By Dan Horn
The Cincinnati Enquirer

A company that collects child support payments from deadbeat parents sued the state of Ohio on Monday, claiming that children will lose $21 million this year because the state improperly terminated the company's contract.

National Child Support Inc., a private collection firm based in Blue Ash, accused the state of depriving children of their legal right to receive child support payments.

The lawsuit was filed in U.S. District Court in Cincinnati and seeks payment of more than $4 million to the company and $21 million to parents who have been unable to collect child support.

Several Ohio counties, including Butler County, had hired National Child Support to locate some of the worst deadbeat parents and to collect past-due child support.

But the contracts were terminated after officials at the Ohio Department of Job and Family Services objected to the way the company was paid by the counties.

State officials say National Child Support's payment method was "a scheme" that ripped off the federal government.

"What they are proposing, we can't do," said Tom Hayes, director of the Ohio Department of Job and Family Services. "It's illegal."

Under the law, the federal government will reimburse 66 percent of the cost of recovering child support payments, while state or local governments pay the other 34 percent.

But when National Child Support submitted its bills for collecting, the company would take only the 66 percent from the federal government and would forgive the rest. Mr. Hayes said that's improper because it means the federal government was actually paying 100 percent of the cost.

Because state officials must sign off on the deals, Mr. Hayes said, the state was in effect passing along false information to the federal government.

"They have to submit to us their true cost, not some inflated bill," Mr. Hayes said.

Company officials defend the payment method as a "volume discount" that they offer to clients who bring in the most cases.

They say public agencies, such as a prosecutor's office, routinely collect past-due child support and then recoup 66 percent of the cost from the federal government, but prosecutors do not expect the local child support agency to cough up the remaining 34 percent.

E-mail dhorn@enquirer.com