[atlas:bill]

AN ACT Relating to reimbursement of public entities for payments made because of criminal acts of officers, employees, or contractors; amending RCW 4.92.070, 6.15.020, 41.28.200, and 43.43.310; reenacting and amending RCW 41.26.053, 41.32.052, and 41.40.052; adding new sections to chapter 43.10 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. The legislature finds that citizens, through their government, are frequently unable to collect reimbursement from employees, officers, and contractors whose criminal conduct results in payment of public money to injured parties. The legislature further finds that this inability is a drain on public resources and facilitates the avoidance or responsibility by those who engage in criminal conduct. The purpose of this act is to enable public entities on behalf of the citizens to obtain reimbursement from such employees, officers, and contractors.

NEW SECTION. Sec. 2. A new section is added to chapter 43.10 RCW to read as follows:

(1) The attorney general shall provide the state auditor with a written report summarizing each legal case, or settlement of a case, that requires a public entity to make any payment as a result of criminal conduct by an officer or employee of the entity or by a contractor with the entity. The auditor shall conduct an investigation of the facts of the case. If the auditor finds that all or a significant portion of the payment made by the public entity is attributable to the criminal conduct of an officer, employee, or contractor, then the auditor may retain an attorney to sue the officer or former officer, employee or former employee, or contractor or former contractor on behalf of the entity in order to collect the amount so attributable. The auditor shall select an attorney not on the staff of the attorney general. This section does not apply to recovery of any such an amount if the attorney general, in the report to the auditor, states that the attorney general is not barred from bringing the legal action on behalf of the public entity.

(2) For purposes of this section:

(a) "Contractor" includes any person who contracts with a public entity for the purpose of providing goods or services to a public entity; and

(b) "Public entity" includes the state, its political subdivisions, municipal corporations, quasi-municipal corporations, and special districts.

NEW SECTION. Sec. 3. A new section is added to chapter 43.10 RCW to read as follows:

This chapter does not apply to the retention of an attorney by the state auditor, under section 2 of this act, to collect amounts from current or former officers, employees, or contractors of a public entity. This chapter also does not apply to any legal action or settlement in which such an attorney represents a public entity under section 2 of this act.

NEW SECTION. Sec. 4. A new section is added to chapter 43.10 RCW to read as follows:

(1) If, as a result of criminal conduct by a person who is a member of a retirement system or plan, the attorney general, or the state auditor through an attorney retained under section 2 of this act, brings legal action against the person to obtain reimbursement of amounts paid by a public entity to an injured party, the attorney general or state auditor may in the action request the court to order payment to the public entity of the retirement or plan benefits, or other amounts, that would otherwise be paid to the person under the retirement system or plan. If the court finds that reimbursement is due to the public entity, the court shall enter an order granting the request. The order shall not conflict with the community property interests of a spouse.

(2) The administrator of any public retirement system shall adopt rules providing for the assignment of benefits, or other amounts, to a public entity as may be required by a court order under this section.

(3) This section applies to the following persons and retirement systems:

(a) With respect to a public retirement system, a person who, after the effective date of this act, becomes a member of a public retirement system, including but not limited to a retirement system under chapter 2.14, 28A.400, 28B.10, 41.26, 41.28, 41.32, 41.40, or 43.43 RCW; and

(b) To the extent not prohibited by federal law, a person participating in an employee benefit plan identified in RCW 6.15.020(4).

Sec. 5. RCW 4.92.070 and 1989 c 403 s 3 are each amended to read as follows:

If the attorney general ((~~shall find~~)) finds that ((~~said~~)) the officer, employee, or volunteer's acts or omissions were, or were purported to be in good faith, within the scope of that person's official duties, or, in the case of a foster parent, that the occurrence arose from the good faith provision of foster care services, ((~~said~~)) the request shall be granted((~~, in which event~~)). The attorney general may also grant a request to represent the officer, employee, or volunteer if the attorney general believes that there is a reasonable doubt whether the acts or omissions were performed in good faith and within the scope of official duties and that it is therefore in the state's interest to grant the request. If a request is granted, the necessary expenses of the defense of ((~~said~~)) the action or proceeding shall be paid from the appropriations made for the support of the department to which such officer, employee, volunteer, or foster parent is attached. In such cases the attorney general shall appear and defend such officer, employee, volunteer, or foster parent, who shall assist and cooperate in the defense of such suit. However, the attorney general may not represent or provide private representation for a foster parent in an action or proceeding brought by the department of social and health services against that foster parent.

Sec. 6. RCW 6.15.020 and 1997 c 20 s 1 are each amended to read as follows:

(1) It is the policy of the state of Washington to ensure the well-being of its citizens by protecting retirement income to which they are or may become entitled. For that purpose generally and pursuant to the authority granted to the state of Washington under 11 U.S.C. Sec. 522(b)(2), the exemptions in this section relating to retirement benefits are provided.

(2) Unless otherwise provided by federal law, any money received by any citizen of the state of Washington as a pension from the government of the United States, whether the same be in the actual possession of such person or be deposited or loaned, shall be exempt from execution, attachment, garnishment, or seizure by or under any legal process whatever, and when a debtor dies, or absconds, and leaves his or her family any money exempted by this subsection, the same shall be exempt to the family as provided in this subsection. This subsection shall not apply to child support collection actions issued under chapter 26.18, 26.23, or 74.20A RCW, if otherwise permitted by federal law.

(3) The right of a person to a pension, annuity, or retirement allowance or disability allowance, or death benefits, or any optional benefit, or any other right accrued or accruing to any citizen of the state of Washington under any employee benefit plan, and any fund created by such a plan or arrangement, shall be exempt from execution, attachment, garnishment, or seizure by or under any legal process whatever. This subsection shall not apply to child support collection actions issued under chapter 26.18, 26.23, or 74.20A RCW if otherwise permitted by federal law. This subsection shall permit benefits under any such plan or arrangement to be payable to a spouse, former spouse, child, or other dependent of a participant in such plan to the extent expressly provided for in a qualified domestic relations order that meets the requirements for such orders under the plan, or, in the case of benefits payable under a plan described in sections 403(b) or 408 of the internal revenue code of 1986, as amended, or section 409 of such code as in effect before January 1, 1984, to the extent provided in any order issued by a court of competent jurisdiction that provides for maintenance or support. This subsection shall not prohibit actions against an employee benefit plan, or fund for valid obligations incurred by the plan or fund for the benefit of the plan or fund. This subsection does not apply to section 4 of this act.

(4) For the purposes of this section, the term "employee benefit plan" means any plan or arrangement that is described in RCW 49.64.020, including any Keogh plan, whether funded by a trust or by an annuity contract, and in sections 401(a) or 403(a) of the internal revenue code of 1986, as amended; or that is described in sections 403(b) or 408 of the internal revenue code of 1986, as amended, or section 409 of such code as in effect before January 1, 1984. The term "employee benefit plan" shall not include any employee benefit plan that is established or maintained for its employees by the government of the United States, by the state of Washington or any political subdivision thereof, or by any agency or instrumentality of any of the foregoing.

(5) An employee benefit plan shall be deemed to be a spendthrift trust, regardless of the source of funds, the relationship between the trustee or custodian of the plan and the beneficiary, or the ability of the debtor to withdraw or borrow or otherwise become entitled to benefits from the plan before retirement. This subsection shall not apply to child support collection actions issued under chapter 26.18, 26.23, or 74.20A RCW, if otherwise permitted by federal law. This subsection shall permit benefits under any such plan or arrangement to be payable to a spouse, former spouse, child, or other dependent of a participant in such plan to the extent expressly provided for in a qualified domestic relations order that meets the requirements for such orders under the plan, or, in the case of benefits payable under a plan described in sections 403(b) or 408 of the internal revenue code of 1986, as amended, or section 409 of such code as in effect before January 1, 1984, to the extent provided in any order issued by a court of competent jurisdiction that provides for maintenance or support. This subsection does not apply to section 4 of this act.

(6) Unless contrary to applicable federal law, nothing contained in subsection (3), (4), or (5) of this section shall be construed as a termination or limitation of a spouse's community property interest in an individual retirement account held in the name of or on account of the other spouse, the account holder spouse. At the death of the nonaccount holder spouse, the nonaccount holder spouse may transfer or distribute the community property interest of the nonaccount holder spouse in the account holder spouse's individual retirement account to the nonaccount holder spouse's estate, testamentary trust, inter vivos trust, or other successor or successors pursuant to the last will of the nonaccount holder spouse or the law of intestate succession, and that distributee may, but shall not be required to, obtain an order of a court of competent jurisdiction, including any order entered under chapter 11.96 RCW, to confirm the distribution. For purposes of subsection (3) of this section, the distributee of the nonaccount holder spouse's community property interest in an individual retirement account shall be considered a person entitled to the full protection of subsection (3) of this section. The nonaccount holder spouse's consent to a beneficiary designation by the account holder spouse with respect to an individual retirement account shall not, absent clear and convincing evidence to the contrary, be deemed a release, gift, relinquishment, termination, limitation, or transfer of the nonaccount holder spouse's community property interest in an individual retirement account. For purposes of this subsection, the term "nonaccount holder spouse" means the spouse of the person in whose name the individual retirement account is maintained. The term "individual retirement account" includes an individual retirement account and an individual retirement annuity both as described in section 408 of the internal revenue code of 1986, as amended, and an individual retirement bond as described in section 409 of the internal revenue code as in effect before January 1, 1984. As used in this subsection, an order of a court of competent jurisdiction includes an agreement, as that term is used under RCW 11.96.170.

Sec. 7. RCW 41.26.053 and 1991 c 365 s 20 and 1991 c 35 s 25 are each reenacted and amended to read as follows:

(1) Subject to subsections (2), (3), and ((~~(3)~~)) (4) of this section, the right of a person to a retirement allowance, disability allowance, or death benefit, to the return of accumulated contributions, the retirement, disability or death allowance itself, any optional benefit, any other right accrued or accruing to any person under the provisions of this chapter, and the moneys in the fund created under this chapter, are hereby exempt from any state, county, municipal, or other local tax and shall not be subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency laws, or any other process of law whatsoever, and shall be unassignable.

(2) On the written request of any person eligible to receive benefits under this section, the department may deduct from such payments the premiums for life, health, or other insurance. The request on behalf of any child or children shall be made by the legal guardian of such child or children. The department may provide for such persons one or more plans of group insurance, through contracts with regularly constituted insurance carriers or health care service contractors.

(3) Subsection (1) of this section shall not prohibit the department from complying with (a) a wage assignment order for child support issued pursuant to chapter 26.18 RCW, (b) an order to withhold and deliver issued pursuant to chapter 74.20A RCW, (c) a notice of payroll deduction issued pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order issued by the department, (e) a court order directing the department of retirement systems to pay benefits directly to an obligee under a dissolution order as defined in RCW 41.50.500(3) which fully complies with RCW 41.50.670 and 41.50.700, or (f) any administrative or court order expressly authorized by federal law.

(4) Subsection (1) of this section does not apply to section 4 of this act.

Sec. 8. RCW 41.28.200 and 1939 c 207 s 21 are each amended to read as follows:

The right of a person to a pension, an annuity or a retirement allowance, to the return of contributions, the pension, annuity or retirement allowance itself, any optional benefit, any other right accrued or accruing to any person under the provisions of this chapter, and the moneys in the fund created under this chapter shall not be subject to execution, garnishment, attachment, or any other process whatsoever and shall be unassignable except as in this chapter specifically provided. This section does not apply to section 4 of this act.

Sec. 9. RCW 41.32.052 and 1991 c 365 s 21 and 1991 c 35 s 63 are each reenacted and amended to read as follows:

(1) Subject to subsections (2), (3), and ((~~(3)~~)) (4) of this section, the right of a person to a pension, an annuity, a retirement allowance, or disability allowance, to the return of contributions, any optional benefit or death benefit, any other right accrued or accruing to any person under the provisions of this chapter and the moneys in the various funds created by this chapter shall be unassignable, and are hereby exempt from any state, county, municipal or other local tax, and shall not be subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency laws, or other process of law whatsoever.

(2) This section shall not be deemed to prohibit a beneficiary of a retirement allowance who is eligible:

(a) Under RCW 41.05.080 from authorizing monthly deductions therefrom for payment of premiums due on any group insurance policy or plan issued for the benefit of a group comprised of public employees of the state of Washington or its political subdivisions;

(b) Under a group health care benefit plan approved pursuant to RCW 28A.400.350 or 41.05.065 from authorizing monthly deductions therefrom, of the amount or amounts of subscription payments, premiums, or contributions to any person, firm, or corporation furnishing or providing medical, surgical, and hospital care or other health care insurance; or

(c) Under this system from authorizing monthly deductions therefrom for payment of dues and other membership fees to any retirement association composed of retired teachers and/or public employees pursuant to a written agreement between the director and the retirement association.

Deductions under (a) and (b) of this subsection shall be made in accordance with rules that may be adopted by the director.

(4) Subsection (1) of this section does not apply to section 4 of this act.

Sec. 10. RCW 41.40.052 and 1991 c 365 s 22 and 1991 c 35 s 92 are each reenacted and amended to read as follows:

(1) Subject to subsections (2), (3), and ((~~(3)~~)) (4) of this section, the right of a person to a pension, an annuity, or retirement allowance, any optional benefit, any other right accrued or accruing to any person under the provisions of this chapter, the various funds created by this chapter, and all moneys and investments and income thereof, are hereby exempt from any state, county, municipal, or other local tax, and shall not be subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency laws, or other process of law whatsoever, and shall be unassignable.

(2) This section shall not be deemed to prohibit a beneficiary of a retirement allowance from authorizing deductions therefrom for payment of premiums due on any group insurance policy or plan issued for the benefit of a group comprised of public employees of the state of Washington or its political subdivisions and which has been approved for deduction in accordance with rules that may be adopted by the state health care authority and/or the department, and this section shall not be deemed to prohibit a beneficiary of a retirement allowance from authorizing deductions therefrom for payment of dues and other membership fees to any retirement association or organization the membership of which is composed of retired public employees, if a total of three hundred or more of such retired employees have authorized such deduction for payment to the same retirement association or organization.

(4) Subsection (1) of this section does not apply to section 4 of this act.

Sec. 11. RCW 43.43.310 and 1991 c 365 s 23 are each amended to read as follows:

(1) Except as provided in subsections (2), (3), and ((~~(3)~~)) (4) of this section, the right of any person to a retirement allowance or optional retirement allowance under the provisions hereof and all moneys and investments and income thereof are exempt from any state, county, municipal, or other local tax and shall not be subject to execution, garnishment, attachment, the operation of bankruptcy or the insolvency laws, or other processes of law whatsoever and shall be unassignable except as herein specifically provided.

(2) Subsection (1) of this section shall not prohibit the department of retirement systems from complying with (a) a wage assignment order for child support issued pursuant to chapter 26.18 RCW, (b) an order to withhold and deliver issued pursuant to chapter 74.20A RCW, (c) a notice of payroll deduction issued pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order issued pursuant to chapter 41.50 RCW, (e) a court order directing the department of retirement systems to pay benefits directly to an obligee under a dissolution order as defined in RCW 41.50.500(3) which fully complies with RCW 41.50.670 and 41.50.700, or (f) any administrative or court order expressly authorized by federal law.

(3) Subsection (1) of this section shall not be deemed to prohibit a beneficiary of a retirement allowance from authorizing deductions therefrom for payment of premiums due on any group insurance policy or plan issued for the benefit of a group comprised of members of the Washington state patrol or other public employees of the state of Washington, or for contributions to the Washington state patrol memorial foundation.

(4) Subsection (1) of this section does not apply to section 4 of this act.