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Make certain garnishee's affidavits are timely filed.

CASE ON POINT: Kenosha Hospital & Med. Cntr. v. Garcia, 683 N.W.2d 425 -WI (2004)

ISSUE: It may surprise many to learn that if an employee has his wages attached or garnished, and his employer, having been duly served with a writ of attachment or garnishment, fails to timely file the necessary affidavit as to the amount of wages on hand at the time of the service of process, the employer can be held responsible for the total amount unpaid on the judgment. In this extraordinary Wisconsin case, a hospital garnished wages. However, hospital personnel departments should be keenly aware that should an employee's wages be garnished and the hospital fails to timely file the necessary affidavit, the hospital (unless otherwise exempt) may be liable for the total amount due on a judgment against its employee.

CASE FACTS: Jesus Garcia was indebted to Kenosha Hospital for more than $20,000 for unpaid medical services. The hospital filed suit against Garcia and obtained a judgment for the amount in question. On September 21, 2001, the hospital commenced a wage garnishment proceeding against Garcia and his employer, Richter Industries, the garnishee, to collect on the unsatisfied civil judgment. Notice of the garnishment action was served on the garnishee's payroll department. The garnishee failed to file the necessary affidavit required by state law. The penalty for failing to timely file an affidavit as to the amount of wages or assets on hand was that the employer, or garnishee, is liable for the entire amount due on the judgment. Often, this can be far in excess of any wages, which are subject to garnishment. On January 2, 2002, a hearing was held on the hospital's motion for judgment against Richter Industries. Richter did not respond or appear at the hearing. The court held Richter Industries responsible for the total balance owed by its employee, Garcia. On January 7, 2002, Garcia filed a petition for bankruptcy. On the same afternoon, the Circuit Court filed an order of judgment awarding the hospital a judgment against Richter Industries for the total amount of the hospital's judgment against Garcia, plus post-judgment costs less the sum of $527, which had been paid by the employee. On January 10, 2002, a notice of bankruptcy was filed on behalf of Garcia in the Kenosha County Circuit Court explaining that Kenosha Hospital had been named as a creditor. The notice stated that "the Bankruptcy Code prohibits further prosecution of this matter without the specific approval of the United States Bankruptcy Court" for the Eastern District of Wisconsin. Richter Industries moved to vacate the judgment. The Circuit County Court denied Richter Industries' motion to vacate the judgment. Richter appealed. The Wisconsin Court of Appeals affirmed the judgment of the lower court. Richter appealed further.

COURT'S OPINION: The Supreme Court of Wisconsin reversed the judgment of the lower courts and remanded the case for further hearing not inconsistent with its decision. The court noted that the purpose of the statute making a garnishee liable for the entire obligation of a debtor is apparently to induce satisfaction of garnishment by threatening a garnishee with the penalty of being responsible for the entire amount of the debt owed to a creditor. The court agreed with Richter that personal service of the notice of the motion for judgment against the garnishee is required. The court found that this did not contravene the legislative goal of inducing employers to withhold garnishing of employees' funds, which were garnished and file the appropriate response with the respective courts. The court found that the fact that the employee had gone into bankruptcy was irrelevant since the suit by Richter Industries in this case was against the hospital. It was predicated upon what it had failed to do relative to complaint with state law on garnishments. However, the court concluded that since the hospital failed to make proper service of process on Richter, the judgment of the lower court had to be reversed and remanded the case back to the lower court.

LEGAL COMMENTARY: This case is predicated upon an unusual set of circumstances. However, with the extraordinary number of employees that most hospitals have, since they have three separate shifts, personnel departments of hospitals are more likely to be subject to wage garnishments that most other employers. Accordingly, those responsible for complying with state law and court regulations, which are promulgated to facilitate garnishment, should be aware of the consequences of failing to timely respond when served with garnishment papers. Each hospital should have at least one or more individuals who have responsibility to ensure that a log of garnishments received is kept in a tickler file showing due dates for required responses to be filed either with the court and/or the party garnishing the hospital employee's wages. A dissenting opinion was filed. The dissenting judge seized on the fact that there was a question regarding the validity of service of process. The dissenting judge concluded that since the majority found that Richter Industries did not comply with the requirements for valid service of process sufficient for the court to obtain personal jurisdiction, there was nothing further for the court to consider.

Meet the Editor & Publisher: A. David Tammelleo, JD, is a nationally recognized authority on health care law. Practicing law for over 40 years, he concentrates in health care law with the Providence, R.I. firm of A. David Tammelleo & Associates. He has presented seminars on medical, nursing and hospital law throughout the United States. In addition to his writings as Editor of Medical Law's, Nursing Law's & Hospital Law's Reagan Reports, his legal articles have been published in the most prestigious health law journals. A prolific writer, his thousands of articles, as well as his achievement as an attorney and lecturer, have won him recognition in Martindale-Hubbell's Bar Register of Preeminent Lawyers, Marquis Who's Who in American Law, and Who's Who in America.
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Title Annotation:Legal Focus on Hospital Law Issues; Kenosha Hospital & Med. Cntr. v. Garcia, 683 N.W.2d 425 -WI (2004)
Publication:Hospital Law's Regan Report
Geographic Code:1USA
Date:Jul 1, 2004
Previous Article:Hospital law decisions of note.
Next Article:Do employers have conditional privileges against defamation claims?

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