U.S. v. France
U.S. Ct. Apps., Seventh Cir., Apr. 7, 2015
The Seventh Circuit ruled that the federal government has the power to garnish monthly payments from a private disability insurance policy belonging to a dentist that had been ordered, as part of his guilty plea to mail fraud, to pay restitution to victims for a fraudulent billing scheme.
Here, the dentist was ordered to pay $800,000 in restitution to the victims of his fraudulent billing scheme in 2002. However, in 2014, he had paid less than $11,000 towards that amount. Based on the information from the insurance company, the government moved to garnish the entire monthly distributions of $16,296 from his private disability policy under the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3613(a). The dentist and his ex-wife argued that the disability payments were at least partially exempt from garnishment, in part because a portion that the ex-wife was receiving was for child support. The district court ordered garnishment of the entire monthly disability payments. The district court also concluded that state law exemptions did not apply because the government was proceeding under federal law.
The Seventh Circuit affirmed, finding that Section 3613(a)(1) selectively incorporated exemptions from the Internal Revenue Code and made express exceptions for two specific types of disability payments – workers’ compensation and military-related disability payments – without mentioning private disability insurance.