Montana Supreme Court Allows Restitution to Insurer
When a Claim is Paid as a Result of a Crime Insurer Must Demand Restitution
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Sami Jo Lodahl (Lodahl) appealed an order sentencing her to pay restitution to the Montana State Fund (MSF) for benefits it paid to Sergeant Dawn Miller (Miller) from the Gallatin County Detention Center related to an on-the-job injury. Lodahl argues the MSF does not qualify as a “victim” requiring payment of the restitution amount, in essence, would cause her unjust hardship given her dire financial circumstances, and the court should have considered Miller’s alleged comparative negligence when awarding restitution. In State Of Montana v. Sami Jo Lodahl, 2021 MT 156, DA 19-0406, Supreme Court Of The State Of Montana (June 29, 2021) the Supreme Court found restitution was in order but that the the defendant was too poor to pay.
FACTUAL BACKGROUND
The State charged Lodahl with felony assault on a peace officer for Lodahl’s actions on January 30, 2017, of striking Miller, after Miller requested Lodahl sit down while waiting for an initial appearance in justice court in another matter. At the time of the incident, Lodahl testified she was extremely scared and extremely sick. In the incident, Miller incurred abrasions on her chin and cheek, pain in her ribs, a sprained finger, and her glasses were bent in half. Following this incident, Lodahl was transported to the Montana State Hospital for mental health treatment.
Pursuant to a plea agreement, Lodahl pleaded guilty to the offense of misdemeanor assault in exchange for the State’s dismissal of the original charge, assault on a peace officer, a felony. The plea agreement called for Lodahl to pay restitution to the MSF for its payments to Miller and her medical providers. Lodahl asserted the MSF did not qualify as a “victim” and further that she should not be required to pay the restitution given her dire financial situation.
Lodahl testified she is a single mother of two boys—aged 10 and 7 at the time of sentencing. She suffers mental health problems—diagnosed with a bipolar disorder, as well as anxiety with agoraphobia—which have resulted in the Social Security Administration determining her to be disabled and entitled to Social Security Disability Insurance (SSDI). Lodahl works 15 to 23 hours per week at a motel. She has attempted to increase her work hours, but such increases have resulted in mental health decompensations.
Lodahl argued at the restitution hearing the MSF was not a victim because it had not suffered a “pecuniary loss” and the statute did not authorize payment of “general damages.” She 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.
The District Court sentenced Lodahl to six months in the Gallatin County Detention Center, with all but 20 days suspended, for which Lodahl was granted credit for time served. The court ordered her to pay $1,261.20 in restitution to Miller and $4,891.29 in restitution to the MSF within five months of the execution of the sentence. It waived all costs and fees except for a $100 flat administration fee for the restitution.
DISCUSSION
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. The term “victim,” in relevant part, means “a person who suffers loss of property, bodily injury, or death as a result of … the commission of an offense” or “an insurer or surety with a right of subrogation to the extent it has reimbursed the victim of the offense for pecuniary loss.”
Lodahl contended the restitution statutes’ plain language requires a victim insurer to have “reimbursed” the victim directly for her “out-of-pocket” losses, terms she argues require the qualifying losses first be paid by the victim and subsequently reimbursed by the insurer.
The District Court correctly determined the MSF qualifies as a victim insurer. The statute makes plain an entity that insures against an individual’s pecuniary losses—like medical expenses and lost income—is entitled to recover what it pays when that individual is victimized.
Lodahl’s interpretation would impose an artificial and burdensome scheme for any victim who has insurance, altering the typical insurer-insured relationship to require the victim to pay her medical providers directly before seeking insurance benefits in order to obtain restitution.
The victim and her insurer are entitled to any damages that could be pursued against the defendant in a civil action, regardless of any subrogation issues between them. The District Court correctly concluded the MSF was an insurer victim entitled to restitution for pecuniary loss.
Sentencing practices must emphasize restitution to the victim by the offender. A sentence must require an offender who is financially able to do so to pay restitution.
The District Court correctly determined the ordered restitution amount but erred in ignoring and misapprehending the uncontroverted evidence of Lodahl’s dire financial situation and failed to appropriately apply the statute to conclude it would otherwise be unjust to require Lodahl to pay the restitution imposed. Affirmed in part, reversed in part, and remanded to waive Lodahl’s payment of the restitution imposed.
ZALMA OPINION
A correct decision on the law makes an important decision that an insurer is entitled to restitution from a criminal convicted of a crime that caused the insurer to pay money to its insured. It then, like Solomon, decided that the trial court erred requiring a poor woman to pay the restitution since it would make her life too difficult and replaced its judgment on ability to pay with that of the trial court that saw and heard the witnesses and evidence.
© 2021 – Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.
He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.
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