Richard Eric Johnson v. Gillian Wheeler Johnson , 999 N.E.2d 56 ( 2013 )

ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Bruce A. Kotzan Michael G. Ruppert
Indianapolis, Indiana Jaimie L. Cairns
Indianapolis, Indiana
Dec 12 2013, 11:46 am
In the
Indiana Supreme Court
No. 49S05-1303-DR-199
RICHARD ERIC JOHNSON,
Appellant (Petitioner below),
v.
GILLIAN WHEELER JOHNSON,
Appellee (Respondent below).
Appeal from the Marion Superior Court, No. 49D03-9906-DR-000898
The Honorable Patrick L. McCarty, Judge
On Petition to Transfer from the Indiana Court of Appeals, No. 49A05-1202-DR-81
December 12, 2013
David, Justice.
The Indiana Child Support Guidelines provide both structure and flexibility for trial
courts to set and modify child support obligations in ways tailored to the circumstances of the
parties before them. The Guidelines obligate trial courts to follow certain processes and consider
certain factors, but there remains a degree of latitude within which a court may fashion an order
that best meets the needs of the child and also reflects the financial realities of the parents.
Here, the trial court modified a prior child support order in several respects and the
noncustodial parent appealed. The Court of Appeals affirmed in part and reversed in part,
including reversing the trial court’s determination of credits for the custodial parent’s health
insurance costs and the noncustodial parent’s Social Security benefits. We grant transfer and
affirm the trial court on those two issues, finding its approach to be appropriate in light of the
flexibility afforded by our Guidelines, and summarily affirm the Court of Appeals in all other
respects.
Facts and Procedural History
Eric and Gillian Johnson married in 1994 and divorced in 1999, with two children
resulting from the marriage. They executed a comprehensive settlement agreement, later
approved by a trial court in a 1999 divorce decree, under which Gillian was granted physical
custody of the two children with both parties sharing legal custody. As another part of that
agreement and decree, Eric was ordered to pay Gillian ninety dollars per week, per child, for
child support and also maintain health insurance for the children. Eric and Gillian also agreed to
each pay fifty percent of the children’s uninsured healthcare expenses.
In 2003, Eric retired from the Marion County Sheriff’s Department, terminating his
eligibility for group insurance coverage. He and Gillian agreed to a modification of the 1999
decree that required Gillian to obtain a health insurance policy for their two children from her
employer, and dropped Eric’s weekly child support to seventy-five dollars per week, per child. 1
1
This reduction was not a result of Eric’s retirement; the original child support calculation apparently did
not factor in three children that Eric had prior to his marriage with Gillian.
2
In 2011, Eric sought to modify the 1999 decree again. Eric was now receiving Social
Security Retirement benefits and because of that Gillian was receiving a monthly benefit for each
child. Eric sought to credit that amount against his child support obligation. He also sought to
modify his obligation to pay a percentage of the children’s higher education costs and his
parenting time allotment. Gillian responded, alleging that she had incurred uninsured health care
expenses for which Eric had not paid his fifty percent share and also requesting an order that Eric
pay a portion of the children’s extracurricular expenses.
The parties also disagreed as to the amount of credit Gillian was owed in the child
support calculation because of the cost for her to insure the two children. Gillian’s employer
offered three plans: an individual employee plan, for $.08 per month; an individual plus one
plan, for $379.02 per month; and a family plan, for $494.54 per month. Gillian was on the
family plan in order to insure everyone—however, by this point she had another child outside of
the two from her marriage to Eric. Eric therefore claimed that her base insurance cost was that
of the individual plus one plan, and she should be awarded a credit equal only to the difference
between that plan and the family plan—an amount that calculated to $26.75 per week. Gillian,
however, claimed that her credit should be two-thirds of the cost of insuring all three of her
children. In other words, the cost for each child would be the cost of the family plan minus the
amount for Gillian’s individual coverage, divided by three; the credit for the two children would
then be two-thirds of that amount—or $76.67 per week.
The trial court credited Eric for the children’s Social Security benefits by including the
benefits in Gillian’s weekly adjusted income on the child support obligation worksheet. It then
gave Gillian a credit in the amount of $76.67 per week for the cost incurred in obtaining health
insurance. The net result reduced Eric’s child support obligation to a total of $138 per week,
down from $150 per week. It also ordered Eric to pay additional money for uninsured health
expenses incurred by the children, up to fifty percent of the costs, denied Eric’s request to
3
modify his obligation to contribute to the children’s higher education expenses, and modified the
parenting time and transportation cost provisions of the 1999 decree.
Eric appealed, claiming the trial court erred in assessing his obligation to pay uninsured
health expenses, applied an inappropriate credit to Gillian when determining her health insurance
costs, erred in its modification of the parenting time, transportation cost, and extracurricular
expenses provisions of the 1999 decree, improperly denied his request to modify his secondary
education obligation, and improperly computed the credit resulting from his Social Security
benefits. The Court of Appeals, in an unpublished memorandum decision, affirmed in part and
reversed in part. Johnson v. Johnson, 979 N.E.2d 718 (Ind. Ct. App. 2012). It affirmed the trial
court’s calculation of uninsured health care expense obligations, modification of parenting time,
and the denial of Eric’s request to modify his higher education obligation. Id. at *1. It reversed,
however, on the issues of Gillian’s health insurance credit, transportation costs, extracurricular
expenses, and the credit for Eric’s Social Security Retirement benefits. Id.
Both Eric and Gillian sought transfer, which we grant only to address the trial court’s
calculation of Gillian’s health insurance credit and the application of Eric’s Social Security
Retirement benefits. We summarily affirm the Court of Appeals decision in all other respects.
Ind. Appellate Rule 58(A).
Standard of Review
The trial court’s judgment here included specific findings of fact and conclusions of law.
The conclusions of law are reviewed de novo. Johnson v. Johnson, 920 N.E.2d 253, 256 (Ind.
2010). But pursuant to Trial Rule 52(A), we “shall not set aside the findings or judgment unless
clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the
credibility of the witnesses.” Factual findings are only clearly erroneous where there is no
4
support for them in the record, either directly or by inference; a judgment is only clearly
erroneous when it applies an improper legal standard to proper facts. Johnson v. Wysocki, 990
N.E.2d 456, 460 (Ind. 2013). “In either case, we must be left ‘with the firm conviction that a
mistake has been made.’” Id. (quoting Yanoff v. Muncy, 688 N.E.2d 1259, 1262 (Ind. 1997)).
I. Gillian’s Credit for Health Insurance Premiums
Indiana’s Child Support Guidelines provide that “[t]he weekly cost of health insurance
premiums for the child(ren) should be added to the basic obligation whenever either parent
actually incurs the premium expense or a portion of such expense.” Ind. Child Support
Guideline 3(E)(2). The commentary to this Guideline explains that this is accomplished by
giving a credit to the parent who actually pays the cost; but “[i]f health insurance coverage is
provided through an employer, only the child(ren)’s portion should be added and only if the
parent actually incurs a cost for it.”
The commentary to Guideline 7, explaining how to apply this credit on the Health
Insurance Premium Worksheet, says that the amount credited should be “the cost of the child’s
portion, if known, or the difference between the cost of insuring a single party versus the cost of
family coverage.” It also notes that unique circumstances may arise, including those involving
subsequent spouses and/or children, and “[t]he treatment of these situations rests in the sound
discretion of the court, including such options as prorating the cost.” Child Supp. G. 7, cmt.
Again, Eric’s position was that the amount credited here should equal the difference
between the family coverage plan and the individual plus one plan, because Gillian needed to
insure her other child regardless. Gillian’s position was that the amount credited should be two-
thirds the cost of insuring all three of her children. The trial court found that Eric’s $26.75 per
week credit was unfair “because [Gillian] cannot insure the parties’ children for that amount.”
5
(App. at 16.) On the other hand, it found Gillian’s proposed $76.67 credit equitable “because she
only gets a credit for two-thirds of the cost, and, thus, if she sought child support for her
subsequently born child and received a one-third credit for his portion of the premium she would
ultimately receive credit for the actual amount of health insurance premium costs she pays.”
(App. at 16.)
We recognize that Eric’s position has merit, in that the trial court’s division of the health
insurance premium could be construed as requiring him to pay a portion of the cost to insure
Gillian’s third child. And the fact that that Gillian apparently receives no support from the father
of her third child is certainly not Eric’s fault.
Nevertheless, that does not mean this assessment of a credit is clearly erroneous. For one
thing, even if Gillian did not have her subsequent child she could not insure the two children
under the individual plus one plan—she would still have to pay the full cost of the family plan.
Eric’s proposal therefore could not represent the cost Gillian actually incurred in obtaining health
insurance for their two children.
And for another thing, because Gillian does have the subsequent child, the trial court’s
apportionment assigns each child an equal monetary value with respect to this credit. In theory,
if Gillian obtained child support from the father of the subsequent third child, that amount would
be reflected as a credit equal to the amount credited for one of her and Eric’s children. Eric’s
proposal, however, would result in Gillian receiving a substantially larger credit for that third
child than for the other two.
While this certainly works to Eric’s benefit, it would have the reverse impact on that third
child’s father. Under Eric’s proposal, Gillian would be responsible for her own coverage and
Eric would be responsible for the difference between the individual plus one plan and the family
plan—around $115 per month. The third child’s father, however, would be responsible for the
6
difference between Gillian’s individual plan and the individual plus one plan—just a little under
$380 per month.
In sum, while we acknowledge that other trial courts might approach this issue
differently, when the Guidelines do not explicitly dictate a bright-line procedure to be followed
our standard of review is flexible enough to permit the trial court judge to fashion child support
orders that are tailored to the circumstances of the particular case before them and consequently
reflect their best judgment. Here the trial court fashioned a solution that it believed was
equitable to the parties and we are not left with a firm conviction that a mistake was made by its
doing so. We therefore affirm the trial court with respect to the credit Gillian received for her
health insurance premium costs.
II. Eric’s Social Security Retirement Benefits
A parent’s child support obligation may also be subject to an adjustment for Social
Security benefits. Child Supp. G. 3(G)(5). Social Security Disability benefits are automatically
included in the weekly gross income of the noncustodial parent and applied as a credit to his or
her child support obligation. Child Supp. G. 3(G)(5)(a)(2)(ii). Social Security Retirement
benefits, however, “may, at the court’s discretion, be credited to the noncustodial parent’s
current child support obligation. The credit is not automatic. The presence of Social Security
Retirement benefits is merely one factor for the court to consider in determining the child
support obligation or modification of the obligation.” Child Supp. G. 3(G)(5)(a)(2)(i). The
rationale for this Guideline arose in Stultz v. Stultz, 659 N.E.2d 125 (Ind. 1995).
In Stultz, a noncustodial father sought to modify his child support obligation to reflect, in
part, Social Security Retirement benefits being paid directly to his children. The trial court
denied the modification, finding the retirement benefits were not income for either the children
7
or retiree, but instead a benefit made available to the children at no cost to a retiree. It also noted
that the Indiana Code required trial courts to consider, among other things, “the standard of
living the child would have enjoyed had the marriage not been dissolved or had the separation
not been ordered” in fashioning (or modifying) a child support order. Id. at 127. And had the
Stultz’s marriage not dissolved, “the children would have enjoyed the benefit of all of the
[mother’s] income plus the retirement, plus the social security retirement benefits they received,
plus the [father’s] income.” Id.
The Court of Appeals reversed, holding that a parent ordered to pay child support is
always entitled to a credit for any Social Security benefits received by that parent’s children. Id.
at 126. It relied on a case holding that a disabled parent was entitled to receive a credit against
his or her child support obligations in an amount equal to Social Security Disability benefits
received by the child. Id. at 127; see Poynter v. Poynter, 590 N.E.2d 150 (Ind. Ct. App. 1992),
trans. denied. The Court of Appeals equated Social Security Retirement benefits to Social
Security Disability benefits, and concluded that the trial court had no discretion not to award the
noncustodial parent a credit for those benefits received. Stultz, 659 N.E.2d at 128.
We disagreed and affirmed the trial court, noting first that on a dollar for dollar credit
system, the result reach by the Court of Appeals would effectively have reduced the father’s
obligation to nothing. Id. at 126. But we also found significant case law supporting the view
that a credit for Social Security Retirement benefits was not automatic, and rather was “merely
one factor for the trial court to consider in determining the child support obligation or
modification of the obligation.” Id. at 128. And the trial court reviewed a number of factors in
reaching its decision, not the least of which was the statutory consideration of the standard of
living the children would have enjoyed had the marriage lasted—and that standard of living
would have included the benefits of the father’s retirement. Id.
8
We refused to completely foreclose “the possibility of other trial courts, in certain cases,
granting a credit to a social security recipient parent for benefits received by a child,” but
nevertheless anticipated “that such a credit will generally be denied, at least with respect to social
security retirement benefits.” 2 Id. at 128–29. “Congress has created an entitlement for the minor
children of all social security participants who retire. But it is the children’s entitlement, not the
retiree’s, and should not as a general rule diminish the legal obligation of retirees to support their
children.” Id. at 130.
Here, the trial court engaged in a two-step analysis in determining if Eric should receive a
credit for his children’s Social Security Retirement benefits, and if so, in what amount. Looking
first to the statutory factors governing the determination of child support, it focused on Eric and
Gillian’s financial resources and the standard of living the children would have enjoyed had their
parents remained married. 3 It found that Gillian was the sole wage-earner in a family of four,
whereas Eric’s household consisted only of Eric and his new wife—who was employed full-
time—and that both Eric and Gillian had been able to increase their savings in recent years. It
also found that if it applied a dollar for dollar credit, the children’s standard of living would be
reduced by more than thirty percent.
2
This particular point was not adopted into the Guidelines.
3
Those factors are now codified at Indiana Code § 31-16-6-1(a) (Supp. 2013), and include:
(1) the financial resources of the custodial parent;
(2) the standard of living the child would have enjoyed if:
(A) the marriage had not been dissolved; or
(B) the separation had not been ordered; or
(C) in the case of a paternity action, the parents had been married and remained
married to each other;
(3) the physical or mental condition of the child and the child’s educational needs; and
(4) the financial resources and needs of the noncustodial parent.
9
It did determine, however, that Eric was entitled to some credit in the determination of
his child support because of the Social Security Retirement benefits. To determine the amount,
the trial court cited a footnote in Stultz, in which this Court said
[I]n those situations where the trial court concludes that it is
appropriate to give a Social Security recipient parent credit for
Social Security benefits paid directly to a child, the trial court
should in fact include the amount of the benefits in the recipient
parent’s adjusted income for purposes of calculating the parents’
relative share of the total child support obligation.
(App. at 14 (citing Stultz, 659 N.E.2d at 126 n.2).) It therefore included the Social Security
Retirement benefits in Gillian’s weekly adjusted income on the child support worksheet.
On appeal, Eric argues that “[t]his approach set the basic support obligation at a higher
level than the children would have enjoyed had the family remained intact and thereby devoted a
substantially higher percentage of total family income to the children’s support.” (Appellant’s
Br. at 32.) Instead, he says, “an adjustment for Gillian’s receipt of these funds should be shown
as a credit to him on line 7 of the [child support worksheet].” (Appellant’s Br. at 32.) This, he
concedes, would have resulted “in a negative support amount.” (Appellant’s Br. at 36 n.3.) We
cannot agree with his proposal.
We recognize that determination of how to apply a child’s receipt of Social Security
Retirement benefits in a child support order can be complicated, and present challenges to a trial
court—and not applying those benefits poses the risk that the trial court may fashion a child
support order under which “the children of divorcing parents enjoy a standard of living much
greater than that which they enjoyed pre-dissolution.” Thompson v. Thompson, 868 N.E.2d 862,
865 (Ind. Ct. App. 2007). This would most certainly be the opposite—but equally
inappropriate—danger of applying the Poynter methodology.
10
And we likewise agree—and our Child Support Guidelines now reflect—that a
mechanical application of the trial court methodology in Stultz (i.e., a strict denial of credit)
would be improper, and the opinion “should be applied to provide for the exercise of the trial
court’s discretion.” Id. at 868 (encouraging use of methodology from Stultz’s footnote 2).
“[U]tilizing such a methodology will promote the aims of the Support Guidelines, will treat
similarly situated families the same, and will provide for children receiving the same degree of
support post-dissolution that they had when their parents’ marriage was intact.” Id.Eric’s claim—that the trial court’s order gives his children a higher standard of living
than they would have enjoyed had their parents’ marriage continued, and devotes a substantially
higher percentage of total family income to child support—is language pulled from Thompson.
See id. at 869. The implication of his argument is that this language is the lens through which
we should review the modification of his child support order. We disagree.
We do not read Thompson as setting forth the test for reviewing every determination of a
credit for Social Security Retirement benefits. Rather, the case very articulately expresses two
extreme approaches for that credit. On one end there are those instances where the trial court
provides a dollar for dollar credit to the noncustodial parent, effectively wiping away the child
support obligation. See id. at 868. And on the other end are those cases where the child support
obligation is determined without any consideration of the benefits, effectively providing the
child—and custodial parent—with a windfall. See id. At and beyond those two boundaries,
Thompson said, generally lies the abuse of the trial court’s discretion.
The trial court here followed neither of those extreme approaches. Instead, it followed
the flexible methodology set forth in Stultz, encouraged in Thompson, and reflected in the Child
Support Guidelines. And it reached an amount somewhere in between the two extremes.
Moreover, without needing to assess whether that determination was in and of itself clearly
erroneous, Eric’s proposed alternative—a dollar for dollar credit effectively negating his child
11
support obligation—is expressly prohibited by both Stultz and Thompson. Essentially, he is
asking us to revisit Stultz and hold that the entitlement owed to his children by the government
should relieve him of his financial obligation to provide support. This we will not do.
Conclusion
We therefore affirm the trial court order with respect to the calculation of Gillian’s health
insurance premium credit and application of Eric’s Social Security Retirement benefits. We
summarily affirm the Court of Appeals as to the remaining issues.
Dickson, C.J., Rucker, Massa, and Rush, J.J., concur.
12