BILL ANALYSIS SENATE JUDICIARY COMMITTEE Senator Ellen M. Corbett, Chair 2009-2010 Regular Session AB 2619 (Block) As Amended April 28, 2010 Hearing Date: June 15, 2010 Fiscal: No Urgency: No TW:jd SUBJECT Elder and Dependent Adult Abuse: Restitution: Earnings Withholding Orders DESCRIPTION This bill would authorize wage garnishments against defendants convicted of elder or dependent adult financial abuse. BACKGROUND In 1982, the Legislature recognized a need to protect elder and dependent adults from abuse and exploitation, including financial abuse. The Elder Abuse and Dependent Adult Civil Protection Act (EADACPA) was enacted to provide adult protective services agencies, local long-term care ombudsman programs, local law enforcement agencies, and other interested parties the ability to use any means necessary to protect elder and dependent adults from abuse. (AB 1805 (Felando, Ch. 1184, Stats. 1982).) In furtherance of the Legislature's intent to protect elder and dependent adults, the Legislature enumerated several crimes for injury to elder or dependent adults. (SB 1681 (Mello, Ch. 594, Stats. 1984).) SB 1681 also created a civil cause of action for financial abuse of elder and dependent adults. This bill would authorize victims of elder and dependent adult financial abuse to collect on judgments through wage garnishment. CHANGES TO EXISTING LAW (more) AB 2619 (Block) Page 2 of ? Existing law defines financial abuse of an elder or dependent adult as the taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. (Welf. & Inst. Code Sec. 15610.30.) Existing law provides for the issuance of a writ of attachment in any action for damages stemming from the financial abuse of an elder or dependent adult. (Welf. & Inst. Code Sec. 15657.01.) Existing law authorizes courts to award attorney's fees and costs, compensatory damages, and all other remedies otherwise provided by law to victims of elder or dependent adult abuse. (Welf. & Inst. Code. Sec. 15657.5.) Existing law allows courts to issue withholding orders such as to create a lien (wage garnishment) against employees owing judgments. (Code Civ. Proc. Sec. 706.010 et seq.) Existing law provides that a lien continues for a period of one year from the date the earnings of the judgment debtor become payable unless the amount required to be withheld pursuant to the order is paid as required by law. (Code Civ. Proc. Sec. 706.029.) Existing law provides that child support withholding orders are given priority over all other withholding orders. (Code Civ. Proc. Sec. 706.031.) Existing law provides that tax withholding orders are given priority after support withholding orders. (Code Civ. Proc. Sec. 706.077.) This bill would authorize a court to issue an earnings withholding order against a person found guilty of elder or dependent financial abuse. This bill would require the application for issuance of an earnings withholding order to specify how much of the judgment stems from a financial abuse claim. This bill , effective January 1, 2012, would prioritize elder or dependent abuse withholding orders after child support and tax withholding orders. AB 2619 (Block) Page 3 of ? This bill would instruct employers not to withhold earnings under an elder or dependent abuse order unless child support, tax, and prior elder or dependent abuse orders have expired. COMMENT 1. Stated need for the bill The author writes: This [bill] allows victims of elder and dependent adult financial abuse, who are victorious in court but unable to collect from the defendant, a better opportunity to collect restitution through wage garnishment. . . . The bill would give priority to an "earnings withholding order for elder or dependent adult financial abuse" over any other earnings withholding order, and therefore moves victims of elder or dependent adult financial abuse to the front of the line to collect wages. However, earnings withholding orders for spousal and child support and for taxes will still have priority over all other withholding orders including elder or dependent adult financial abuse. AB 2916 also provides that changes to the priority of these withholding orders not be effective until January 1, 2012 so as to provide ample time for all forms to be updated for employers. A supporter of the bill, Insurance Brokers and Agents of the West, further describes the need for this bill as follows: Unfortunately, as with any business, there are some bad actors in the insurance marketplace. In a case where a rogue agent may have committed actions considered to be elder and financial abuse, he or she may be ordered to pay restitution for several cases of fraud and the cost of paying the fines and restitution renders them insolvent. . . . We believe if a rogue insurance agent is convicted of elder and dependent financial abuse, the victim should absolutely be made whole again. AB 2619 recognizes the seriousness of these abuses and would make their restitution a high priority when it comes to wage garnishment. 2. Due process for the defendant AB 707 (McAlister, Chapter 1364, Statutes of 1982) overhauled money judgment enforcements under the Code of Civil Procedure. One of the goals in revising the law was to balance the AB 2619 (Block) Page 4 of ? interests and rights of debtors, creditors, and third parties. AB 707 authorized courts to issue withholding orders whereby employers would subtract specified amounts from the defendant's paycheck in order to provide plaintiffs with judgment recovery. AB 707 set up various procedures necessary to collect a judgment through wage garnishment so that the defendant's rights were adequately protected and the plaintiff would receive restitution. AB 707 also established wage garnishment priority for child support orders. This bill would provide a method for victims of elder or dependent adult financial abuse to collect their awarded judgments through wage garnishments against defendants. This method effectively provides these plaintiffs with an appropriate mechanism with which to collect on their judgment while protecting rights of defendants. Included in the plaintiff's judgment may be reasonable attorney's fees and costs incurred by the victim. To receive attorney's fees and costs, the victim would have to prove by a preponderance of the evidence that the defendant was liable for financial abuse. (Welf. & Inst. Code Sec. 15657.5(a).) The victim may also be awarded compensatory damages. To receive compensatory damages, the victim would have to prove by clear and convincing evidence that the defendant was guilty of recklessness, oppression, fraud, or malice in the commission of financial abuse. (Welf. & Inst. Code Sec. 15657.5(b).) The defendant is given an opportunity in court to present evidence to dispute the victim's claims, and the victim must present a minimum level of evidence in order to win attorney's fees and costs and a higher level of evidence to win compensatory damages. Further, Code of Civil Procedure Section 706.010 et seq. provides exemptions and limitations on wage garnishments which protect the defendant in certain circumstances. Under this bill, when a defendant has failed to pay the plaintiff's judgment or the defendant has become insolvent, the plaintiff would be able to collect the judgment through a wage withholdings order which would garnish a portion of the defendant's wages. Given that defendants have the ability to defend themselves in court and Code of Civil Procedure wage garnishment protections, the mechanism provided by this bill for plaintiff's to collect on their judgment is fair to both the plaintiff and the defendant. 3. Legislature's intent to protect victims of elder and dependent adult abuse AB 2619 (Block) Page 5 of ? In accordance with the Legislature's explicit intent under the EADACPA to protect victims of elder and dependent adult abuse, this bill would allow these victims the ability to recover money awarded to the victims by the court. In many instances, victims of elder and dependent financial abuse have difficulty collecting on the awarded judgments because the defendant fails to pay or becomes insolvent at the hands of other creditors. In these instances, the defendants not only receive the financial gain stolen from the victims but also fail to pay the court's judgment. Victims of elder and dependent adult financial abuse are particularly vulnerable because they have a decreased ability to protect themselves from scam artists. In the event the elder or dependent adult relies on a caretaker for their medical needs, the elder or dependent adult who is a victim of financial abuse may then become a financial burden on their caretakers. By allowing these vulnerable victims to recover through wage garnishment the monies lost to unscrupulous defendants, this bill would provide a necessary avenue for the victims to recover. Support : Consumer Attorneys of California; Insurance Brokers and Agents of the West; National Association of Insurance and Financial Advisors of California Opposition : None Known HISTORY Source : Author Related Pending Legislation : None Known Prior Legislation : See Background and Comment 2. Prior Vote : Assembly Judiciary Committee (Ayes 10, Noes 0) Assembly Floor (Ayes 71, Noes 0) ************** AB 2619 (Block) Page 6 of ?