Shaun M. Webb v. Katherine A. Webb

Shaun M. Webb v. Katherine A. Webb

Civil Action-Family Law-Support- Agreement-Terms-Intent of the Parties-Ambiguity-Parol Evidence-Medical Expenses-Uncovered by Health Insurance-Allocation-Employer Funded Health Savings Account-Income Available for Support-Reimbursement of Medical Expenses

The parties are parents of a child subject to a support Order entered by agreement.  The parties contest whether employer contributions to a health savings account should be considered income available for support under the Order.  Specifically, Shaun M. Webb (“Father”) requested that medical expenses not covered by health insurance following injuries sustained by the child should be paid from Katherine A. Webb’s (“Mother’s) employer funded health savings account before allocation of the uncovered expenses under the Order.

1.  Since the support Order was entered by agreement, the court must begin by examining the language of the agreement itself.

2.  When an agreement is clear and unambiguous, its terms must be enforced.

3.  When an agreement is ambiguous, the court may receive parol evidence in order to ascertain the terms of the agreement.

4.  The goal of the court in receiving parol evidence is to discern the intent of the parties when entering into the agreement.

5.  Where there is confusing and potentially conflicting information contained in the Order regarding responsibility for payment of medical expenses and provision of health insurance coverage that cannot be enforced without reference to parol evidence, the Order is ambiguous.

6.  In light of the fact that it was a priority to Mother that the parties’ older daughter no longer subject to the Order be covered with health insurance, Mother specifically rejected the option of Father’s sole provision of health insurance coverage for the children, Mother elected to provide duplicative insurance coverage knowing that Father also was providing coverage and Mother received a credit for provision of health insurance coverage in calculation of the support amount, the support Order requires both parties to provide health insurance coverage for the child still subject to the Order.

7.  Pennsylvania law is quite broad in its definition of income available for support.

8.  An employer funded health savings account is part of an employee’s compensation and constitutes income available for support. 

9.  An employer funded health savings account is a reimbursement of medical expenses for purposes of Pa.R.C.P. Rule 1910.16-6.

10.  Since the health savings account in this case covers three (3) individuals, one-third of the employer contributed amount should be allocated to the child in this case with any expenses incurred over this amount being considered and treated as unreimbursed medical expenses under the support Order. 

11.  Following the payment of reimbursed expenses such as the proportionate amount for the child under the health savings account, the first $250.00 of unreimbursed expenses should be paid by the plaintiff with allocation of further expenses on a pro rata basis as outlined in the support Order.

L.C.C.C.P. No. 2012-50390, Opinion by Bradford H. Charles, Judge, March 21, 2023. 

IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY, PENNSYLVANIA

DOMESTIC RELATIONS SECTION

SHAUN M. WEBB,                                                  :  NO. 2012-5-0390

                                    Petitioner                                            :  PACSES 111301113

                                                                                                : 

v.                                                                                 :

: 

KATHERINE A. WEBB,                                        :

                                    Respondent                           :  

ORDER OF COURT

AND NOW, this 21^st day of March, 2023, after hearing, inconsideration of the testimony produced, upon consideration of the arguments submitted by the parties, and in accordance with the attached Opinion, the Order of this Court is as follows: 

1. Katherine A. Webb (hereafter MOTHER) shall be required to pay medical expenses incurred on behalf of the parties’ daughter in the amount of $963.07.  If these expenses have not already been paid, MOTHER shall pay them directly to the medical providers.  If the medical expenses have already been paid by Shaun M. Webb (hereafter FATHER), then MOTHER shall reimburse FATHER for said medical expenses. 
2. The existing Support Order dated November 22, 2021, shall remain in full force and effect, with the understanding that Katherine A. Webb’s employer-funded HSA shall be considered to be a part of reimbursable medical expenses. 

BY THE COURT:

                                                                                                                                    J.

                                                            BRADFORD H. CHARLES

BHC/pmd

cc:           Michael Bechtold, Esquire// 525 S, 8^th Street., Lebanon PA 17042

                Max Smith, Esquire // 11 East Chocolate Avenue, Suite 300, Hershey PA 17033

                Shaun M. Webb// 10 Valley Lane, Annville PA  17003

Katherine A. Webb// 232 S. Village Circle, Palmyra PA  17078

                Domestic Relations

IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY, PENNSYLVANIA

DOMESTIC RELATIONS SECTION

SHAUN M. WEBB,                                                  :  NO. 2012-5-0390

                                    Petitioner                                            :  PACSES 111301113

                                                                                                : 

v.                                                                                 :

: 

KATHERINE A. WEBB,                                        :

                                    Respondent                           :  

                                                                                                :              

APPEARANCES

Michael Bechtold, Esquire                                       For Shaun M. Webb

Max Smith, Esquire                                                  For Katherine A. Webb

OPINION BY CHARLES, J. March 21, 2023

            This is a dispute about whether a child’s medical expenses should be paid from an employer-funded Health Savings Account (HSA).  Shaun Webb (hereafter FATHER) and Katherine Webb (hereafter MOTHER) disagree about whether or how MOTHER’s employer-funded HSA was encompassed within the agreement that formed the basis for the existing Support Order.  In addition, the Lebanon County Domestic Relations Office (DRO) has requested this Court’s guidance regarding HSAs because the Pennsylvania Support Rules are largely silent with respect to when and how they should be accessed.  We issue this Opinion to address the issues that have been presented.

I.          FACTS and PROCEDURAL HISTORY

             FATHER and MOTHER are the parents of two children.  The parties’ oldest daughter is emancipated and her situation is not directly relevant to the matter now before the Court.  The parties’ youngest daughter has turned eighteen, but she remains a high school senior.  Until graduation in June of 2023, the parties’ youngest daughter will continue to be entitled to receive child support. 

            Prior to 2020, the parties’ youngest daughter resided with MOTHER.  FATHER paid child support for her while MOTHER was the primary custodian.  At some point in 2020 or 2021, the youngest daughter began living with FATHER.  He initiated a Complaint for Child Support shortly thereafter. 

            On November 22, 2021, MOTHER, FATHER and both attorneys met via Zoom with a Domestic Relations Conference Officer.  An agreement was reached at this proceeding.  The agreement was memorialized by the Domestic Relations Conference Officer.  (See, Exhibit 2).

            The Court Order that resulted from the parties’ agreement confirmed that both parties would continue to provide health insurance for their daughter.  The Conference Officer wrote in the final report: “Both parties cover the child [MW] for insurance through their employers”.  However, the Court Order itself contained a checkmark on the block entitled: “Plaintiff to provide medical insurance.”  The Court Order was silent with respect to whether MOTHER must also provide health insurance, and the Court Order was also silent with respect to either parties’ Health Savings Accounts (HSAs).  However, MOTHER’s support amount was reduced because of the amount she paid for her daughter’s insurance. 

            MOTHER’s employer provides her with a Health Savings Account (HSA) that is partially employer-funded.  For the 2021-2022 fiscal year, MOTHER’s employer contributed $2,400 to her HSA.  For the 2022-2023 fiscal year, this amount decreased slightly to $2,300.  MOTHER is also permitted to contribute additional pre-tax dollars to this account as she chooses.  We do not know whether this occurred in the past year, but it does not really matter because the focus of the parties has been on the $2,300 that was contributed by MOTHER’s employer; FATHER believes it should be considered to be a part of MOTHER’s health insurance coverage and MOTHER disagrees.

            Apparently, the parties’ minor daughter was injured in an accident that occurred in 2021.  Medical expenses were incurred.  FATHER’s insurance paid some of the expenses.  He submitted the unpaid balance of $963.07 to MOTHER ($251.03 in 2021 and $512.04 in 2022) and asked that she pay these amounts from her employer-funded HSA.  MOTHER refused.

            MOTHER has taken the position that the Support Order requires FATHER to pay the first $250 of medical expenses and that all additional medical expenses should be allocated on a pro rata basis between herself and FATHER.  FATHER takes the position that MOTHER’s employer-funded HSA should first be used before any medical expenses should be allocated between he and MOTHER.  The Lebanon County Domestic Relations Office has filed a brief that essentially adopted FATHER’s position.  The Domestic Relations Office also presented argument with respect to the question of whether the $250 payment requirement set forth in the Child Support Formula should be applied before or after HSA funds are depleted. 

            We author this Opinion to resolve the parties’ dispute and to provide future guidance for the Lebanon County Domestic Relations Office if or when this issue arises in the future. 

II.        ANALYSIS

            To resolve the issue now before this Court, we must evaluate the agreement upon which the current Support Order is based.  In addition, we must also consider how the law should treat employer-funded HSAs.  Because support litigants are at liberty to agree to something outside the parameters of the Support Rules, we will begin with an examination of the agreement entered into by the parties on November 22, 2021.

            As with any contract, an examination of the parties’ support agreement must begin with the language of the agreement itself. See, Steuart v. McChesney, 444 A.2d 659 (Pa. 1982). When a contract is clear and unambiguous, its terms must be enforced.  Lesko v. Frankford  Hospital-Bucks County, 15 A.3d 337 (Pa. 2011).  However, when an agreement is deemed to be ambiguous, the Court can receive parol evidence in order to ascertain the contract terms. Miller v. Poole, 45 A.3d 1143 (Pa. Super. 2012).  The goal of any Court in receiving parol evidence is to discern the intent of the parties when they entered into the agreement.  Metzger v. Clifford Realty Corp., 476 A.2d 1 (Pa. Super. 1984).  Generally speaking, parol evidence is limited to testimony of events that preceded or were contemporaneous with the signing of the contract; unanticipated or undesired outcomes cannot trigger the Rule.  See, e.g., Standard Pa. Practice 2^nd, §53:17 Limitations on applicability of parol evidence rule to written contract.

            In this case, we cannot discern what the parties intended regarding medical insurance from looking only at the written Agreement/Court Order. For example, the Agreement/Order contains a checkmark next to language: “Plaintiff is ordered to provide medical insurance coverage”, and  no similar box is checked relating to MOTHER.  On the other hand, under a section entitled “Medical Coverage”, the Agreement/Order documents that FATHER is to pay $106.58 biweekly for medical coverage that would include five covered persons.  The Agreement/Order also indicates that MOTHER is to pay $99.26 biweekly for medical insurance that covers three persons.  The document further states: “Both parties cover the child [M.W.] for insurance through their employers.”  MOTHER looks at only Page 2 of the Agreement/Order that does not include any mention of her obligation to provide health insurance coverage.  In addition, MOTHER relies upon boilerplate language in the Agreement/Order that states: “The monthly support obligation includes cash medical support in the amount of $250 annually for unreimbursed medical expenses…”  FATHER looks only at a subsequent pages that reference coverages provided separately by both parties. 

            Given the confusion that obviously exists and the different focus of the language relied upon by the parties, we conclude with little hesitation that the support agreement reached by the parties on or about November 22, 2021 is ambiguous;  it cannot be enforced without reference to parol evidence because the terms themselves are confusing and maybe even inconsistent. 

            Having concluded that the support agreement is ambiguous, we must rely upon parol evidence to discern what the parties intended when they reached their agreement in November of 2021.  FATHER very clearly indicated that he viewed the agreement as requiring that MOTHER provide health insurance coverage for his daughter.  He argues that because MOTHER’s health insurance coverage included an employer-funded HSA, that HSA should be available to pay for the daughter’s medical expenses.  MOTHER’s testimony was less clear, but she did acknowledge the following:

• That medical insurance coverage was specifically discussed at the time of the Support Conference that precipitated the agreement;
• That it was unclear to her whether FATHER’s health insurance would also cover the parties’ older daughter.  It was a priority to MOTHER that the older daughter also be covered.
• That the possibility of FATHER providing exclusive health insurance was discussed at the time of the conference, and MOTHER specifically rejected that concept;
• That MOTHER voluntarily chose to provide duplicative insurance for the parties’ youngest daughter knowing that FATHER also would provide insurance.

If the above testimony were not enough, FATHER also pointed out that MOTHER received a credit adjustment for providing health insurance when her Support Obligation was determined under the formula.  Thus, MOTHER received financial benefit to the detriment of FATHER by virtue of her agreement to provide insurance for her youngest daughter.

            We determine based upon the entirety of the parol evidence presented and the agreement itself that the Support Order required that both parties provide health insurance coverage for their youngest daughter.  Notwithstanding the boilerplate language contained on Page 2 of the Court Order, we conclude that both MOTHER and FATHER agreed that their youngest daughter should have the benefit of coverage provided through both parties’ separate employers. 

            Having concluded that the support agreement required MOTHER to provide health insurance, we must next determine whether MOTHER’s employer-funded HSA is part of her coverage.  The Pennsylvania Support Guidelines are silent with respect to this issue.  However, analogous precedent and an evaluation of the purpose of Pennsylvania’s Child Support law leads us to conclude that employer-funded HSAs should be included within the definition of health insurance. 

            Pennsylvania law is quite broad in its definition of income available for support.  Pa.R.C.P. 1910.16-2 defines incomes available for support as “all income from any source.”  The Comment to the Rule plainly articulates that even non-traditional forms of compensation must be considered.  Moreover, Pennsylvania’s Superior Court has characterized Pennsylvania’s classification of income as follows:

“The starting point for calculation of a parent’s child support obligation is a determination of each party’s income available for support.  The assessment of the full measure of a parent’s income for the purposes of child support requires courts to determine ability to pay from all financial resources.  Thus…the Court must consider all forms of income.”      

Mencer v. Ruch, 928 A.2d 294, 297–98 (Pa. Super. 2007) (citations omitted; emphasis applied).

            It would be incongruous to conclude that employer-funded HSAs should not be considered when all other forms of compensation are.  We therefore hold that employer-funded HSAs are part of an employee’s compensation.  Because compensation in all forms must be considered, we reject MOTHER’s position that her employer-funded HSA cannot be accessed for the benefit of her daughter. 

            Given our conclusion that an employer-funded HSA is compensation that must be considered in a support context, we must address the question of how this is to occur.  We could include the amount of the HSA as income to be included as part of a child support formula calculation.  The problem with such an approach is that employer-funded HSAs are designed only for a specific purpose, i.e., the payment of medical expenses.  If we were to calculate on-going child support based in part upon an employer’s HSA contribution, and if the employee incurred no medical expenses, then the HSA would not have value and it would be unfair to use the amount of the contribution in calculating monthly support.  Alternatively, we could include an employer-funded HSA as part of an employee’s health insurance benefit.  By doing so, we limit the applicability of the HSA contribution to situations where medical expenses are incurred.  In our opinion, the latter approach is more appropriate and fair. 

            The logistics of applying the employer-funded HSA must also be considered.  If an HSA applies to individuals other than the child who is the subject of the Support Order, it could be unfair to apply the entire HSA to that child, thereby depriving other beneficiaries of its benefit.  We struggled with the question of how to allocate MOTHER’s employer-funded HSA amount of $2,300 per year.  We contemplated entering an Order that would require a DRM to evaluate how much of the HSA balance remained at the precise time when the child’s medical expenses were incurred.  We recognize that this paradigm could have created unfairness in that the child could end up receiving amounts in the HSA that otherwise would have been available for the employee or other children.  Conversely, if the employee or other children use the entire employer-funded HSA amount prior to the medical expense incurred by the child-beneficiary, then the child-beneficiary would have been deprived of any benefit. 

It was FATHER who suggested an approach that we find to be fair.  FATHER pointed out that MOTHER’s HSA covers three individuals.  FATHER proposed that one-third of MOTHER’s $2,300 annual HSA should be allocated to the parties’ youngest daughter.  If any medical expenses are incurred over and above this one-third amount, then they would have to be paid as unreimbursed medical expenses.  We concur that this approach is fair to all concerned.

            One other issue remains to be decided regarding the application of HSA benefits.  Pennsylvania’s Support Rules declare that the first $250 in “unreimbursed” medical expenses should be paid by the obligee before expenses are allocated between the two parties.  MOTHER argues that this $250 amount should be paid by FATHER before any amount is deducted from her HSA.  FATHER characterizes MOTHER’s HSA as part of her health insurance and argues that it should be considered as part of MOTHER’s “reimbursement” for medical expenses.  We agree with FATHER. 

            The word “reimburse” is defined in the dictionary as: “To make repayment to for expense or loss incurred;…recompense, remunerate, indemnify, redress, recoup.” (The Random House Dictionary of the English Language, Unabridged Edition).  This definition presupposes that the individual or entity who is the beneficiary of “reimbursement” will be receiving funds from another source for what would otherwise be a personal expense.  Using this definition, it is clear to this Court that employer-funded HSAs are designed to provide an employee with “reimbursement” for medical expenses. 

            In its brief, the Lebanon County DRO cited an internal policy that was developed regarding HSAs.  That policy states:

“If a [party] has an HSA their employer contributes to, the [party] must use the employer’s contribution to the account before submitting for unreimbursed medical expenses.  Additionally, after the HSA is used, the Plaintiff is still responsible for paying the first $250 and this amount is not counted as part of the employer-contributed HSA.”

This DRO policy does not, of course, enjoy precedential authority.  In addition, as acknowledged in DRO’s brief, the policy is not completely clear with respect to the question of whether funds contained in HSAs of defendants should be treated in a manner identical to funds contained in HSAs of plaintiffs.

            This Court agrees with the basic priority of payment proposed in DRO’s brief:

• “Reimbursed” expenses should be paid first;
• The first $250 of unreimbursed expenses should then be paid by the plaintiff;
• Further expenses should be allocated on a pro-rata basis as outlined in the Court Order.

In the opinion of this Court, an employer-funded HSA is a “reimbursement” for medical expenses.  Because the $250 payment set forth in the Pennsylvania Support Rules is triggered only for “unreimbursed” medical expenses, it simply does not apply until after the employer-funded HSA has been depleted…and this dynamic regarding “reimbursement” is the same whether the HSA is funded by an employer of the plaintiff or the defendant.  To the extent necessary, we declare today that all employer-funded HSAs should be considered “reimbursement” of medical expenses for purposes of applying Pa.R.C.P. 1910.16-6.

III.       CONCLUSION        

            We truthfully do not consider this decision to represent a “close call”.  Pennsylvania has always defined income as broadly as possible.  Without question, an employer-funded HSA is a benefit of employment offered as part of an employee’s compensation package.  To ignore that benefit simply because the Pennsylvania Support Rules are silent about it would contravene the public policy and philosophy that forms the foundation of Pennsylvania’s Child Support Law.

            We have taken the time today to describe HSAs and how they should be considered going forward.  Applying the decisions we have reached to the facts of this case, we determine that one-third of MOTHER’s employer-funded HSA, or of $766/year, should be available during 2021 and 2022 to defray medical expenses incurred by the parties’ daughter.  Because the amounts requested by MOTHER in each of those years, $251.03 and $512.04, are less than the amount that should be available for the daughter from the HSA, we will order today that said amounts should be paid by MOTHER. Stated differently, MOTHER will be required to use her HSA in order to fund medical expenses in the amount of $963.07.