HB 153-FN – AS AMENDED BY THE SENATE
15Feb2005… 0082h
01/18/06 0267s
02/02/06 0613s
2005 SESSION
05/10
HOUSE BILL 153-FN
AN ACT relative to the collection of debts owed to the state and relative to frivolous court actions involving state construction projects.
SPONSORS: Rep. Mooney, Hills 19; Rep. R. L'Heureux, Hills 19; Rep. Hinkle, Hills 19; Rep. Gibson, Hills 19; Sen. Roberge, Dist 9; Sen. D'Allesandro, Dist 20
COMMITTEE: Executive Departments and Administration
This bill:
I. Authorizes the department of administrative services to oversee, on behalf of state agencies, debt collection conducted by collection agencies and law firms. Recovered funds, less collection costs, shall be returned to the appropriate agency.
II. Requires the department of administrative services to submit an annual report on the collection activity to the legislature.
III. Permits the prevailing party in a case involving a state construction project to recover attorneys’ fees and costs if the court finds the case was frivolous or otherwise intended to harass or intimidate the prevailing party.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Explanation: Matter added to current law appears in bold italics.
Matter
removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
15Feb2005… 0082h
01/18/06 0267s
02/02/06 0613s
05-0161
05/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Five
AN ACT relative to the collection of debts owed to the state and relative to frivolous court actions involving state construction projects.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Subdivision; The State and its Government; Treasurer and Accounts; Collection of Debts Due the State. Amend RSA 6 by inserting after section 43 the following new subdivision:
Collection of Debts Due the State
6:44 Collection of Public Debts by Collection Agencies or Law Firms.
I.(a) The department of administrative services shall manage and be responsible for overseeing the debt collection function for all state agencies by private collection agencies or law firms. All net proceeds, after legal fees and expenses of suit and collection, shall be credited to the agency account for which the claim was collected.
(b) The amount of the collection fee and the terms and conditions of retention shall be negotiated by the department of administrative services and the private collection agency or law firm, subject to governor and council approval, and the requirements of this subparagraph. If the debt allows for collection of legal fees and expenses, the amount of the collection fee as negotiated between the department of administrative services and the private collection agency or law firm shall be added to the bill of costs to be paid by the debtor.
II. No debt may be assigned to a collection agency or law firm unless:
(a) There have been at least 2 documented attempts, at least 10 days apart, to notify the debtor of the existence of the debt and of the fact that the debt may be assigned to a collection agency or law firm for collection if it is not paid; and
(b) At least 15 days have elapsed from the last notice attempt.
III. Collection agencies or law firms assigned debts under this section shall have those remedies and powers which would be available to them as assignees of the state. The collection agencies or law firms are likewise bound by applicable laws governing unfair collection practices.
IV. For purposes of this section, a private collection agency or law firm shall cease its efforts designed to collect the debt and inform the department of administrative services and the agency upon the occurrence of any of the following:
(a) Direction from the department of administrative services.
(b) Bankruptcy of the account debtor.
(c) Determination by the private collection agency or law firm, after diligent inquiry, that the debt is non-collectible.
(d) Upon order of a court having jurisdiction over the debtor in a criminal or civil matter.
(e) Direction from the department of justice, after consultation with the department of administrative services.
V. The commissioner of administrative services shall submit an annual report, on or before June 30, to the speaker of the house of representatives, the president of the senate, and the chairperson of the house standing committee on executive departments and administration, relative to collection activity under this section. The report shall include, for each account: the relevant agency; the amount to be collected; the amount collected and whether it was collected by a collection agency, law firm, or court action initiated by the department of administrative services; any expenses incurred; and any amount outstanding.
VI. For purposes of this section, the term “debt” shall include fines and other debts, including the fee required under subparagraph I(b) of this section.
2 New Section; Frivolous Actions Relative to State Construction Projects. Amend RSA 507 by inserting after section 15 the following new section:
507:15-a Frivolous Actions Relative to State Construction Projects.
I. If, upon the hearing of any action against the state pertaining to a state construction project, which has commenced after the necessary state and federal approvals for construction have been issued, it appears to the court that the action is frivolous or intended to otherwise harass or intimidate the prevailing party, then the court, upon motion of a prevailing party or on its own motion, may order summary judgment or other relief against the party who brought such action, and award the amount of costs and attorneys’ fees incurred by the prevailing party. Costs shall include, but not be limited to, increased construction costs incurred by the state.
II. For purposes of this section, “state construction project” shall mean a capital budget project.
3 Effective Date. This act shall take effect July 1, 2006.
LBAO
05-0161
Amended 3/15/05
HB 153 FISCAL NOTE
AN ACT relative to the collection of debts owed to the state.
FISCAL IMPACT:
The Department of Administrative Services states this bill, as amended by the House (House Amendment #2005-0082h), will increase state restricted revenue by $32,450 in FY 2006 and each year thereafter. The Department of Justice states this bill will increase state general fund expenditures by $27,748 in FY 2006, $52,744 in FY 2007, and increase state restricted expenditures by $55,146 in FY 2008, and $57,631 in FY 2009. There will be no fiscal impact on county and local revenue or expenditures.
METHODOLOGY:
The Department of Administrative Services states this bill would allow agencies and departments to enter into written contracts with private collection agencies or law firms to collect debts due the State. The Department’s main activity associated with collection of revenue on an ongoing basis is managed by the Office of Cost Containment (OCC). OCC will continue to collect on active ongoing cases and will use their powers of returning to court for enforcement of delinquencies. The Department states OCC does not have adequate resources to locate individuals that have relocated without a forwarding address. For this group, OCC estimates $649,000 for calendar year 2004 billings are outstanding due to bad addresses. The Department estimates that only 5% of this amount might be collectible due to the difficulty associated with locating these individuals, and the limited resources of the debtors. The Department estimates this bill could increase state revenue by $32,450 ($649,000 x 5% collectible) annually. This bill would also allow the collection agencies or law firms to charge debtors an additional fee of up to 35% of the amount owed, which would be retained by the agency or law firm. Amounts would be deposited into the newly established Debt Recovery Fund, and used by the Department of Justice for the expenses of managing the collection function.
The Department of Justice states this bill permits state agencies to retain private collection agencies or law firms for the purpose of collecting debts owed to any state agency. The Department is charged with administering this process for all state agencies, including negotiating the terms and conditions of any contracts. This would also include general oversight of the collection process, management of the non-lapsing account, disbursement of the proceeds, and the reporting function. This administrative function will require general funds for a Program Specialist for a period of two years. This bill also permits the Department to use the Debt Recovery Fund for the expenses associated with managing the collection function. The Department estimates it will take two years for the process to become established and generate sufficient proceeds to support the administrative position, beginning in FY 2008. The Department’s Civil Bureau can absorb the cost of the contracting process and legal oversight of the administrative function. The Department estimates benefits at 40% of salary, instead of the 44% contained in Department of Administrative Services’ Budget Manual, due to the level of attorney salaries. Assuming annual step increases, an effective date of January 1, 2006, the cost of a computer, printer, and furniture, the Department estimates state general fund expenditures will increase by $27,748 in FY 2006, $52,744 in FY 2007, and state restricted expenditures (Debt Recovery Fund) will increase by $55,146 in FY 2008, and $57,631 in FY 2009.
The Administrative Office of the Courts states that most of the Judicial Branch’s fine collection occurs in the District Courts. The District Courts have a fine collection project underway in about one quarter of the District Courts, and expects to expand it to all District Courts during the coming year. Should the Judicial Branch decide to use collection agencies or law firms to collect fines pursuant to this bill, it is likely to do so on a pilot basis in selected locations. The Office cannot determine a potential fiscal impact at this time.
The Association of Counties states that county governments already have authority to contract for debt collection services. The Association is unable to determine if this bill’s restrictions would impact the available contractual agreements between county governments and private collection agencies.
The New Hampshire Municipal Association states this bill will have no fiscal impact on local revenue or expenditures since cities and towns already have authority to hire debt collectors.
The
Office of Legislative Accounting states this bill would have no fiscal impact.