and that controls operational decisions.
     (5) "Overpayment" means any payment or benefit to a recipient or to a vendor in excess of that to which is entitled by law, rule, or contract, including amounts in dispute.
     (6) "Child welfare training and advancement program" means the program administered in partnership between the department's children's administration and participating universities in Washington to provide educational benefits for students accepted into a masters of social work program at one of the participating universities. Participation in the program includes a stipend for tuition and specialized practicum placement within the department. Students participating in the child welfare training and advancement program agree to seek employment with the department after graduation. If selected, child welfare training and advancement program recipients must agree to work for the department for a period roughly commensurate with the amount of time they received educational assistance.
     (7) "Child welfare training and advancement program participant agreement" means an agreement signed by a participant in order to participate in the child welfare training and advancement program and receive financial assistance from the department in a masters of social work degree program.
     (8) "Employee overpayment" means an obligation owed by a current or former state employee to reimburse the department for: (a) An overpayment of salary to a current or former state employee occurring in the current or a past pay period, which results from errors in calculating an employee's pay such as using the wrong pay level, paying a part-time employee as a full-time employee, or other intentional or unintentional errors; (b) nonsalary payments made to the employee when such payments are later determined to have been made in error; (c) personal usage of state resources; or (d) payments made by the department to a third party on the employee's behalf.

Sec. 2   RCW 43.20B.030 and 2012 c 258 s 1 are each amended to read as follows:
     (1) Except as otherwise provided by law, including subsection (2) of this section, there will be no collection of overpayments and other debts due the department after the expiration of six years from the date of notice of such overpayment or other debt unless the department has commenced recovery action in a court of law or unless an administrative remedy authorized by statute is in place. However, any amount due in a case thus extended shall cease to be a debt due the department at the expiration of ten years from the date of the notice of the overpayment or other debt unless a court-ordered remedy would be in effect for a longer period.
     (2) There will be no collection of debts due the department after the expiration of twenty years from the date a lien is recorded pursuant to RCW 43.20B.080.
     (3) The department, may, at any time, ((may)) accept offers of compromise of disputed claims or may grant partial or total write-off of any debt due the department or the department of early learning, if it is no longer cost-effective to pursue. The department shall enter into agreements with the department of early learning and shall, in consultation with the department of early learning, adopt rules establishing the considerations to be made in the granting or denial of a partial or total write-off of debts.
     (4) Notwithstanding the requirements of RCW 43.20B.630, 43.20B.635, 43.20B.640, and 43.20B.645, the department may waive all efforts to collect overpayments from a client when the department determines that the elements of equitable estoppel as set forth in WAC 388-02-0495, as it existed on January 1, 2012, are met.
     (5) Notwithstanding the requirements of section 3 of this act, the department may waive efforts to collect financial assistance payments from persons who received financial assistance through the child welfare training and advancement program if the person meets certain exemptions specified in the rules adopted by the department.
     (6) Notwithstanding the requirements of section 4 of this act, the department may waive efforts to collect overpayments from current or former employees of the department who received employee overpayments.
     (7) The department, through the office of financial recovery, has rule-making authority to implement this section.

NEW SECTION.  Sec. 3   (1) The department may establish and recover financial assistance payments received by persons under the child welfare training and advancement program who subsequently failed to comply with the terms of their child welfare training and advancement program participant agreement.
     (2) The department may establish and recover any amounts owing under a child welfare training and advancement program participant agreement to repay the department for financial assistance paid on behalf of the participant.
     (3) If the child welfare training and advancement program participant is a current department employee, any amounts owing may be recovered in the same way as a salary overpayment, as provided in section 4 of this act.
     (4) If the child welfare training and advancement program participant is not a department employee, the department may recover financial assistance payments through lien and foreclosure, distraint, seizure and sale, order to withhold and deliver, or other legal action available to the department to satisfy the debt due.
     (5) The department, through the office of financial recovery, has rule-making authority to implement this section.

NEW SECTION.  Sec. 4   (1) The department may recover overpayments made to current or former employees.
     (2) The procedures for establishment and recovery of employee overpayments may vary depending on whether the employee is currently employed by the department.
     (a) The department may establish overpayments for current employees and may recover those overpayments as salary overpayments, by withholding money from future paychecks.
     (b) The department may establish overpayments for former employees and may recover those employee overpayments through lien and foreclosure, distraint, seizure and sale, order to withhold and deliver, or other legal action available to the department to satisfy the debt due.
     (3) The department, through the office of financial recovery, has rule-making authority to implement this section.

NEW SECTION.  Sec. 5   (1) After the department of early learning has imposed a fine or civil penalty against a child care provider or facility under chapter 43.215 RCW and Title 170 WAC, and a final debt has been established, the department of social and health services, through the office of financial recovery, may enforce the final debt.
     (2) The office of financial recovery may enforce the debt through lien and foreclosure, distraint, seizure and sale, order to withhold and deliver, or other legal action available to the department of social and health services to satisfy the debt due.
     (3) Debts determined under this chapter or chapter 43.215 RCW are subject to collection action without further necessity of action by a presiding or reviewing officer. The office of financial recovery may collect the debt in accordance with RCW 43.20B.635, 43.20B.640, and 43.20B.680 and sections 10 through 13 of this act. In addition, a lien based on a fine or civil penalty against a child care provider or facility may be subject to distraint, seizure, and sale in the same manner as prescribed for support liens in RCW 74.20A.130.
     (4) The department, through the office of financial recovery, has rule-making authority to implement this section.

NEW SECTION.  Sec. 6   The department may, at the secretary's discretion, secure the repayment of any outstanding employee overpayment, plus interest, if any, through the filing of a lien against the debtor's real property, or by requiring the posting of a bond, assignment of deposit, or some other form of security acceptable to the department.
     (1) Any lien is effective from the date of filing for record with the county auditor of the county in which the property is located and the lien claim has preference over the claims of all unsecured creditors.
     (2) The department shall review and determine the acceptability of all other forms of security.
     (3) Any bond must be issued by a company licensed as a surety in the state of Washington.

NEW SECTION.  Sec. 7   Liens created under section 6 of this act bind the affected property for a period of ten years after the lien has been recorded or six years after the resolution of all good faith disputes as to the amount of overpayment, whichever is later.

NEW SECTION.  Sec. 8   Any action to enforce an employee overpayment debt must be commenced within six years from the date of the department's notice to the debtor, unless a lien is recorded pursuant to section 6 of this act, in which case such action must be commenced within ten years from the date of notice of the debt.

NEW SECTION.  Sec. 9   The remedies under sections 7 and 8 of this act are nonexclusive and nothing contained in this chapter may be construed to impair or affect the right of the department to maintain a civil action or to pursue any other remedies available to it under the laws of this state to recover the debt.

NEW SECTION.  Sec. 10   The department of social and health services may, at the secretary's discretion, secure the repayment of any outstanding fine or civil penalty, or both, established by the department of early learning, plus interest, if any, through the filing of a lien against the child care provider or facility's real property, or by requiring the posting of a bond, assignment of deposit, or some other form of security acceptable to the department of social and health services, or by doing both.
     (1) Any lien is effective from the date of filing for record with the county auditor of the county in which the property is located and the claim under the lien has preference over the claims of all unsecured creditors.
     (2) The department of social and health services shall review and determine the acceptability of all other forms of security.
     (3) Any bond must be issued by a company licensed as a surety in the state of Washington.

NEW SECTION.  Sec. 11   Liens created under section 5 of this act bind the affected property for a period of ten years after the lien has been recorded or six years after the resolution of all good faith disputes as to the amount of fine or civil penalty, or both, whichever is later.

NEW SECTION.  Sec. 12   Any action to enforce a fine or civil penalty, or both, assessed by the department of early learning must be commenced by the department of early learning or the department of social and health services within six years from the date of the department of early learning's notice to the child care provider or facility, unless a lien is recorded pursuant to section 5 of this act, in which case such action must be commenced within ten years from the date of notice of the debt.

NEW SECTION.  Sec. 13   The remedies under sections 5 and 10 through 12 of this act and this section are nonexclusive and nothing contained in this chapter may be construed to impair or affect the right of the department of social and health services to maintain a civil action or to pursue any other remedies available to it under the laws of this state to recover the debt.

NEW SECTION.  Sec. 14   The department, through the office of financial recovery, has rule-making authority to adopt rules to allow the office of financial recovery to develop administrative processes for establishing overpayments or debts owed to the department or the department of early learning, consistent with due process requirements.

NEW SECTION.  Sec. 15   Sections 3 through 14 of this act are each added to chapter 43.20B RCW.