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Kristin Bedell appeals from a judgment of a single justice of this court denying her petition under G. L. c. 211, § 3. We affirm.
In February, 2006, Kristin Bedell filed a complaint for divorce from her husband, Thomas Bedell. On March 8, 2007, during the course of the divorce proceedings, Thomas filed a motion seeking to be released from the automatic restraining order that was in place pursuant to Rule 411 of the Supplemental Rules of the Probate Court (2008). Thomas, whose death was imminent, wanted to be released from the restraining order so that he could transfer his interests in certain assets to his children from a previous marriage. If Thomas had passed away before the divorce proceedings concluded and he had not been released from the provisions of the restraining order, the assets in question would have passed to Kristin rather than to his children. On March 15, 2007, the probate judge allowed the motion, over Kristin's objection, on the basis that it would be inequitable for Kristin to receive one hundred per cent of the marriage assets because of Thomas's "sudden and imminent death."
Shortly thereafter, on March 19, 2007, Kristin filed a motion in the Probate and Family Court to stay the order. She also filed a petition for interlocutory relief with a single justice of the Appeals Court pursuant to G. L. c. 231, § 118, first par. On March 20, 2007, Thomas died. Kristin's motion to stay the order releasing Thomas from the restraining order was denied the same day. Her petition for interlocutory relief was also denied. On April 4, 2007, a suggestion of death and a request for a dismissal of the divorce proceedings was filed in the Probate and Family Court on behalf of Thomas. A judgment of dismissal was entered on April 11, 2007. Kristin moved to vacate the judgment of dismissal, but the motion was denied after a hearing.
Kristin also sought to appeal from the single justice's denial of her petition under G. L. c. 231, § 118, first par. Her notice of appeal was struck on the same day that it was filed, April 23, 2007, on the basis that there is no right of appeal from the decision of a single justice issued pursuant to G. L. c. 231, § 118, first par. Kristin took no further action until December 24, 2007, when she filed her G. L. c. 211, § 3, petition, which the single justice denied.
Relief under G. L. c. 211, § 3, is properly denied "where there are adequate and effective routes . . . by which the petitioning party may seek relief." Greco v. Plymouth Sav. Bank, 423 Mass. 1019 , 1019 (1996). The petitioner bears the burden to allege and demonstrate the absence or inadequacy of other remedies. See, e.g., Russell v. Nichols, 434 Mass. 1015 , 1016 (2001). Kristin has not met this burden. The order releasing Thomas from the restraining order was, initially, an interlocutory order from which Kristin appropriately sought review pursuant to G. L. c. 231, § 118, first par. After Thomas died, however, the order became final. See Edinburg v. Edinburg, 22 Mass. App. Ct. 192 , 197 n.13 (1986) (interlocutory order awarding counsel fees "effectively became a final order from which immediate review was available" on death of husband and abatement of then ongoing divorce proceedings). See also Diggs v. Diggs, 291 Mass. 399 , 401 (1935) (divorce proceedings abate upon death of either party).
Patricia S. Johnstone (David S. Smith with her) for the plaintiff.
Mary P. Harrington for the defendants.
[Note 2] Although the single justice considered and denied Kristin's petition on the merits, "we affirm the denial of [the] petition on the preliminary procedural ground that [Kristin] failed to show the absence of an adequate alternative remedy to relief under G. L. c. 211, § 3." Cook v. Carlson, 440 Mass. 1025 , 1026 n.2 (2003), citing White v. Commonwealth, 439 Mass. 1017 (2003), and Farley v. Commonwealth, 435 Mass. 1010 (2001).


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Present: GANTS, C.J., SPINA, CORDY, BOTSFORD, DUFFLY, LENK, & HINES, JJ. Rebecca Kiley, Committee for Public Counsel Services, for the defendant. Kenneth E. Steinfield, Assistant District Attorney, for the Commonwealth. Matthew R. Segal & Jessie J. Rossman, for the American Civil Liberties Union Foundation of Massachusetts, amicus curiae, submitted a brief.
Background. The defendant was employed as a cashier at a Walmart department store in Salem. A Walmart video camera captured the defendant “free-bagging” items; that is, with certain customers, she placed some store items into bags without scanning the items at the cash register, so that these customers received these items without paying for them. As a result, in November, 2013, a complaint issued in the Salem Division of the District Court Department alleging that the defendant stole the property of Walmart having a value of more than $250 pursuant to a single larcenous scheme on various dates between July 20 and September 4, 2013, in violation of G.L. c. 266, § 30(1). In April, 2014, the defendant admitted to facts sufficient to warrant a finding of guilty, and the judge continued her case without a finding for eighteen months, with restitution to be determined at a later date.2 THE DEFENDANT WAS placed on administrative probation for eighteen months, with a special condition that she have no contact with Walmart.
At a restitution hearing in September, 2014, the defendant stipulated that the loss to Walmart was $5,256.10, and a judge (who was not the plea judge) ordered that restitution in that amount be paid. However, in October, 2014, the defendant filed a motion to revise and revoke the order of restitution, which was allowed, and a new restitution hearing was held in November, 2014, before yet another judge. At this evidentiary hearing, the Commonwealth offered testimony from Ronald Capistran, the loss protection manager at the Salem Walmart, who calculated that the retail sales price of the items stolen totaled $5,256.10. He estimated that the “markup” on most of the items sold in the store was “somewhere between [seven per cent] and probably [fifteen per cent]” but, in a rare case, “it could be [fifty]” per cent. The defendant testified that she was “discharged” from Walmart in September, 2013, after working there as a cashier for nearly twelve years. She received unemployment benefits for approximately three months following her termination, but was found ineligible for such benefits after a department of unemployment assistance hearing and was ordered to reimburse the Commonwealth for the benefits she had received. At the time of the restitution hearing, she had been unable to find employment and had no income or government assistance of any kind. She had been evicted from her apartment and was staying with someone, but not paying rent. She testified that she “free-bagged” the items only for friends, and received only fifty dollars once for having done so.
The prosecutor argued that restitution should be based on the retail sales value of the items stolen because the theft was at the point of sale, and Walmart was deprived of the value of the goods that should have been paid by the customer. The prosecutor also argued that the amount of restitution should not be reduced based on the defendant's inability to pay because the defendant “by her actions created her inability to pay in that she was fired from a job by stealing.” The defendant argued that the actual loss to Walmart is the replacement cost of the stolen goods, not their retail price, because Walmart is not entitled to recover in restitution for its lost profits. The defendant also argued that she should not be ordered to pay restitution because she was financially unable to pay, noting that, if ordered to pay “any figure remotely near” the amount of restitution sought, she will be in violation of her probation because of her inability to pay. The judge declared that the loss is measured by the retail loss and ordered that restitution in the amount of $5,256 be paid during the period of probation at a rate to be determined by the probation department.3 The defendant timely appealed from this order, and we allowed the defendant's application for direct appellate review.
Discussion. A judge may order a defendant to pay restitution to the victim as a condition of probation provided that the “[r]estitution is limited to economic losses caused by the defendant's conduct and documented by the victim.” Commonwealth v. McIntyre, 436 Mass. 829, 833–834, 767 N.E.2d 578 (2002). See Commonwealth v. Nawn, 394 Mass. 1, 6, 474 N.E.2d 545 (1985) (“There is no question that restitution is an appropriate consideration in a criminal sentencing”). “The procedure used to determine the amount of restitution or reparation must be reasonable and fair.” Id. at 6–7, 474 N.E.2d 545. The prosecution should disclose prior to the hearing the amount of restitution it seeks. Id. at 7, 474 N.E.2d 545, citing People v. Gallagher, 55 Mich.App. 613, 620, 223 N.W.2d 92 (1974). Where the defendant does not stipulate to the amount, the judge should conduct an evidentiary hearing at which “the Commonwealth bears the burden of proving by a preponderance of the evidence the amount of the victim's losses.” Nawn, 394 Mass. at 7–8, 474 N.E.2d 545. At such a hearing, the victim may testify regarding the amount of the loss, and the defendant may cross-examine the victim, with such cross-examination limited to the issue of restitution. Id. at 8, 474 N.E.2d 545. The defendant may rebut the victim's estimate of the amount of loss with expert testimony or other evidence. Id. at 7, 474 N.E.2d 545.
1. Ability to pay. In deciding whether to order restitution and, if so ordered, the amount, the judge should “consider whether the defendant is financially able to pay the amount ordered.” Nawn, 394 Mass. at 7, 474 N.E.2d 545, citing Model Sentencing and Corrections Act § 3–601(d), 10 U.L.A. 322 (Supp.1984), and ABA Standards Relating to Probation § 3.2(d) (1970). “The amount of restitution is not merely the measure of the value of the goods and money stolen from the victim by the defendant; ․ the judge must also decide the amount that the defendant is able to pay and how such payment is to be made.” Nawn, supra at 8–9, 474 N.E.2d 545.
In practice, this means that, at the close of the evidentiary hearing, the judge must make two findings in deciding whether to order restitution as a condition of probation and, where ordered, the amount of restitution to be paid during the period of probation. First, the judge must determine the amount of the victim's actual economic loss causally connected to the defendant's crime. See McIntyre, 436 Mass. at 834, 767 N.E.2d 578. The Commonwealth bears the burden of proof as to this finding. See Nawn, 394 Mass. at 7–8, 474 N.E.2d 545. The order of restitution may not exceed this amount. See Commonwealth v. Rotonda, 434 Mass. 211, 221, 747 N.E.2d 1199 (2001). Second, the judge must determine the amount the defendant is able to pay. See Nawn, supra at 8–9, 474 N.E.2d 545. Where a defendant claims that he or she is unable to pay the full amount of the victim's economic loss, the defendant bears the burden of proving an inability to pay. See Commonwealth v. Porter, 462 Mass. 724, 732–733, 971 N.E.2d 291 (2012) (defendant bears burden of persuasion regarding indigency, in part because “[a] criminal defendant is the party in possession of all material facts regarding her own wealth and is asserting a negative”). Cf. United States v. Fuentes, 107 F.3d 1515, 1532 (11th Cir.1997) (regarding restitution, “the defendant must establish her financial resources and needs by a preponderance of the evidence”).
We require a judge to consider the defendant's ability to pay when setting the restitution amount because a judge may order restitution in a criminal case only as a condition of probation, and therefore the collection of restitution is enforced by the threat or imposition of a criminal sanction for violation of a probation condition. See Commonwealth v. Denehy, 466 Mass. 723, 737, 2 N.E.3d 161 (2014); Commonwealth v. Goodwin, 458 Mass. 11, 15, 933 N.E.2d 925 (2010). Cf. G.L.c. 258B, § 3 (u ) (victim shall be informed of “right to pursue a civil action for damages relating to the crime, regardless of whether the court has ordered the defendant to make restitution to the victim”). A defendant can be found in violation of a probationary condition only where the violation was wilful, and the failure to make a restitution payment that the probationer is unable to pay is not a wilful violation of probation. See Commonwealth v. Canadyan, 458 Mass. 574, 579, 944 N.E.2d 93 (2010) (“where there was no evidence of wilful noncompliance, a finding of violation of the condition of wearing an operable [global positioning system (GPS) ] monitoring device was unwarranted, and is akin to punishing the defendant for being homeless”); Commonwealth v. Gomes, 407 Mass. 206, 212–213, 552 N.E.2d 101 (1990) (imposition of default costs permitted only when default is wilful). Cf. Bearden v. Georgia, 461 U.S. 660, 669 n. 10, 103 S.Ct. 2064, 76 L.Ed.2d 221 (1983) (“Numerous decisions by state and federal courts have recognized that basic fairness forbids the revocation of probation when the probationer is without fault in his failure to pay the fine” [footnote omitted] ).
To allow a judge to impose a restitution amount that the defendant cannot afford to pay simply dooms the defendant to noncompliance. Such noncompliance may trigger a notice of probation violation even though a probationer cannot be found in violation for failing to pay a restitution amount that the probationer cannot reasonably afford to pay. See Canadyan, supra; Gomes, supra. Not only would a notice of violation under such circumstances waste the time of the court, but it imposes upon the blameless probationer the risk of an arrest on a probation warrant, of payment of a warrant fee, of being held in custody pending a hearing, and of probation revocation if the judge were to fail to recognize that inability to pay is a defense to the alleged violation. See G.L.c. 276, § 87A; Fay v. Commonwealth, 379 Mass. 498, 504, 399 N.E.2d 11 (1980); Rule 3 of the District/Municipal Courts Rules for Probation Violation Proceedings, Mass. Ann. Laws Court Rules (LexisNexis 2015–2016).
Burdening a defendant with these risks by imposing restitution that the defendant will be unable to pay violates the fundamental principle that a criminal defendant should not face additional punishment solely because of his or her poverty. See Canadyan, supra; Gomes, supra at 212–213, 552 N.E.2d 101. Cf. Bearden, 461 U.S. at 668–669, 103 S.Ct. 2064 (“if the probationer has made all reasonable efforts to pay the fine or restitution, and yet cannot do so through no fault of his own, it is fundamentally unfair to revoke probation automatically without considering whether adequate alternative methods of punishing the defendant are available” [footnote omitted] ). To avoid this unlawful result, we require the judge to consider the defendant's ability to pay when initially setting the restitution amount.4 See State v. Blank, 570 N.W.2d 924, 927 (Iowa 1997) (“A court's assessment of a defendant's reasonable ability to pay is a constitutional prerequisite for a criminal restitution order”). Cf. Fuentes, 107 F.3d at 1529 (“Although a sentencing court may order restitution even if the defendant is indigent at the time of sentencing, ․ it may not order restitution in an amount that the defendant cannot repay”).
A judge may not ignore a defendant's ability to pay in determining restitution under the rationale that, if the defendant were to violate the probation condition of payment of restitution because of an inability to pay, the judge would not revoke probation but would instead extend the period of probation to allow the defendant more time to pay. Probation “serves as a disposition of and punishment for a crime; it is not a civil program or sanction” (emphasis in original). Commonwealth v. Cory, 454 Mass. 559, 566, 911 N.E.2d 187 (2009). It punishes a defendant by ordering the defendant to comply with conditions deemed appropriate by the sentencing judge and, “[i]f a defendant violates one or more conditions of probation, a judge may revoke his probation and sentence him to a term of imprisonment for his underlying conviction, or return the defendant to probation, with new or revised conditions.” Commonwealth v. Goodwin, 458 Mass. 11, 15, 933 N.E.2d 925 (2010).
An extension of the period of probation punishes a defendant in two ways. First, it extends the restrictions on a defendant's liberty arising from probation. Under the general conditions of probation, a probationer may be required to report periodically to his or her probation officer, may not leave the State without permission, and must pay a monthly probation fee or, in lieu of payment, provide community service, unless payment is waived by the judge because of the order of restitution. See G.L.c. 276, § 87A; Commentary to Rules 2 and 4 of the District/Municipal Courts Rules for Probation Violation Proceedings, Mass. Ann. Laws Court Rules, at 77–78, 86 (LexisNexis 2015–2016). A probation officer may search the home of a probationer by obtaining a warrant supported only by reasonable suspicion rather than probable cause. See Commonwealth v. LaFrance, 402 Mass. 789, 792–793, 525 N.E.2d 379 (1988). Special conditions, where ordered, may impose further restrictions and obligations, such as drug and alcohol testing and evaluation, participation in treatment programs, GPS monitoring, and home confinement curfews. See G.L.c. 276, § 87A.
The defendant may be required to report to his or her probation officer any change in the defendant's ability to pay, and the probation officer may petition the judge to modify the condition of probation by increasing or decreasing the amount of restitution due based on any material change in the probationer's financial circumstances. See Goodwin, 458 Mass. at 18, 933 N.E.2d 925, quoting Buckley v. Quincy Div. of the Dist. Court Dep't, 395 Mass. 815, 820, 482 N.E.2d 511 (1985) (“A judge may add or modify a probation condition that will increase the scope of the original probation conditions only where there has been a ‘material change in the probationer's circumstances since the time that the terms of probation were initially imposed,’ and where the added or modified conditions are not so punitive as to significantly increase the severity of the original probation”). Cf. United States Sentencing Commission Guidelines Manual § 5B1.3(a)(7) (updated Nov. 2015) (“the defendant shall notify the court of any material change in the defendant's economic circumstances that might affect the defendant's ability to pay restitution”).
Because we have not previously had the opportunity to articulate the legal standard for determining the defendant's ability to pay restitution, we do so here for the first time. In determining the defendant's ability to pay, the judge must consider the financial resources of the defendant, including income and net assets, and the defendant's financial obligations, including the amount necessary to meet minimum basic human needs such as food, shelter, and clothing for the defendant and his or her dependents. Cf. G.L.c. 261, § 27A (a ) (defining “[i]ndigent” with respect to civil litigants who seek waiver of court fees as person who is “unable to pay the fees and costs of the proceeding in which he is involved or is unable to do so without depriving himself or his dependents of the necessities of life, including food, shelter, and clothing”); United States v. McGiffen, 267 F.3d 581, 589 (7th Cir.2001), citing United States v. Embry, 128 F.3d 584, 586 (7th Cir.1997) (in determining whether defendant is financially able to contribute to cost of appointed counsel, judge must find “whether requiring the contribution would impose an extreme hardship on the defendant, whether it would interfere with his obligations to his family, and whether there were third parties with valid claims to the funds”); Museitef v. United States, 131 F.3D 714, 716 (8TH CIR.1997) (test of inability to pay costs of appointed counsel “is whether repayment would cause such financial hardship as to make it impractical or unjust․ The ability to pay must be evaluated in light of the liquidity of the individual's finances, his personal and familial needs, or changes in his financial circumstances”); Model Penal Code: Sentencing § 6.04(2) (Proposed Official Draft 2012) (“The total severity of economic sanctions imposed on an offender may never exceed the offender's ability to pay while retaining sufficient means for reasonable living expenses and existing family obligations”).
The payment of restitution, like any court-imposed fee, should not cause a defendant substantial financial hardship. See People v. Jackson, 483 Mich. 271, 275, 769 N.W.2d 630 (2009) (in determining defendant's ability to pay, judge must consider “whether the defendant remains indigent and whether repayment would cause manifest hardship”). Cf. S.J.C. Rule 3:10, § 10(a), 475 Mass. (2016) (“The indigent counsel fee shall be waived where a judge, after the indigency verification process, determines that the party is unable without substantial financial hardship to pay the indigent counsel fee within 180 days”). Restitution payments that would deprive the defendant or his or her dependents of minimum basic human needs would cause substantial financial hardship. Where a defendant has been found indigent by the court for purposes of the appointment of counsel, a judge should consider carefully whether restitution can be ordered without causing substantial financial hardship.
A judge may also consider a defendant's ability to earn based on “the defendant's employment history and financial prospects,” Nawn, 394 Mass. at 9, 474 N.E.2d 545, but a judge may attribute potential income to the defendant only after specifically finding that the defendant is earning less than he or she could through reasonable effort. Cf. Child Support Guidelines (Aug. 1, 2013) (allowing attribution of potential income “[i]f the Court makes a determination that either party is earning less than he or she could through reasonable effort”).
2. Order of restitution. We now turn to the order of restitution in this case. The judge here ordered restitution in the amount of the “retail loss”—$5,256—even though the judge appeared to recognize that the defendant could not afford to pay that amount during the remaining period of her probation.8 The judge did not set a monthly amount for the defendant to pay, but instead directed that the probation department set a payment schedule. It was error for the judge to order restitution based only on the amount of loss, without considering whether the defendant was financially able to pay that amount during the remaining period of her probation. It was also error for the judge to delegate to the probation department the responsibility of establishing a payment schedule.
The consequence of these errors demonstrates why it is so important that the ability to pay be considered in setting the amount of restitution. Although the record does not reveal what payment schedule was established by the probation department, a notice of violation issued on May 11, 2015, for the defendant's failure to pay the required amount,9 and a warrant issued for her arrest when she failed to appear at the probation violation hearing on May 22. The warrant was recalled on June 4, and she stipulated to a violation of her probation at a hearing on July 15, where the judge restored her to the same terms and conditions of probation, but ordered her to make restitution payments of thirty dollars per month. Although the defendant made the required monthly payments, on October 28, 2015, the day her probation was set to expire, the probation department issued a second notice of violation for her failure to pay the balance of her restitution, which the probation department calculated as $5,176.10 The probation hearing on that notice of violation has been continued in light of this pending appeal.11 If the defendant had not been poor, she could have afforded to pay the restitution in full before October 28, 2015, and would no longer have been subject after that date to the conditions of probation or the risk that a new crime might result in her being resentenced on her larceny from Walmart. It was only because of her poverty that she was subject to the prolonged punishment of probation.
3. Calculation of amount of economic loss. The defendant claims that the judge erred, not only in failing to consider her ability to pay, but also in calculating the amount of restitution as the retail price of the items stolen. We earlier noted that the payment of restitution “ is limited to economic losses caused by the defendant's conduct and documented by the victim.” McIntyre, 436 Mass. at 834, 767 N.E.2d 578. Because the purpose of restitution is to reimburse the victim “for any economic loss caused by the defendant's actions,” Rotonda, 434 Mass. at 221, 747 N.E.2d 1199, the amount of restitution may not exceed the victim's actual loss. See McIntyre, supra. See also United States v. Ferdman, 779 F.3d 1129, 1132 (10th Cir.2015), quoting United States v. James, 564 F.3d 1237, 1243 (10th Cir.2009) (“a district court may not order restitution in an amount that exceeds the actual loss caused by the defendant's conduct, which would amount to an illegal sentence constituting plain error”); United States v. Boccagna, 450 F.3d 107, 119 (2d Cir.2006) (“Criminal restitution ․ is not concerned with a victim's disappointed expectations but only with [its] actual loss”).
Here, the record reflects that the theft occurred when the defendant's friends brought merchandise to her cashier counter, and that the defendant scanned some items and “free-bagged” others. Although the record is silent as to how the defendant chose which items to “free-bag” and whether her friends knew in advance that she would “free-bag” particular items (or “free-bag” any), the judge reasonably could have inferred from the circumstances of the theft that, had the defendant scanned these items at her counter, the friends would have paid for them. Therefore, because these items were stolen, not from inventory, but after they were brought to the cashier's counter, the judge reasonably could have found by a preponderance of the evidence that these items would have been sold had they not been stolen, and that the retail price of the items was the appropriate measure of the victim's actual loss. Although it is not plain that the judge applied this analysis in calculating the amount of restitution as the “retail loss,” we conclude that the judge did not err in determining that the appropriate amount of the victim's actual loss in these circumstances was the aggregate retail price of the items stolen.
Conclusion. Because the judge erred in failing to consider the defendant's ability to pay in determining whether to order restitution and in determining the amount of restitution, we vacate the judge's restitution order and remand the case to the District Court for further proceedings consistent with this opinion.
I agree that in setting an amount of restitution especially as a condition of a probation, a judge can and should take into account the likely ability of the defendant to pay that amount during the term of the probation imposed. I disagree with the extra burden the court seems prepared to place on victims in establishing their economic loss in the context of thefts from a retail enterprise.
It seems to me that the economic loss incurred in that context should be presumed to be the retail price of the goods stolen, an amount that can be readily ascertained and presented to the court at a restitution hearing. See State v. Smith, 144 Idaho 687, 693, 169 P.3d 275 (2007) (where retailer's items stolen, correct value for restitution will generally be retail market value of items).
For example, in People v. Chappelone, 183 Cal.App.4th 1159, 107 Cal.Rptr.3d 895 (2010), the victim was the Target department store, and the principal defendant was an employee responsible for seeing that damaged items and merchandise withdrawn by manufacturers were taken off the sales floor and returned to the appropriate entity for credit (or sold for deeply discounted prices to charitable organizations). Id. at 1163, 1165–1166, 107 Cal.Rptr.3d 895. The theft at issue involved large quantities of such items awaiting disposal from storage. Id. at 1165, 107 Cal.Rptr.3d 895.
The court set restitution at $278,678, based on the full retail price of the goods.1 Id. at 1170, 107 Cal.Rptr.3d 895. On appeal, the Court of Appeal noted that the vast majority of stolen goods had in fact been recovered and returned to Target, and that the items, even before the theft, were identified by Target as damaged or otherwise not saleable at retail in any event.2 Id. at 1173–1174, 107 Cal.Rptr.3d 895. In these circumstances, the Court of Appeal reasonably held that valuing the merchandise at its full retail price highly inflated its actual value, and the recovery of that amount would result in a windfall to Target. Id. at 1178–1179, 107 Cal.Rptr.3d 895. While the retail price was a “reasonable starting point the value should have been discounted to reflect the true nature of the goods.” Id. at 1175, 107 Cal.Rptr.3d 895. Consequently, the restitution order was vacated and the matter remanded for a further hearing.
The facts in United States v. Ferdman, 779 F.3d 1129 (10th Cir.2015), are also exceptional. The items at issue in that case were eighty-six cellular telephones that the defendant purchased at Sprint stores (fraudulently using various corporate accounts) for a “subsidized price” contingent on Sprint service agreements. Id. at 1131, 1136. The defendant then resold the telephones. Id.
The trial judge ordered restitution in an amount based on the full retail price that could have been charged to a customer purchasing the telephones without a service agreement.3 Id. at 1131. While the Appeals Court concluded that the trial court judge could ordinarily include lost retail sales and lost profits in a restitution order, the specific language of the Federal Mandatory Victims Restitution Act of 1996, as applied in this case, required more than just an unverified letter from Sprint stating that its losses were the full unsubsidized retail prices of the telephones, without any evidence from which the trial judge could infer that the defendant's theft caused the victim to lose actual retail sales at those prices. Id. at 1136–1137, 1139–1140.
1. We acknowledge the amicus brief submitted by the American Civil Liberties Union of Massachusetts.
2. The defendant recommended that her case be continued without a finding for eighteen months. The prosecutor recommended that a guilty finding be entered, that she be placed on probation for a period of two years, and that she be ordered as a condition of probation to pay Walmart $5,256.10 in restitution. The defendant accepted the judge's disposition even though it exceeded her recommendation. See G.L.c. 278, § 18.
3. The judge waived the probation supervision fee and the indigent counsel fee.
4. Where, because of the defendant's limited ability to pay, the restitution amount is less than the victim's total economic loss, nothing bars the victim from filing a civil action and obtaining a judgment against the defendant for the full amount of the loss. The victim may seek to collect on this judgment through a civil execution. See Commonwealth v. Klein, 400 Mass. 309, 311, 509 N.E.2d 265 (1987); Commonwealth v. Malick, 86 Mass.App.Ct. 174, 178, 14 N.E.3d 338 (2014); Fidelity Mgt. & Research Co. v. Ostrander, 40 Mass.App.Ct. 195, 199, 662 N.E.2d 699 (1996). See also G.L.c. 258B, § 3 (u ).
5. A judge remains free to revoke probation or extend the term of probation where a probationer violates a condition of probation by willfully failing to pay a restitution amount he or she had the ability to pay. See Bearden v. Georgia, 461 U.S. 660, 668, 103 S.Ct. 2064, 76 L.Ed.2d 221 (1983) (“If the probationer has willfully refused to pay the fine or restitution when he has the means to pay, the State is perfectly justified in using imprisonment as a sanction to enforce collection”); Commonwealth v. Avram A., 83 Mass.App.Ct. 208, 212–213, 982 N.E.2d 548 (2013).
6. We acknowledge that extending the length of probation in such circumstances has not been recognized to be in violation of Federal constitutional law. See Bearden, 461 U.S. at 674, 103 S.Ct. 2064 (where defendant on probation is unable to pay fine, court may extend time for payment).
7. For example, where a defendant has been found guilty of shoplifting and the judge determines that the economic loss to the victim is $5,000, the judge might decide that the defendant's risk of future criminal conduct is most effectively diminished by two years of treatment for the defendant's drug and mental health problems, and that the defendant should therefore be placed on supervised probation for two years, with special conditions of drug and mental health treatment. Once the judge has decided on this two-year probationary period, the judge must then consider the defendant's ability to pay and determine the amount of restitution that the defendant is able to pay. The judge might determine that, for example, the defendant has the ability to pay fifty dollars per month for each of the twenty-four months. If the defendant successfully completes the probation period and meets the required monthly payments, the defendant's probation must be terminated, even though the defendant paid only $1,200 in restitution; probation may not be extended so that the victim may be paid the balance of $3,800. The victim may initiate a civil action to recover the unpaid balance of economic loss.Where a judge determines that there is no reason to impose probation other than to collect restitution, a judge may impose a brief period of probation (e.g., thirty or sixty days) and determine how much of the economic loss the defendant is able to pay during that time period, and make that amount of restitution a condition of the brief period of probation.
9. The record on appeal reflects that the defendant made only two payments of five dollars for restitution.
10. The Commonwealth correctly noted that this amount is in error, and that the amount of restitution due on that date was actually $5,126.
11. The record reflects that the defendant continued to make monthly restitution payments of thirty dollars at least through December, 2015.
12. The concurrence contends that we should declare the retail price to be the best measure of actual loss in order to avoid placing an “extra burden” on victim retailers who seek restitution. Post at 956. A retailer should be able to ascertain the wholesale price of stolen items as easily as the retail price, and we do not think it unfair to require the victim retailer to show that it is more likely than not that the stolen items would have been sold to obtain the higher retail price as the measure of restitution.
1. This amount also included $44,000 in expenses incurred by the Target department store during the investigation. People v. Chappelone, 183 Cal.App.4th 1159, 1170, 107 Cal.Rptr.3d 895 (2010).
2. The merchandise was ultimately donated by Target to charities. See id. at 1171, 107 Cal.Rptr.3d 895.
3. This amount included apparently $3,300 in investigative costs incurred by Sprint. See United States v. Ferdman, 779 F.3d 1129, 1134 (10th Cir.2015).

matches: § 30 v. v. v. § 3 § 3 v. v. v. v. v. § 3 v. v. v. § 87 v. v. v. v. § 87 v. § 87 v. § 5 § 27 v. v. v. § 6 v. § 10 v. v. v. v. v. v. § 18 v. v. v. § 3 v. v. v. v.


Ecuadorian national legislation does not specify clearly the circumstances in which law enforcement officers may use firearms.
Under the 2008 Constitution of the Republic of Ecuador, “The Armed Forces and National Police Force are institutions aimed at protecting citizen rights, liberties, and guarantees.”Art.158, 2008 Constitution of Ecuador.It is also stipulated that, “The members of the National Police Force shall receive training based on human rights, specialized research, prevention, control, and crime prevention, and the use of methods of deterrence and conciliation as alternatives to the use of force.”Art. 163, 2008 Constitution of Ecuador.With respect to police accountability, “In compliance with the principle of jurisdictional unity, the members of the Armed Forces and the National Police Force shall be charged and tried by regular justice. Misconducts of a disciplinary or administrative nature shall be subject to their own procedural standards.”Art. 188, 2008 Constitution of Ecuador.
The 2009 Law on Public and State Security requires that the security forces respond in a proportionate manner to security threats.Art. 4(d), Ley Org. No 1, 2009.In the past, the Criminal Code of the National Police has given a broad exemption from responsibility to the police for the use of force, including lethal force.
The Office of the Human Rights Ombudsman is given the authority by the Constitution of Ecuador to investigate alleged unlawful use of force by the Ecuadorian state, including the police. The Office is specifically called upon: "To exercise and promote surveillance of due process of law and to immediately prevent and stop all forms of cruel, inhumane and degrading treatment."Art. 215, 2008 Constitution of Ecuador.
In 2017, in its Concluding Observations on Ecuador’s seventh periodic report under the UN Convention against Torture, the Committee against Torture expressed concern about allegations of torture and other inhumane treatment in prisons and recommended that Ecuador launch and provide information on full investigations into the allegations.Committee against Torture, Concluding Observations on Ecuador, UN doc. CAT/C/ECU/CO/7, 21 January 2017, §35, 36.The Committee similarly expressed concern about the allegations of excessive use of force against protesters and called on Ecuador to launch full investigations into the incidents.Committee against Torture, Concluding Observations on Ecuador, UN doc. CAT/C/ECU/CO/7, 21 January 2017, §39, 40.
In a number of cases, the Inter-American Court of Human Rights has considered alleged violations of the rights to life and/or to physical integrity by the Ecuadorian police.Arts. 4 and 5, 1969 Inter-American Convention on Human Rights.
In its 2007 judgment in this case, the Court held that Ecuador had violated the right to life of the applicants – suspected drug dealers – who were killed during an operation by the Ecuadorian armed forces and national police. The Court found "no evidence demonstrating that agents of the armed forces who participated in the operation attempted to use less-lethal means of intervention in the specific case of the alleged victims", and concluded that Ecuador had not proved that the action of its security forces "was necessary and proportional in relation to the exigencies of the situation".Inter-American Court of Human Rights, Zambrano Vélez and Others v. Ecuador, Judgment (Merits, Reparations and Costs), 4 July 2007, §108.
The use of lethal force and firearms against individuals by law enforcement officials – which must be forbidden as a general rule – is only justified in even more extraordinary cases. The exceptional circumstances under which firearms and lethal force may be used shall be determined by the law and restrictively construed, so that they are used to the minimum extent possible in all circumstances and never exceed the use which is "absolutely necessary" in relation to the force or threat to be repealed.... When excessive force is used, any resulting deprivation of life is arbitrary....Inter-American Court of Human Rights, Zambrano Vélez and Others v. Ecuador, Judgment (Merits, Reparations and Costs), 4 July 2007, §84.
The use of force must be limited by the principles of proportionality, necessity and humanity. Excessive or disproportionate use of force by law enforcement officials that result in the loss of life may therefore amount to arbitrary deprivations of life.Inter-American Court of Human Rights, Zambrano Vélez and Others v. Ecuador, Judgment (Merits, Reparations and Costs), 4 July 2007, §85.


79-4509. Same; maximum property tax refund. In the event property taxes accrued exceeds $700 for a household in any one year, the amount thereof shall, for purposes of this act, be deemed to have been $700.
History: L. 1970, ch. 403, § 9; L. 1973, ch. 404, § 4; L. 1975, ch. 506, § 4; L. 1989, ch. 303, § 4; L. 1992, ch. 98, § 4; L. 2007, ch. 157, § 5; L. 2012, ch. 135, § 33; Jan. 1, 2013.


In Princeton Strategic Investment Fund, LLC v. United States, 2011 U.S. Dist. LEXIS 147339 (ND CA 2011) (will post a copy when I get a non-copyrighted copy), the principal issue was whether, in a civil TEFRA partnership case, a partnership was bound by the doctrine of collateral estoppel because of the prior convictions of principals affiliated with the partnership. The criminal case was the criminal convictions of Messrs. Robert Pfaff, John Larson and R. J. Ruble. (I refer to this criminal case as United States v. Pfaff (see prior blog on the Second Circuit's affirmance, here.) United States v. Pfaff was the remnant of the much larger indictment in United States v. Stein in which 13 of the defendants were dismissed for prosecutorial abuse. (See United States v. Stein, 541 F.3d 130 (2d Cir. 2008).) These cases arose from the KPMG related shelters, principally the BLIPS shelters.
Messrs. Pfaff and Larson were principals in the firms controlling the partnership and thus all the decisions regarding the BLIPS transaction. More importantly, they were convicted of a count of conviction for tax evasion with regard to the partnership and tax losses in question. So the issue was whether the partnership would be collaterally estopped because of their convictions.
There is an aphorism that the law is what the Supreme Court says it is. That aphorism probably means whatever the speaker or listener thinks or wants it to mean. To me, it does not mean that the Supreme Court makes decisions guided only by the world view of a majority of its Justices, but simply that, ultimately, the pronouncement of the majority as to the meaning of the law is the law. The role of the majority's world view is much more complex.
Ms. Greenhouse's article is Linda Greenhouse, What We Think About When We Think About the Court (NYT Opinionator 12/28/11), here.
In United States v. Cadet, ___ F.3d ___, 2011 U.S. App. LEXIS 25144 (2d Cir. 2011), here, the Second Circuit addressed several criminal tax issues that, while not particularly exceptional, offers good reminders to readers.
First the background of the case. The defendant was a return preparer who, allegedly, falsified tax returns for his clients. As the case went to trial, the charges were 20 counts for Aiding and Assisting, Section 7602(2) for claiming false deductions for the clients. The defendant was convicted of 16 counts and sentenced to 41 months incarceration and 36 months of supervised release.
The Court first addressed Rule 404(b) bad or other acts evidence. (Other acts may be a bit of a euphemism, since the whole point is for the prosecutor to bring bad stuff about the defendant to the jury's attention to influence their decision to convict.) The evidence was an IRS agent's testimony that, in a sting operation, upon the IRS agent's statement of concern about the indicated tax payment due, the defendant had offered to use "creative financing" -- really false deductions -- that reduced the indicated tax liability and generated an indicated refund. So the agent testified, the defendant generated this discussion and charged a higher fee for the indicated results.
Don Clark and Stephen Miller, An Eye for Investments and an Ear for Bluegrass (WSJ 12/20/11), here.
Adam Lashinsky, Sr., Remembering Warren Hellman (CNNMoney 10/19/11), here.
David R. Baker, Warren Hellman, financier and philanthropist, dies at 77 (SFGaste 10/19/11), here.
In Warren Hellman we are reminded that those of outsized achievements can be mensches as well.
In addition to the link on the bottom right to the Hardly Strictly Bluegrass web site, here is the link to the Facebook page.
In ILM 201150029 (11/9/11), the IRS concludes that the Section 6677 penalty for failing to file a foreign trust information return is not divisible for purposes of conferring jurisdiction in a refund suit upon payment of less than the entire amount. The divisible tax concept deals with the predicates for litigating liability for the tax. The divisible tax concept mitigates the so-called Flora rule (Flora v. United States, 362 U.S. 145 (1960)) which generally requires full payment before a refund suit may be brought. For example, the trust fund recovery penalty (TFRP) is a divisible penalty per employee per quarter and thus, upon the IRS's assessment of the TFRP, the taxpayer may pay a relatively minimal amount of one quarter's assessment to litigate in a refund suit. The IRS's conclusion in this new ILM, if accepted by the courts, will make litigation of the Section 6677 penalty more onerous and, depending upon the taxpayer's financial condition, perhaps prohibitive. Astute readers of the ILM will be able to pick up and attempt to exploit counter-arguments.
Section 6048 contains three distinct and separate reporting obligations. First, under section 6048(a), a responsible party must inform the Service of each occasion upon which a U.S. person creates a foreign trust, transfers money or property to a foreign trust, or when a citizen or resident of the United States dies if the decedent owned a portion of a foreign trust. Second, under section 6048(b), a U.S. person treated as owning a foreign trust under the grantor trust rules (sections 671 through 679) must report information with respect to that trust and also must ensure that the trust itself reports information to the Service and to each U.S. person treated as owning, or receiving a distribution from, the trust. Lastly, under section 6048(c), any U.S. person who receives a distribution from a foreign trust during the taxable year must report information about that distribution to the Service.
In an affidavit filed in the California case in October, Josephine Bonaffini, the Federal/State Coordinator for the IRS’ Estate and Gift Tax Program, said the agency has so far examined 658 taxpayers identified as transferring property to relatives and concluded that 238 of them should have, but didn’t, file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. Twenty of those delinquent filers have already been assessed extra tax because they had exceeded the amount each person is allowed to transfer gift tax free, she said.
Sound like fertile ground for targeted use of limited audit resources.
The most famous use of the John Doe Summons -- at least in recent history -- is its use for offshore financial institutions, starting famously with the attack on the use of offshore credit cards and progressing most recently to its use against certain offshore banks, most prominently UBS.
In United States v. Kozeny, 667 F.3d 122 (2d Cir. 2011), here, the Second Circuit addressed the conscious avoidance concept in the context of an FCPA conviction which requires that the defendant act knowingly. I won't slice and dice here the theoretical differences, if any, between the element knowingly and the element willfully in tax crimes, for that distinction is irrelevant to the points I make in this blog entry. Suffice it to say that I believe that the conscious avoidance concept applies the same in both contexts.
The FCPA provides that a person's state of mind is knowing with respect to conduct, a circumstance, or a result if, and I'm quoting from the statute, the FCPA, if such person is aware that such person is engaging in such conduct; that such circumstance exist [sic] or that such result substantially is certain to occur, or such person has a firm belief that such circumstances exist or that such result is substantially certain to occur. That's the end of the quote.
When knowledge of existence of a particular fact is an element of the offense, such knowledge may be established when a person is aware of a high probability of its existence, and consciously and intentionally avoided confirming that fact. Knowledge may be proven in this manner if, but only if, the person suspects the fact, realized its high probability, but refrained from obtaining the final confirmation because he wanted to be able to deny knowledge.
On the other hand, knowledge is not established in this manner if the person merely failed to learn the fact through negligence or if the person actually believed that the transaction was legal.
The IRS published yesterday temporary and proposed regulations regarding the Section 6038D filing requirement. As previously noted, the Form 8938 is used, and will commence for tax years after March 18, 2010. The IRS web page for the Form 8938 is here. The IRS explains in a web page titled Explanation of Section 6038D Temporary and Proposed Regulations, here. The actual proposed and temporary regs are here and here, respectively, The following is from the version of the IRS Explanation web page dated 12/15/11, with some of the items simply cut and pasted from that web page:.
A new case, United States v. Clayton, 2011 U.S. Dist. LEXIS 144031 (MD NC 2011), just in time for the Christmas season, offers a reminder about the confluence of tax and the bankruptcy discharges. Generally, debtors are entitled to take bankruptcy and be discharged from their debts. The operative word here, of course, is generally. And, specifically with regard to tax debts, debtors may often be discharged from their tax debts. The operative word here is often.
Income taxes of individuals are not discharged for taxes in the following categories: (i) taxes where the due date for the return is within three years of the date the bankruptcy petition was filed; (ii) taxes due for a year for which no return was filed; (iii) taxes for a year for which a delinquent return was filed within 2 years of the bankruptcy petition date; and (iv) taxes (but not penalties) attributable to a fraudulent return or an attempt to evade or defeat the tax; and (v) taxes assessed within 240 days of the date of filing the bankruptcy petition, plus any time plus thirty days during which an offer in compromise was made within 240 days after the assessment was pending.
Clayton focuses on the procedure for the discharge in the context of the Government's claim that Section 523(a)(1) exempted the tax in question from discharge. That section exempts tax where "the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax." (The disjunctive "or" describes arguably different culpable acts, and that disjunctive is relevant to one argument made in Clayton.).
I have written before about government attempts to end run the strictures of FRE Rule 404(b) by arguing that the evidence in question, even if of the type the Rule 404(b), here, would prohibit, could still be admitted if it is intrinsic to the crime(s) charge. This type of evidence is usually prejudicial to the defendant which is why the prosecutors want it in and the defendant does not want it in. We have posted that the Seventh Circuit, having previously sanctioned an "inextricable intertwinement" test of intrinsic evidence, had backed away from that test. See Seventh Circuit Sounds the Death Knell for Inextricable Intertwinement as End-Run Around Rule 404 and 403 (8/3/10), here.
Rule 404(b) does not apply "to evidence of acts which are 'intrinsic' to the offense charged." Fed. R. Evid. 404(b) advisory committee's note to 1991 amendments. The Third Circuit recently rejected the definition of "intrinsic evidence," common in other circuits, as evidence that is "inextricably intertwined" with the charged offense. United States v. Green, 617 F.3d 233, 248 (3d Cir. 2010), cert. denied, 131 S. Ct. 363 (2010). n2 In Green, the Third Circuit held that the "intrinsic" label applies only to two narrow categories of evidence. The first category is evidence of uncharged acts that directly proves the charged offense. The second category is evidence of uncharged acts performed contemporaneously with the charged crime that "'facilitate the commission of the charged crime.'" For example, in a hypothetical case where the defendant is charged with the sale of contraband, the defendant's necessary possession of that contraband would be a facilitating act. Evidence of other acts outside of these two narrow categories is extrinsic.
n2 The Third Circuit has distinguished its definition of intrinsic evidence from "most courts of appeals," which "hold that acts are 'intrinsic' to the charged offense if they are 'inextricably intertwined' with that offense." Green, 617 F.3d at 245. Before renouncing the "inextricably intertwined" test in Green, the Third Circuit critiqued the definitions of intrinsic evidence as either inextricably intertwined with the charged offense or completing the story' of the charged offense as too narrow and too broad, respectively. However, the Green Court noted that it is unlikely that our holding will exclude much, if any, evidence that is currently admissible as background or 'completes the story' evidence under the inextricably intertwined test.
In ILM 201146017 (10/14/11), here, the IRS concludes that it may summons a taxpayer's electronic data files (or backup files) in order to obtain associated metadata. That is the bottom-line conclusion, but the ILM applies the rule in several discrete circumstances.
Generally, metadata is information that describes how, when, and by whom a particular item or set of electronic information was collected, created, accessed, modified, and formatted. The questions above arise in the context of examinations of taxpayers that keep their business records electronically with metadata automatically created as an integral part of the records. In many instances, the Service's examinations would be advanced by accessing metadata that identifies the original date a transaction was entered in the electronic records, the dates of any changes to the entries, and the username of the person who made the entries. The value inherent in an examiner's ability to obtain the date and source of recorded entries is self-evident; the information tends to support or undermine the credibility of the entries in the business records.
See also for types of metadata, the Wikipedia entry on Metadata, here.
There has been a lot of speculation all over the lot about what the IRS will do on so-called opt-outs from the OVDI and OVDP. Much of the speculation is that the IRS will be draconian in determining the presence of willfulness for the FBAR willfulness penalty or in applying the FBAR nonwillful penalty. I personally do not think the IRS will be draconian, but realize that that conclusion is in the eye of the beholder.
I offer this blog entry so that readers can offer real world experiences as to what has happened to them (or, if in process, what is happening to them) after they opt out. I hope readers will also offer hints and strategies as to how others might mitigate the damage on the opt out. There is a lot of angst, particularly in the taxpayer community, about the opt out process. I hope that the comments will offer some comfort to those in the stage of considering whether to opt out or, having made the decision, are at the early stages of the process.
Readers might want to review other blogs relating to the opt out process, which I collect under the links below.
"Opting Out" #2 (3/2/12), here.
Our understanding of the statutory elements as expressed in Palivos and Hooks appears to be in tension with the text of the statute. Section 7206(2) literally says that a person commits the crime by assisting in "the preparation or presentation" of fraudulent documents in connection with matters arising under the internal revenue laws. This court and the Ninth Circuit, however, read the statute in the conjunctive to require that a defendant assist in both preparing and filing the document. See United States v. Kellogg, 955 F.2d 1244, 1248-49 (9th Cir. 1992) (citing United States v. Dahlstrom, 713 F.2d 1423, 1429 (9th Cir. 1983)). Five other circuits appear to have a contrary view. Three circuits have held—although two of them in unpublished decisions—that preparing a fraudulent return or other document, whether or not filed, is sufficient to violate the statute. United States v. McLain, 646 F.3d 599, 604 (8th Cir. 2011); United States v. Borden, 269 F. App'x 903, 904-05 (11th Cir. 2008) (nonprecedential decision); United States v. Feaster, 843 F.2d 1392, 1988 WL 33814, at *2 (6th Cir. Apr. 15, 1988) (nonprecedential decision). Two other circuits have expressed doubt that the act of filing is an essential element under § 7206(2); both courts hold that even if filing is an element, that element is met when a defendant gives a false return to a third party who is obligated by law to file the return with the IRS. United States v. Cutler, 948 F.2d 691, 694-95 (10th Cir. 1991); United States v. Monteiro, 871 F.2d 204, 209-10 (1st Cir. 1989). It is not necessary to resolve this issue here because there is no question that Joyner-Williams both prepared and filed false tax returns. Moreover, the district court instructed the jury using this court's conjunctive reading of § 7206(2), which, as recognized by the circuits that disagree with us, is more favorable to defendants than the statutory language would seem to permit.
In United States v. Stierhoff, 2011 U.S. Dist. LEXIS 138418 (D RI 2011), decided 11/30/11, the defendant was a stalker who also had failed to report and pay tax. He was convicted by the state of Rhode Island for stalking. The feds then slammed him with indictment for income tax evasion of approaching $460,000. He was convicted. He appealed. He lost. United States v. Stierhoff, 549 F.3d 19 (1st Cir. 2008). Stierhoff took another grasp with a motion "a motion to vacate, set aside or correct a sentence pursuant to 28 U.S.C. § 2255." He lost again. United States v. Stierhoff, 2011 U.S. Dist. LEXIS 138418 (D RI 2011).
What was his most recent gripe? He claimed his right to effective representation was denied. That is usually done in a 2255 proceeding, so nothing unusual here. As the court noted, "Success on a claimed violation of the right to effective representation of counsel requires a showing of both "deficient performance by counsel and resulting prejudice." [Citations and quotes omitted] He urged a number of failures by his trial counsel, but the only failure the court could find was his failure to meet the requirements for success.
He raised several points which I find generally unexceptional, but one of his arguments does address a theme I have discussed before -- the interplay between a Cheek good faith defense and the need for a defendant to testify in order to successfully assert the defense. See my prior blog Making a Cheek Good Faith Defense without Testifying (11/24/11), here.
that trial counsel was ineffective because he advised Stierhoff not to testify and thus failed to have Stierhoff testify about whether he believed he had a legal duty to pay taxes. Likewise, Stierhoff claims that appellate counsel was ineffective for failing to raise the issue. Stierhoff argues that this testimony would have been particularly important to disprove willful intent. Stierhoff contends that trial counsel did not explain to him that the "only way . . . to... counter the substantial amount of circumstantial evidence" would be for him to testify about his good faith belief that he was not violating tax law.
Amir Zavieh, a naturalized citizen and resident of San Francisco, has been indicted in the Southern District of Florida. The indictment is here and the DOJ press release is here. I have only been able to review the indictment lightly, but I do note that Renzo Gadola, a former Swiss banker cooperating with the Government plays a prominent role as an alleged co-conspirator. For prior blogs on Gadola, see here. It is payback time for DOJ's generosity to Gadola! And Gadola's former sidekick, Martin Lack, is involved as well, also named an alleged co-conspirator. Lack is or was a Swiss banker who was indicted in August. See my prior blog, New Swiss Enabler Indictment (8/2/11), here. Last I heard, Lack is on the lam and likely to remain so.
It is a familiar pattern of skulduggery and trying to avoid detection. For those with time on their hands, the alleged Overt Acts of the conspiray may be a good cure for insomnia (alright it is interesting to some tax crime afficionados).
The purpose of today's blog entry is to offer to readers of this blog only some anecdotal indications of what to do if a reasonably complete package cannot be posted by tomorrow. Readers must understand that these are only anecdotal indications of what to do and in no way binds the IRS.
First, and probably the most direct way to get some indication from the IRS is to call the OVDI Hotline or some other person associated with the process. At the recommendation of a fellow practitioner, I yesterday called Carl Barkow, OVDI Supervisor in Austin (512) 460-8953. Basically, he said that, in the event that despite due diligence, the taxpayer is unable to submit a reasonably complete package, the taxpayer should submit whatever he or she could submit, along with a cover letter explaining why the package is not reasonably complete and then submit the other items no later than 12/31/11. I gave him my name, but I don't think he recorded it, and he did say that he was getting a number of calls on this and was giving this advice / suggestion. So, I think this advice was intended to be generic and not specific to me or my client.
I have written before on the mens rea requirement for most tax crimes -- willfullness, defined as the intentional violation of a known legal duty. This requirement asks what the actor intended in doing that which, together with the this mens rea, the law criminalized (e.g., in the case of evasion, a tax due and owing and an affirmative act of evasion).
How does one prove or disprove the existence of the required intentional violation of a known legal duty? Unless the defendant admits his or her intent, the Government makes its case on circumstantial evidence that permits a jury to infer beyond a reasonable doubt the existence of the intent. The defendant must either then testify as to his or her lack of such intent or introduce rebuttal evidence that will permit and hopefully convince the jury to conclude that the Government's circumstantial evidence is insufficient.
In a prior blog, I discussed the issue related issues of the role of good faith. Good faith, if present, proves that the defendant did not have the required intent -- the required intent to violate a known legal duty. See my prior blogs on this issue here. Readers will recall that defendants will usually want a specific good faith instruction in addition to the general willfulness instruction which subsumes the good faith defense.
In a recent nonprecedential opinion, United States v. Abramson-Schmeiler, 2011 U.S. App. LEXIS 23789 (10th Cir. 2011), here, the Court addressed variations on this theme. The defendant attempt to introduce lay opinion testimony from the defendant's tax accountant. The defendant sought to have the accountant testify that "if the payments were underreported that he didn't believe that she did it on purpose." The trial court summarily refused to permit the testimony.
Michael A. Hase, whose guilty plea was previously discussed here, was sentenced on 12/2/11. The blog discussing the guilty plea Another UBS Client Pleads -- With the Baggage of Illegal Income (9/27/11), here. I have seen the DOJ press release but it is not yet posted on the DOJ Tax press release site. When it is posted, I will link it here. But readers should note particularly that this is an atypical case because of the key charge of Theft of Government Property which probably skewed the sentencing results toward greater punishment. Had this been a tax related charge (some tax charge(s) without the other charge), I would not have expected, for example, an incarceration sentence of 29 months.
Guilt: By Plea Agreement - 2 counts - theft of government property 18 USC 641 (one count); tax perjury (Section 7206(1)) (1 count covering 10 years).
FBAR Penalty: $1.937,767 + (Based on 50% of the indicated highest balance of $3,875,934 in 2006).
I will update the spreadsheet later.
As reported, the relief is only for U.S. / Canadian dual citizens living in Canada. I can understand why such dual citizens living in the U.S. would be excluded, but what about such dual citizens whose center of gravity was in Canada but they resided outside both the U.S. and Canada?
The second test they must past is that they owe no U.S. taxes. Under the two initiatives to date, U.S. persons (regardless of dual nationality) could be penalized even if they owed no U.S. tax (usually because of foreign tax credits or related deductions that might have offset any offshore income); if they failed to report the income even though owing no additional tax, they were subject to penalty. So this is some relief that would be available.
While the IRS spokesperson didn't provide any details on what that guidance will provide, Jacobson said in the Globe and Mail interview that the IRS will make it clear that if a dual citizen living in Canada files a U.S. tax return late and owes no taxes, there will be no penalties for failure to file. The guidance also will provide that those who were unaware of the FBAR filing requirement will be able to file previous reports now, along with a statement explaining why they're filing late, and that no penalty will be imposed if the IRS determines that there is reasonable cause. Finally, individuals who took part in the IRS's 2011 offshore voluntary disclosure initiative or in the 2009 special offshore voluntary disclosure program will be able to get back penalties already paid, according to Jacobson.
Jacobson said in the interview that it is unclear how many years of back taxes will be covered or what would happen to people who owe relatively small amounts of tax to the IRS.
Barrie McKenna, U.S. taxman to go easy on American residents in Canada (The Globe and Mail 12/2/11), here.


text:
“Fraud Upon the court” occurs when the judicial machinery itself has been tainted, such as when an attorney, who is an officer of the court, is involved in the perpetration of a fraud or makes material misrepresentations to the court. Fraud upon the court makes void the orders and judgments of that court.
It has recently become evident that the Director of the Board of Registration in Medicine’s Physician Health and Compliance Unit, attorney Deb Stoller, has been unethically and unlawfully withholding and concealing documentary evidence that is not only exculpatory to me but reveals that Physician Health Services (PHS) engaged in misconduct and fraud. She has essentially been concealing their crimes.
The “Administrative Record” filed by the Board was absent copious documentation of major importance and all of it was submitted through the care of Ms. Stoller. The missing documents include multiple petitions and supporting documents that are neither irrelevant nor superfluous. Each of these documents contains sufficient indicia of reliability to meet probative value.Concealing material fact, misrepresentation and making false statements to a state administrative agency is unethical. It constitutes abuse of power and fraud.
Fraud on the court occurs where a party tampers with the fair administration of justice by deceiving “the institutions set up to protect and safeguard the public” or otherwise abusing or undermining the integrity of the judicial process. Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 246 (1944).
Ms. Stoller is in violation of the Rules of Professional Conduct including Mass.R.Prof.C. 3.4(c). Fairness to Opposing Party and Counsel which states in part: A lawyer shall not: (c) knowingly disobey an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid obligation exists.
(1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer; (3) offer evidence that the lawyer knows to be false. If a lawyer, the lawyer’s client, or a witness called by the lawyer, has offered material evidence and the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal. A lawyer may refuse to offer evidence, other than the testimony of a defendant in a criminal matter, that the lawyer reasonably believes is false; (b) A lawyer who represents a client in an adjudicative proceeding and who knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal,; (c) The duties stated in paragraphs (a) and (b) continue to the conclusion of the proceeding, and apply even if compliance requires disclosure of information otherwise protected by Rule 1.6.
And under Mass.R.Prof.C. 8.4(c, d, h. It is professional misconduct for a lawyer to: (c) engage in conduct involving dishonesty, fraud, deceit, or misrepresentation; (d) engage in conduct that is prejudicial to the administration of justice; (h) engage in any other conduct that adversely reflects on his or her fitness to practice law.
The Supreme Judicial Court (SJC) reviews the Board’s decisions in part for constitutional error, see Mass.Gen.L. ch. 30A, Sec. 14(7), and is permitted to gather evidence “in cases of alleged irregularities in procedure before the agency [when those irregularities are] not shown in the record.” Mass.Gen.L. ch. 30A, Sec. 14(5). The Court may look beyond the record if it appears the agency deliberately or negligently excluded documents that may have been adverse to its decision.
On a writ of certiorari, the court’s review “is confined to the record and is for the purpose of correcting legal error, [and therefore] the inquiry about the presence or absence of genuine issues of material fact, germane to summary judgment procedure, is inappropriate. . . . [The reviewing court] need only inquire whether the commission’s decision was ‘legally tenable and supported by substantial evidence on the record as a whole.”‘ Gloucester v. Civil Serv. Comm’n, 408 Mass. 292 , 297 (1990), quoting Commissioner of Health & Hosps. of Boston v. Civil Serv. Comm’n, 23 Mass. App. Ct. 410 , 411 (1987). See G.L.c. 31, s. 2 (b); Mayor of Revere, supra at 319-322.
Fraud is distinguished from negligence, ignorance, and error by virtue of the fact that it is intentional; involving some level of calculation. Negligence is: “the failure to use such care as a reasonably prudent and careful person would use under similar circumstances.” In a professional context, it is defined as: “conduct which falls below the standard established by law for the protection of others against unreasonable risk of harm… it is characterized chiefly by inadvertence, thoughtlessness, inattention, and the like.”. Fraud, in contrast, is not accidental in nature, nor is it unplanned. Those who commit fraud know what they are doing and are deliberate in their efforts. They are also aware that it is unethical, illegal, or otherwise improper.
I believe it is safe to conclude that the parties here participated in fraud.
The “litigation-packet” did not merely show “chain-of-custody” issues but forensic fraud. Misrepresenting invalid forensic test results as valid is the definition of forensic fraud. Ms. Stoller should have immediately assessed the “clear-weight” of this evidence, entered it into the docket for reconsideration and given me an opportunity to be heard. She did not.
The Federation of State Medical Board Policy specifically requires strict “chain of custody.” She violated the Board’s very own standards and then blocked me from returning to practice by putting barriers in place, refusing to allow independent evaluations and protracting the time –drawing this out in order to cause as much damage as possible to my family and me.
Mr. Bertram alleges PHS has not committed any crimes because the agency has not been charged with any crimes. This is logical fallacy. They have not been charged with any crimes because the very agencies capable of charging them with crimes are ignoring or otherwise overlooking them for various reasons. Furthermore, If I see someone being stabbed in the back I can reasonably conclude it is a crime. Colluding with a laboratory to intentionally misrepresent laboratory data is laboratory fraud and covered under Title 18 of the United States Criminal Code (Wire fraud 18 USC 1343, False Statements 18 USC 1001, Conspiracy 18-USC 371, False Claims 18-USC 287 and Obstruction of Justice 18-USC 1505). I believe all of these are applicable here. In addition Dr. Sanchez violated M.G.L 156 (B) Section 69 by making false statements to a state agency.
PHS has convinced the Board not to “second-guess” their decisions and apparently the Board has convinced state AGOs to not “second-guess” theirs; each presupposing the integrity of the individuals and validity of the decisions of the agencies in question. As a result complaints by doctors of serious crimes and abuse are ignored. Fact and truth do not matter as the agencies blindly support one-another. This removes all aspects of accountability including answerability and justification for one’s actions. It is a flawed system.
In the past the SJC has overturned the Board’s decisions on due process grounds, see, e.g., Morris v. Board of Reg. in Medicine, 405 Mass. 103, 110, 539 N.E.2d 50, 54 (1989) (vacating Board decision because proceedings “denied [the physician] fairness in a due process sense.”).
This interference with the administration of Justice, abuse of authority and denial of constitutional rights warrant the Board Orders be reversed, vacated and corrected. “The touchstone of due process is protection of the individual against arbitrary action of government.” (Wolff v. McDonnell, 418 U.S. 539, 558 (1974). “[i]n a just society those who govern, as well as those who are governed, must obey the law.” (United States v. Leon, 104 S. Ct. 3430, 3457 (1984) (Stevens, J., dissenting).
The record compiled here illustrates that over the course of four years the Board not only failed to carefully consider any of the relevant evidence but most likely never saw any of it.
Ms. Stoller violated multiple professional regulations, ethics and the law in an ongoing campaign in which she blocked the administration of justice. By concealing the truth she prevented both exculpatory evidence favorable to my case and detrimental to the opposing party (involving misconduct and crimes from ever coming to light. It is quite clear the full Board never saw these documents. The fact that the latest Board action did not have any of the documents or petitions submitted over the past year is prima facie evidence of Fraud on the Court. Ms. Stoller needs to be held accountable and I am requesting the SJC uses whatever power it has available to make certain this occurs. Ms. Stoller needs to be disciplined for her actions and this discipline needs to be commensurate with her crime. In this case nothing less then disbarment and criminal charges would fit that bill.
In the Matter of Michael L Langan, M.D.
The Administrative Record filed by the Board and Assistant Attorney General Bryan Bertram’s oppositional statements suggest that the Director of the Board’s Physician Health and Compliance Unit, Attorney Debra Stoller has been interfering with the administration of justice by suppressing documentation provided as key evidence and the petitionary arguments accompanying them. The amount of missing information is profound and in review of all of the documents including Board Orders and the Board’s oppositional response to my complaint it is evident that the documents were concealed from the full Board. Mr. Bertram’s arguments are based on a very limited record as both exculpatory documents supporting my position and documents indicating misconduct by PHS were intentionally blocked by attorney Deb Stoller in violation of professional regulation consistent with Fraud on the Court. She engaged in misrepresentation, concealment and other misconduct in interference with the administration of justice.
Mass.R.Prof.C. 8.4(c, d, h). Misconduct. It is professional misconduct for a lawyer to: (c) engage in conduct involving dishonesty, fraud, deceit, or misrepresentation; (d) engage in conduct that is prejudicial to the administration of justice; (h) engage in any other conduct that adversely reflects on his or her fitness to practice law.
On March 9, 2015 an Affidavit was filed with this Court (Affidavit of Michael Langan in Support of Motion for Relief Pursuant to Earlier Court Order) because Attorney Deb Stoller refused to schedule a hearing despite this Court’s request that she do so. In this Affidavit I outline the multiple unwarranted and unjustified delays and state “my legitimate concern is that the Board will simply ignore my most recent January 20, 2015 Petition for Re-instatement. My fears are well grounded as the Board has engaged in a persistent pattern of ignoring my every reasonable effort at trying to be re-instated; and the board has abused the administrative law process to accomplish this. It was only after this Affidavit was filed with this Court that Ms. Stoller even put me on the schedule.
It appears my fears were indeed well grounded as they actually did ignore my January 20, 2015 petition. It appears the April 16, 2015 Board Hearing was simply a “sham review” to satisfy this Court’s request.
The Administrative Record compiled for the April 16, 2015 Board Hearing was absent copious relevant documents including the January 20, 2015 Petition on which it was ostensibly based. In fact, the sole petition is close to one year old. Since that time I have submitted five more petitions that are absent. Since that time I have submitted multiple documents and petitions that are not found anywhere in the Board’s record. Although some of the key documents presented to the Board since 2011 are contained therein, there is no index indicating the date they were received and this brings into question when and if these mitigating and even exculpatory documents were ever even considered.
Mr. Bertram is correct. The February 14, 2014 report from Dr. Wilens does not cover the months preceding the January 2015 Petition to the Board, but the attached letters from Dr. Wilens dated April 24, 2014 and April 3, 2015 certainly do. The January 2015 Petition was heard at an April 16, 2015 Board Hearing and the April 3, 2015 letter from Dr. Wilens states: “I have monitored him (Langan) clinically and over the past year have been ordering and monitoring urine and saliva” toxicology tests and notes he will continue following me. This letter was written 13 days prior to the April 16th Board Hearing but absent from the Administrative Record filed by the Board October 9, 2015. The letter was provided to Board attorney Deb Stoller both by U.S. Postal service and e-mail. Additionally, it was hand delivered with the other supporting documents of my January 2015 Petition to Board attorney Tracy Ottina at the April 16th, 2015 Board Hearing.
The only possible explanation for the absence of this letter from the Administrative Record is that it was intentionally withheld. The fact that Mr. Bertram argues the absence of such documentation was used in the Board’s reasoning process to deny my Petition suggests the Board never saw it.
identifies as being a factor in the Board’s denial of my petition therefore in this context had I provided a monitoring plan my petition would not have been denied. Mr. Bertram goes on to state that I have never challenged the Board’s findings that I violated my Letter of Agreement. The copious documentation I I have provided this court shows I have been challenging these findings since day one and due to the limited number of issues leading to my suspension and the documentary evidence I have provided to Ms. Stoller that is exculpating to me and incriminating for PHS I suspect it was all suppressed.
In other words, as with Dr. Wilen’s letter, the Board never saw it and the proposition that this was “inadvertent” is implausible.
In addition to Dr. Wilen’s letter, three petitions were filed with the Board of Registration in Medicine in preparation for the April 16, 2015 Board Hearing. These are dated January 20, 2015 and February 20, 2015 and make reference to a September 3, 2014 Petition in which I introduced a recently acquired document from October 4, 2012.
The October 4, 2012 document from United States Drug Testing Labs (USDTL) to Dr. Luis Sanchez reports the invalidity of the confirmatory test from July 2011 and was the result of an investigation by the College of American Pathologists and precedes Dr. Sanchez report to the Board that I was non-compliant by two weeks. It is essentially exculpatory as Sanchez claimed in a written letter to the Board that he had not become cognizant of the invalidity of the test until December 10, 2012 (67-days later) and these contradictory documents in juxtaposition are prima facie evidence of misrepresentation and dishonesty. Sanchez concealed the test revision and reported non-compliance with my monitoring contract to the Board on October 19, 2012, two weeks after he was informed of the tests invalidity.
In fact the Administrative Record submitted by the Board contains just one Petition from May 25, 2014 that was submitted after Dr. Patricia Recupero completed her 87-page report opining I was safe to practice medicine without restriction and documenting the misconduct of PHS . This report as well as other supportive documentation previously provided to the Board from July 2011 to April 2014 the time they were produced was included with the petition (pages 153-180).
The record provides no index of when these documents were received. No timeline exists. They are not acknowledged in the written Board orders and no consideration is given to them in their written opinion. This brings into question whether or not this information was even available at the time of both Board orders. Was this information taken into account at the time it was provided or was it intentionally withheld or discarded at the time?
Due to the profound removal of due process and fundamental fairness as well as the inability of Mr. Bertram to develop an accurate oral argument due to the limited information contained in the official record I respectfully request the Court proceed with judicial review based on the documents.
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Thank you, Michael Langan, M.D., for the courage to share your experiences. Any administrator within any healthcare entity can destroy a physician with the stroke of a pen courtesy the HC-QIA of 1986. Physicians may face unbridled administrative abuse by any one of the many state or corporate instrumentalities with regulatory authority over our medical livelihoods. Corporate lawyers of physician workforce/training/certifying associations, boards, hospitals, and insurers “game” our legal justice system, subjecting physicians to unaffordable and heart wrenching legal wrangling. We are completely outgunned. Self serving administrators of corporate instrumentalities are protected by corporate veils, immense financial and legal resources, political connections and instant (sometimes very undeserved) societal credibility. The physician workforce is easy prey for administrative exploitation, including sexual assaults in a dynamic not unlike the sexual abuse of altar boys by priests.
You are not alone in your plight, but you are one of the very few with the courage and dedication to your profession to speak out. Collectively as physicians, we have lost our rights of fair process, civil rights and protection under the law. The EEOC has turned its back on the physician workforce because it does not cover governmental instrumentalities. Physician workforce/training/certifying associations strongly deny that they are governmental instrumentalities over us in order to have their cake and eat it too.
Thanks Leslie- sorry I did not reply earlier. Yes this is going on across the Country and the involvement of. Morally disengaged unctuous indivivoduals such as Stoller is reprehensible. After all the corporate sociopaths and PHP reprobates are who they are but the involvement of state salaried employees as complicit co-conspirators be it so called noble corruption or because the PHP throws them a turkey at thanksgiving or whatever is beyond the pale. Either defend them or take a stand that’s the challenge. Silence and apathy are not options anymore.
Silence has been the voice of fear and oppression.
I merely questioned the illegal “emergency” suspensions of the two physician board members who had called for investigations into executive misconduct within a national physician workforce, training and certifying association. I was immediately served a legal demand letter and threatened with termination without prior notice.
Physicians in American have been enslaved by healthcare entities which strip us of our Constitutional rights through sham peer review and crooked regulatory oversight. We labor within Uncle Tom’s healthcare entities, subjected to physical and sexual assaults we dare not report, extortion of our medical credentials, strategic lawsuits to silence our civic minded concerns and exploitation of our personal private medical histories for the voyeuristic pleasure of administrative perverts.
If American fails to restore civil rights to physicians and nurses with corporate anti-SLAPP protections, America will be subjected to even more uncensored corporate medical abuse. Until then, we have ‘Abomination Care’ in America.
She should lose her law license. These cases are about promoting their self serving agendas. In my opinion this is happening all over the U.S.
These arrogant co-conspirator tyrants have been able to get away with career murder and the consequent manslaughter of the patients under these physicians’ care due to spineless yes-men selected for such boards and complete lack of oversight. The time is coming when it will be determined that these boards are not even legitimate state agencies (see SCOTUS – NC Dental) and each board member will be held individually liable for the collective wrongdoing of the board. Likewise, the PHPs / PHS’s – their alliance with and endorsement by Medical Societies makes these latter extremely vulnerable. It is unfortunate for them that they have shown no moral integrity in causing an internal investigation to occur – must be a pretty risky environment in those chambers!
They’re like an anaerobic infection that’s been allowed to fester for so long specifically because it’s been hidden and operates best in a purulent environment deprived of O2. And we know what the remedy must be: aggressive wound management, drainage, and exposure to light and oxygen. Their arrogant toxicity is soon to be exposed. I suspect that none has read either the SCOTUS decision nor the MI class action lawsuit against the Board and PHP there.
Congratulations again for staying on this with such perseverance and determination. It WILL come to light and each perpetrator will be exposed and held accountable for the crimes committed.
experience is similar with all other State Board’s.

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Mississippi law does not treat uninsured motorists (UM) claims separately from underinsured motorist (UIM) claims. The statute merely defines an uninsured motorist to include the underinsured motorist.
Further, UM coverage must arise out of the “ownership, maintenance or use” of an uninsured vehicle. Spradlin v. State Farm Mut. Auto. Ins. Co., 650 So. 2d 1383 (Miss. 1995).
The UM statute does not mandate coverage for punitive damages that might be assessed against an uninsured motorist. State Farm Mut. Auto. Ins. Co. v. Daughdrill, 474 So. 2d 1048 (Miss. 1985). Policy language excluding punitive damages is permitted.
Caveat: The statute does not prevent an insurer from providing greater coverage than required. Thus, it is very important to always review both the statute and the policy.
(6) a motor vehicle owned or operated by a person protected by immunity under the Mississippi Tort Claims Act, if the insured has exhausted all administrative remedies.
No vehicle owned by the United States government and against which a claim may be made under the Federal Tort Claims Act, is considered uninsured.
Miss. Code Ann. § 83-11-102 defines “bodily injury” simply by saying that it includes death resulting from such injury. This term has received little attention for the Mississippi Supreme Court. See Miss. Ins. Law and Prac. § 16:28 (citing E.E.O.C. v. Southern Pub. Co., Inc., 894 F.2d 785 (5th Cir. 1990) (noting the Mississippi Supreme Court has not defined bodily injury)).
In determining whether a tortfeasor is properly considered to be an underinsured motorist with regard to a particular insured, the limits of the tortfeasor’s liability should be compared to the stacked total of UM benefits applicable to the insured. In short, compare the liability limits to the stacked UM limits. Cossitt v. Federated Guar. Mut. Ins. Co., 541 So. 2d 436 (Miss. 1989). It does not matter that a particular insured does not recover the full liability limits to determine coverage for UM. The statute only requires comparing limits to limits. For a UM claim to be valid, for policies following the Mississippi statute, the UM limits (stacked) must exceed the liability limits. If they are equal or less than then liability limits, there is no UM claim. Again, the fact that an insured may not actually receive the limits does not matter. It is a limits to limits only analysis. If a UM claim is triggered via the limits-to-limits analysis, you then determine how much UM is available under other rules, discussed below. Miss. Code Ann. § 83-11-101 et seq.
Different from determining if UM coverage exits, the UM carrier has the right to offset liability coverage payments. If provided for in its policy, the UM insured’s carrier may only validly offset the amount of UM benefits available to the insured by the amount of liability benefits “actually received” by the UM insured. In this context, “actually received” has been defined as those amounts that are either tendered by the tortfeasor’s liability carrier or otherwise available to the UM insured. Fidelity & Guaranty Underwriters, Inc. v. Earnest, 585, 591-92 (Miss.1997). Therefore, if multiple claimants are involved and an insured does not receive the full limits available to him, the carrier can only offset those amounts received or that he could have actually received.
Exhaustion: An insured has the right to elect to pursue a claim directly against his UM carrier and forego the right to seek damages against the tortfeasor (and liability carrier). In such situations, the UM carrier does not have an offset, and must advance the total UM limits (if otherwise appropriate) and force the UM carrier to seek subrogation from the tortfeasor. In other words, it has been held that a UM insured is not required to exhaust the limits of the tortfeasor’s liability before he can collect against his UM carrier. Harthcock v. State Farm Mut. Auto. Ins. Co., 248 So. 2d 456, 461-62 (Miss. 1971). But see Robinette v. American Liberty Ins. Co., 720 F. Supp. 577 (S.D. Miss. 1989).
Priority: “Primary First” – It has been noted that the primary insurer has the right to offset its UM limits first. Dixie Ins. Co. v. State Farm Auto. Ins. Co., 614 So. 2d 918 (Miss. 1992). Check policy language to determine applicability. See Primary/Excess Issues.
An insurer may not offset MedPay payments to the insured against UM coverage limits. Prudential Prop. & Cas. Ins. Co. v. Mohrman, 828 F. Supp 432, 438 (S.D. Miss. 1993).
An insurer may not offset Workers Compensation payments to the insured against UM coverage limits. Nationwide Mut. Ins. Co. v. Garriga, 636 So. 2d 658 (Miss. 1994).
Workers Compensations liens do not apply to UM proceeds. Miss. Ins. Guaranty Assoc. v. Blakeney, 51 So. 23 208 (Miss. App. 2009). Accordingly, a carrier does not need to seek approval from a court or workers compensation commission in order to pay UM proceeds.
Unless the insured rejects the coverage in writing, the policy must provide minimum UM coverage of at least 25,000/50,000/25,000. See Miss. Code Ann. §§ 83-11-101(1) and (2); 63-15-3.
The statute explains that “any insured named in the policy” can reject the coverage in writing. Miss. Code Ann. § 83‑11‑103(2). A statutorily required waiver of UM coverage can be obtained only from a fully informed insured. In other words, the waiver must be knowing and intelligent, meaning that the insured was “reasonably knowledgeable and informed of the costs and benefits of such UM coverage prior to signing the waiver.” Owens v. Mississippi Farm Bureau Cas. Ins. Co., 910 So.2d 1065, 1074 (Miss. 2005). The burden is on the carrier to demonstrate that a waiver was knowingly and intelligently made. Honeycutt v. Coleman, No. 2010-CT-01470-SCT (Miss. May 30, 2013). This can be accomplished by proof that an appropriate explanation of the ramifications of rejecting UM coverage was provided to the insured, or that the insured was a sophisticated purchaser of insurance or was otherwise informed. The Mississippi Supreme Court recently explained that in most cases if an insured denies he was fully informed of his UM rights, it will create a jury question.
There is no requirement of a written rejection of UM coverage above the minimum amount, and there is no duty on an agent to provide an explanation of such optional coverages. Owens v. Mississippi Farm Bureau Cas. Ins. Co., 910 So.2d 1065, 1074 (Miss. 2005).
The statute does not require that the written rejection be maintained. In other words, the mere fact that a carrier cannot produce the written rejection does not automatically create a violation of the statute. The carrier is free to provide affidavits or other circumstantial evidence that an insured at one time had signed a written rejection of coverage, and it is up to the insured to present proof to the contrary. Travelers v. Stokes, 838 So. 2d 270 (Miss. 2003).
If insured sued another tortfeasor, who was not an uninsured motorist, and obtained judgment for less than he sought, he cannot then claim that a different tortfeasor, who is uninsured, was actually the cause of his injuries. He is precluded from pursuing a UM claim. Carson v. Colonial Ins. Co., 724 F. Supp 1225 (S.D. Miss. 1989).
“Named driver” and “owned vehicle” exclusions have been found to be in conflict with the UM Act and are void and unenforceable. Lowery v. State Farm Mut. Auto. Ins. Co., 285 So. 2d 767 (Miss. 1973) (owned vehicle); Atlanta Cas. Co. v. Payne, 603 So. 2d 343, 348 (Miss. 1992) (named driver).
The exclusivity provision in the Worker’s Compensation statute completely bars an employee from recovering UM benefits from his personal insurer when injured by a co-employee. Wachtler v. State Farm Mut. Auto. Ins. Co., 835 So. 2d 23, 28 (Miss. 2003).
The UMPD deductible is $200. Miss. Code Ann. § 83-11-101.
UM stacking is permitted for “Class I” insureds (named insureds and resident relatives), generally, and more limited for “Class II” (permissive drivers and guest passengers). Meyers v. American States Ins. Co., 914 So. 2d 669, 674 (Miss. 2005). Class II insureds can only stack the accident vehicles’ coverage with any of his or her own personal coverage (i.e. other coverage he or she qualifies as an “insured” on). A Class II insured does not have the right to stack an employer’s uninsured motorist coverage unless policy language provides otherwise. Deaton v. Mississippi Farm Bureau Cas. Ins. Co., 994 So. 164, 167 (Miss. 2008). Anti-stacking provisions in policies are void.
A UM policy may include the requirement that actual “physical contact” occur between the insured and an unidentified motor vehicle.
An object that is simply thrown or tossed from one vehicle and hits the insured’s vehicle has been held not to meet the physical contact requirement as the insured vehicle was neither hit by the unknown vehicle nor was any object struck by that vehicle propelling it into the insured’s vehicle. See Aetna Cas. & Sur. Co. v. Head, 240 So. 2d 280 (Miss. 1970) (finding no physical contact in case involving a soft drink bottle being tossed by unknown operator into windshield of insured).
In many cases, however, the physical contact requirement can be met by indirect contact; that is, if the unknown vehicle is said to have contacted the insured through a medium of an intervening vehicle or object. For example, in Southern Farm Bureau Cas. Ins. Co. v. Brewer, the requirement was met when the unknown vehicle struck an object in the road thereby causing the object to be propelled into the insured vehicle. Southern Farm Bureau Cas. Ins. Co. v. Brewer, 507 So. 2d 369 (Miss. 1987). There, the Court emphasized that the injury-causing impact must have a “complete, proximate, direct and timely relationship with the first impact between the first hit-and-run vehicle and the intermediate [object]. In effect, the impact must be the result of an unbroken chain of events with a clearly definable beginning and ending, occurring in a continuous sequence.” Southern Farm Bureau Cas. Ins. Co. v. Brewer, 507 So. 2d 369 (Miss. 1987).
However, the ruling in Brewer was based on Farm Bureau’s policy language at the time. The Court stated that had the insurance company intended that the provision apply only where this is direct, as opposed to indirect physical contact, between the hit-and-run vehicle and the vehicle of the insured, it should have so provided in unmistakably clear language. Since the Farm Bureau policy was cable of two meaning, the construction most favorable to the insured was applied. Southern Farm Bureau Casualty Ins. Co. v. Brewer, 507 So. 2d 369 (Miss. 1987). Thus, in fact scenarios like Brewer, it appears that the policy language controls when deciding whether to exclude damages for indirect contract by debris propelled from a hit and run vehicle.