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Child support changes targeting the rich?

January 19, 2011

A case before the Indiana Court of Appeals calls into question the constitutionality of the state’s new child support guidelines, challenging the revisions that last year altered the payment scheme for high-income earners and raised the ceiling on child support obligations.

The case has the potential to impact custody and divorce dockets throughout the state, raising an issue that is being watched nationally and drawing some family law organizations to criticize what’s being dubbed “hidden alimony.” Some say it goes against the purpose of child support.

In Allan C. Bir v. Cynthia Bir, No. 06A01-1009-DR-449, a divorced father and mother are battling over the extent to which the father owes child support. Allan Bir is an Indianapolis businessman who owns Mi-Tech Metals, and he and his wife Cynthia Bir filed for divorce in early 2008 after 18 years of marriage. The trial court later that year approved a preliminary entry for $4,300 per month in support of the couple’s two minor children.

After Indiana’s revisions to its child support guidelines took effect in 2010, Cynthia filed a motion to modify that child support based on the new income calculations that came to fruition in 2009. This was the first revision of its kind in years, and it changed the mathematical formula the state had used to calculate child support for more than 20 years.

In making its amendment recommendations, the state Judicial Conference domestic relations committee used differing economic data and methodologies to determine weekly support payments for different income ranges and how to apportion the obligations between parents.

Previously, multiple factors were entered into a formula for a particular child support calculation, and the most substantial ones were the parents’ respective incomes. But the former guidelines put less weight on those once a parent’s income reached $4,000 a week or $208,000 a year, and the child support obligation would essentially “plateau.”

The revised guidelines eliminated that “plateau effect,” meaning that a child support obligation now continues increasing directly as income increases – regardless of the particular child or family situations that might be at play. The modifications aren’t automatic or even guaranteed, and it’s up to each local court to review a particular matter to determine if an increase is warranted.

In the Bir case, both parties disagree about what the increase should look like. Allan had previously been paying $4,300 a month, but the new guidelines called for more. Cynthia told the court that she wanted the children to continue enjoying the same lifestyle as they’d had prior to the separation, including traveling abroad. She testified that they’d previously been able to use the family’s private plane but now have to travel commercially, and they have also had to cut back on special trips.

In mid-2010, Boone Circuit Judge Steven David – who has since been elevated to the state’s Supreme Court – held a hearing on that matter and ultimately issued his own order about what the Bir payments should look like.

Though the new guidelines recommended a weekly support obligation of about $37,786 per week, Judge David determined that significant 3,678 percent increase was not warranted. Nothing in the family’s case had changed since the previous amount was approved, he ruled, and that hike would be “unjust.”

Instead, the trial judge issued a provisional order that increased the amount from $4,300 a month to $36,980 per month – a 760 percent increase, on top of what his attorneys say he pays separately for private school and other items.

Citing his children’s expenses, Allan filed a motion to review the provisional child support order on the grounds that the children only needed $8,600 per month and that the father’s budget is not now inadequate or unreasonable.

Judge David denied the motion to correct, and Allan appealed.

While briefing is in its early stages before the Court of Appeals, the Bose McKinney & Evans legal team representing Allan filed an emergency transfer request to the Indiana Supreme Court in mid-November.

The attorneys argued that the guidelines are unconstitutional and the Indiana Court of Appeals doesn’t have the authority to go against them, so the justices needed to decide the issue first. The mother’s attorneys argued that at the trial level, Judge David had deviated from the guidelines’ proscribed amount and issued a provisional order calling for less than a quarter of the amount suggested by the guidelines, and so a constitutional challenge wasn’t ripe for review by the higher court.

Bryan Babb Babb

Both sides disagreed on whether this case raised an issue of great public importance. With Justice David recusing himself on the case he’d handled as a trial-level judge, the other four justices denied the emergency transfer request and left jurisdiction with the intermediate appellate court.

Briefs in the Bir case describe the weekly incomes at less than $10,000 using an “income shares model,” while the incomes higher than $10,000 a week are described as using a “percentage of obligor income model” or “assumption.”

Allan’s attorneys argue that it simply does not take $37,786 weekly or almost $2 million a year to raise two children. The father argues that the guidelines produced “arbitrary and capricious awards” and denied him due process and equal protection, since lower income earners aren’t considered the same way when calculating their child support obligations.

Attorneys for Allan argue, in part, that the new guidelines will fuel more litigation and cause more problems for families and children facing divorces and custody issues. But Cynthia’s attorneys disagreed, saying that it should actually help parties reach agreements in these cases.

Mulvaney Karl Mulvaney

“While litigation may have a negative impact on the children of divorced parents, the potential for litigation is not a result of the Guidelines, but a result of divorced parents’ refusal to use the Guidelines in a reasonable attempt to reach an amicable agreement,” attorney Karl Mulvaney with Bingham McHale wrote in the brief. “Parents dissolving their marriage are capable of setting the tone and bear the responsibility of working toward amicable resolutions of their disputes and protecting their children from the effects of litigation. Ultimately, the impact of litigation on a small number of families, especially when it could be controlled by the parties themselves, is not an issue of great public importance.”

Other states have addressed the issue, the briefs state. Appellate courts in Hawaii, Kentucky, Connecticut, Delaware, Michigan, Missouri, and Texas have touched on impermissible takings and what constitutes “something other than child support.” At this point, the mother’s attorneys haven’t filed a brief addressing the constitutional claims and instead focused on the procedural and jurisdictional issues related to the emergency transfer.

A trio of family-focused organizations have signaled their interest in this case and the overarching issue, signing on as amicus curiae parties in the emergency transfer request. The American Coalition for Fathers and Children, the Institute for the American Family, and Fathers and Families are watching the outcome and say it could have long-term impacts on policy and statutory development not only inside Indiana but nationally.

The groups pushed for quick resolution of this case not only for the Bir children, but because they, in an amicus brief, argued that this could jeopardize Indiana’s ability to receive federal funding as a result of “insufficient economic data at the high earner level.”

“There are issues in this case which directly address the intersection of federal and state policies and statutes,” wrote the IAF, pointing to topics such as whether state child support guidelines comply with Criminal Federal Rule § 302.56 that requires states to consider “economic data on case data” and the cost of raising children in setting these types of guidelines. “Unrealistic, excessive child support orders such as the one issued in Bir v. Bir do not promote shared parenting; instead they promote the opposite by pitting parents against one another in litigation and creating situations where one parent feels disadvantaged.”•

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