Court-ordered restitution to be paid by a criminal to a subrogated insurance company has become a major source of revenue for carriers in the last couple of years. Restitution is the recovery from an economic loss suffered as the result of the commission of a crime. An often-overlooked area of recovery for subrogated carriers is the possibility of obtaining court-ordered restitution from a criminal defendant as part of their sentencing. Approximately two-thirds of the states provide for the availability of some sort of court-ordered restitution to be paid to victims of crime. The states that do allow for restitution often have conflicting statutes and criteria with regard to how, when, and to whom restitution may be awarded. Although restitution statutes have been progressively getting stronger, studies show that nearly half of crime victims are not awarded any sort of restitution – usually because the victim fails to request it.
On June 29, 2021, the Montana Supreme Court sounded off on this issue, granting a subrogated carrier “victim” status when they are required to pay benefits due to the criminal activity of a, well, … criminal. In State of Lodahl, 2021 WL 2660080 (Mont. 2021), Sergeant Dawn Miller was a peace officer who was assaulted by Sami Lodahl. Lodahl was sentenced, among other things, to pay restitution to the Montana State Fund (MSF) for workers’ compensation benefits which had been paid by it to Sgt. Miller. Lodahl appealed the restitution order, arguing that the MSF did not qualify as a “victim” under § 46-18-243(2)(a)(iv), Montana’s criminal restitution statute.
The answer to whether a subrogated carrier is entitled to restitution usually hinges on whether the state involved has defined “victim” to include indirect victims such as insurance companies. The right of an insurance company to recover restitution is sometimes set forth in a state’s statutes, but more frequently it is declared in an appellate decision interpreting that state’s restitution laws. Lodahl argued the MSF is an insurer that distributes money as a regular and expected part of business and thus has only general damages, which cannot be considered in determining restitution. Lodahl contended further she was unable to afford and would be unduly burdened by the full amount of restitution suggested.
Restitution to victims is a developing body of law, and the restitution rights of insurance companies are even less developed. In fact, there are many states where the restitution rights of a subrogated insurance carrier have not yet been decided. The adage, “If you don’t ask, the answer is always ‘No’,” is nowhere more evident than with the intersection of subrogation and restitution. It does not hurt to ask, and often, restitution is the only form of recovery that will be available to a subrogated carrier.
Many states’ laws provide that a criminal or juvenile order for restitution is enforceable as a civil judgment. The Montana Supreme Court in Lodahl said that restitution statutes “engraft[ ] a civil remedy onto a criminal statute, creating a procedural shortcut for crime victims who would be entitled to a civil recovery against the offender.” State law usually provides for a procedure for the enforcement of civil judgments based on such restitution orders. This is usually accomplished by obtaining the Order for Restitution and/or an Abstract of Judgment signed by the criminal judge. It should list you as a victim and identify the criminal who owes you the restitution. While procedures do vary, many states allow you to file the Order for Restitution with the County Recorder, establishing a lien. The victim can also hire a collection attorney to enforce the restitution debt.
For a complete summary of the criminal restitution laws in all 50 states, see the chart found HERE. For questions regarding the pursuit of subrogation restitution claims against criminals like Sami Lodahl, contact Lee Wickert at [email protected].