Wednesday, March 08, 2017

Court clarifies that restitution still makes no sense

Criminal law and money don't play well together, especially with indigent clients. Restitution is perhaps the  most head-scratching part of this crime/money nexus. To a civil lawyer, the thought that a court could enter a $2 million judgment (that is not dischargeable in bankruptcy) against someone without the parties ever conducting a single deposition or hiring a damages expert is patently absurd. But in criminal law it is routine. Defense lawyers are usually so occupied trying to keep their clients out of jail that they spend little time worrying about outlandish restitution requests. Despite mild push-back from the Supreme Court in the most outrageous cases like Paroline v. United States, it is likely that courts will rubber-stamp restitution orders anyway. Today's published opinion in  Sizemore offers an example.

Sizemore addresses a rare federal vehicular manslaughter case. The defendant pleaded guilty and agreed to pay restitution to the victims. While there was no doubt that the victim and his family suffered compensable losses, the court's ultimate order of approximately $230,000 raised several questions. First, was the district court allowed---or even required---to take into account the defendant's ability to pay when entering a restitution award? And second, should the court have reduced the award by amounts that the victims had already received from the defendant's insurance company in compensation for their injuries?

Regarding the first question, the law creates a bizarre contradiction: on the one hand, 18 U.S.C. § 3663 requires a court to consider the "financial resources of the defendant" in determining whether to order restitution; on the other hand, 18 U.S.C. § 3664 prohibits courts from considering the "economic circumstances of the defendant" in determining how much restitution to order. The Sizemore court found no contradiction at all. The law means what it says. But this creates a sort of "restitution gap": if the victim has $1 million in losses, and the defendant cannot possibly pay $1 million, the court could would have the discretion to order (1) no restitution, or (2) $1 million in restitution, but under no circumstances could it order, say, $100,000 in restitution, or some other amount that the indigent defendant might one day have a hope of repaying. 

Regarding the second question, the law specifically states that restitution should be reduced by "any amount later recovered as compensatory damages for the same loss by the victim" in other court proceedings. 18 U.S.C. § 3664(j)(2). The obvious point of this is to avoid double recovery, given that restitution is supposed to make a victim whole, not punish the defendant. But Sizemore rejects this rationale, suggesting that a private settlement "does not preclude a district court from imposing a restitution order for the same underlying wrong." The court even agreed with the district court that an amount paid out to the victim by the defendant's insurance company was not "later recovered" because the insurance company paid before that restitution award was entered. That is, the defendant is punished because his insurance company acted quickly. Huh.