Could a Kentucky criminal court order restitution directly to a victim's insurer?

Plain-English summary

In 1994, Kentucky's Attorney General concluded that a criminal trial court lacked statutory authority to direct restitution or reparation payments to a victim's insurer. The opinion distinguished the person directly harmed by a crime from an insurance company whose loss arose through its contract with that person. It read the probation restitution statute and the separate reparation statute as remedies for victims, not direct payment routes for insurers.

The AG also said compensation already paid by insurance reduced the victim's actual out-of-pocket loss for probation restitution under the then-current statute. It left a separate civil claim by the victim or insurer, and any insurer's subrogation rights in payments made to the victim, outside the criminal proceeding.

Currency note

This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

Criminal courts imposing probation

The AG said probation conditions required statutory authorization. It read KRS 533.030(3) and Clayborn v. Commonwealth as limiting restitution to the victim's actual out-of-pocket expenses. Where an insurer had already compensated the victim, the office found no authority to make the insurer a restitution recipient under that probation provision.

Reparation outside probation

KRS 431.200 allowed restoration or reparation for property taken, injured, or destroyed when the defendant was not ordered to pay as a probation condition. The AG recognized that provision did not expressly limit payment to out-of-pocket expense in the same way, but read its beneficiary as the actual crime victim or directly aggrieved person, excluding an insurer's contractual loss.

Victims and insurers pursuing separate rights

The opinion stated that both a victim and insurer could proceed against the defendant in a civil action. It also said reparation paid to the victim could remain subject to a subrogation agreement between victim and insurer. Those questions were independent of the criminal case and did not give the criminal court power to pay the insurer directly.

Common questions

Could a criminal restitution order name the victim's insurer as payee?

The AG answered no. It found no statutory authority in the provisions analyzed to order direct restitution or reparation to an insurer.

Did the answer change if the court did not impose probation?

No. The AG separately analyzed KRS 431.200's reparation provision and still found it directed to the person directly harmed by the crime, rather than the insurer.

Did insurance payment affect the victim's probation restitution amount?

Under the 1994 law as the AG read Clayborn, yes. A victim already compensated for a loss did not have that loss as an actual out-of-pocket expense for KRS 533.030(3) restitution.

Did the opinion extinguish the insurer's civil or subrogation rights?

No. It expressly placed separate civil proceedings and any subrogation agreement outside the criminal restitution question.

Background and statutory framework

The request asked whether a defendant convicted of a crime could be ordered to pay the insurer that had compensated the victim. The AG applied KRS 533.030(3) to probation restitution and KRS 431.200 to property reparation without probation. It relied on Clayborn v. Commonwealth for the out-of-pocket limitation and Commonwealth v. Bailey for the relationship between those statutory remedies. Its conclusion concerned direct insurer payments in the criminal proceeding, leaving civil claims separate.

Citations and references

• KRS 533.030(3): restitution in probation or conditional discharge under the 1994 provision.
• KRS 431.200: property restoration or reparation outside probation.
• Clayborn v. Commonwealth, Ky.App., 701 S.W.2d 413, 415 (1985): victim's actual out-of-pocket loss.
• Commonwealth v. Bailey, Ky., 721 S.W.2d 706, 707 (1986): relationship of the two restitution provisions.

Source

• Landing page: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG94-057.htm

Original opinion text

OAG 94-57

August 18, 1994

Subject: Direct Restitution Or Reparation Payments to Insurers

Written By: David E. Spenard

Requested By: Hon. Richard Weisenberger

Syllabus: A trial court is not authorized to order restitution or reparation payments directly to an insurer as part of the criminal proceedings.

OAGs cited:

Statutes construed: KRS 431.200; KRS 533.030(3)

Opinion of the Attorney General

In your June 21, 1994, letter you asked whether a trial court could order a person convicted of a crime to pay restitution to an insurer who has previously compensated the crime victim. As you are aware, all criminal prosecutions in state court are maintained on behalf of the Commonwealth. See Dixon v. Commonwealth, 288 Ky. 57, 155 S.W.2d 455 (1941). The criminal proceeding does not prevent the victim or their insurer from pursuing relief in a separate civil proceeding. See RRS 431.080; KRS 431.200; KRS 500.040(2) and KRS 533.030(3). However, any order of restitution or reparation in a criminal proceeding must be authorized by statute. In our view, trial courts are without any statutory authority to order restitution to an insurer as a condition of probation. Additionally, an insurer is not a “victim” under KRS 533.030 or a “person aggrieved” within the meaning intended for KRS 431.200.

Restitution As A Condition Of Probation.

A trial court has no inherent power to grant probation. The power to grant probation is conferred by the legislature. Lovelace v. Commonwealth, 285 Ky. 326, 147 S.W.2d 1029 tl941); see generally Com. Ex Rel. Armstrong v. Collins, Ky., 709 S.W.2d 437 (1986); Commonwealth v. Reed, Ky.App., 680 S.W.2d 134 (1984) (overruled on other grounds by Pruitt v. Commonwealth, Ky., 700 S.W.2d 68 (1985)); see also Haymon v. Commonwealth, Ky., 657 S.W.2d 239 (1983) (Wintersheimer, J., dissenting). There exists no residual judicial power upon which the trial court-ma-y rely in structuring the terms of a person's probation. Hence, the trial courts ability to require restitution as a condition of probation is limited expressly to that authorized by statute.

Restitution as a condition of probation is set forth by statute, KRS 533.030(3), which states in part,

When imposing a sentence of probation or conditional discharge in a case where a victim of a crime has suffered monetary damage as a result of the crime due to his property having been converted, stolen, or unlawfully obtained, or its value substantially decreased as a result of the crime, or where the victim suffered actual medical expenses, direct out-of-pocket losses, or loss of earning as a direct result of the crime, or if as a direct result of the crime the victim incurred medical expenses that were paid by the Cabinet for Human Resources, the Crime Victims Compensation Board, or any other government entity, the court shall order the defendant to make restitution in addition to any other penalty provided for the commission of the offense.

In Clayborn v. Commonwealth, Ky.App., 701 S.W.2d 413, 415 (1985), the Court of Appeals of Kentucky observed that the statute, (KRS 533.030(3)) limits restitution to the victim's actual out-of-pocket expenses. Thus, to the extent that a victim has been compensated for a loss by insurance, there is no statutory authority to impose restitution as a condition of probation. Clayborn v. Commonwealth, 701 S.W.2d at 415. While the victim is free to proceed with an independent civil action, insurers are not entitled to any benefit under KRS 533.030 (3).

Restitution Or Reparation When Probation Not Imposed.

In addition to the authority to make restitution a condition of probation, trial courts also have the ability to order the defendant to restore the stolen property or make reparation in damages. KRS 431.200 provides, in part,

Any person convicted of a misdemeanor or felony for taking, injuring or destroying property shall restore the property or make reparation in damages if not ordered as a condition of probation.

The legislative goal of this statute is to provide victims of crime with a simple means of obtaining restoration of the property. Commonwealth v. Bailey, Ky., 721 S.W.2d 706, 707 (1986). KRS 431.200 provides the same opportunity for restitution to the victim when the defendant is ineligible for probation as KRS 533.030 provides when the defendant is placed on probation. Commonwealth v. Bailey, 721 S.W.2d at 707. Thus, KRS 533.030 (3) and KRS 431.200 are complementary. While KRS 431.200 does not limit restitution to out-of-pocket expenses, it is clear that its benefit is designed only for the actual victim of a crime, the person who directly suffers due to threats or actions of the criminal defendant. This is demonstrated by the language of KRS 533.030 as well as its complementary statutes contained in KRS Chapter 346 (Compensation of crime victims). For purposes of KRS Chapter 346, a victim is a needy person who suffers personal physical or psychological injury or death from a criminal act in Kentucky. See generally, Hulsey v. Com. Crime Victims Compensation Board, Ky.App., 628 S.W.2d 890 (1982) (board subrogated to right of victim to receive workers' compensation benefits when award to victim based on injury giving rise to compensation claim). Further demonstration of this principle is also contained in KRS 421.500 - 421.550 (Crime victim and witness protection), wherein “victim” means an individual who suffers direct or threatened physical, financial, or emotional harm as a result of the commission of certain crimes.

Insurers do not fall within the category of victims or aggrieved persons. The insurer does not make its payment or settlement by virtue of being directly threatened or injured by the criminal defendant. Thus, an insurance payment or settlement is not a direct loss or injury as a result of criminal activity. It is an indirect “loss” resulting from a contractual arrangement between the victim and the insurer. A review of the statutes and case law indicates that the legislature did not intend for KRS 431.200 or KRS 533.030 to provide any direct relief to insurers. Consequently, trial courts are not authorized to order restitution or reparation directly to an insurer as part of the criminal proceeding.

As noted, the victim and the victim's insurer retain the right to proceed against the defendant in a civil action. Further, any restitution or reparation of property to the victim under KRS 431.200 would be subject to any subrogation agreement between the victim and the insurer. However, both of those matters would be independent of the criminal proceeding.

If I can be of any additional assistance in this matter, please feel free to contact me.

Sincerely,

CHRIS GORMAN

ATTORNEY GENERAL

David E. Spenard

Assistant Attorney General