P. v. Balcom

Filed 4/4/06 P. v. Balcom CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

Appellant Todd Owen Balcom was convicted of insurance fraud and related offenses. The prosecution was based on the theory that he willfully failed to disclose that he was earning income during the period he received workers' compensation benefits. There was no claim that he was not injured or that his medical claims were other than legitimate. In granting probation, the trial court ordered him to repay all benefits he received from his employer's workers' compensation insurance carrier. Appellant claims the trial court erred in ordering him to repay the benefits he received that were not the result of his fraud. We agree and remand to the trial court to calculate the correct amount of victim restitution.

A jury convicted appellant of one count of violating Penal Code section 550, subdivision (b)(3), insurance fraud, and two counts of violating Insurance Code section 1871.4, subdivision (a)(1), workers' compensation fraud. The court granted probation for 60 months and ordered as conditions of probation 90 days in the county jail; a $400 restitution fine pursuant to Penal Code section 1202.4, subdivisions (b) and (m); a $10,000 restitution fine pursuant to Insurance Code section 1871.4, subdivision (b); $20,902.51 in victim restitution, plus 7 percent interest pursuant to Penal Code section 1202.4, subdivision (f); and a criminal justice administrative fee of $120 pursuant to Government Code section 29550, subdivision (c).

Subsequently, the court modified the conditions of probation as follows: "Fees" in the amount of $3,457.33; "Fine" in the amount of $3,703.70; "PA" (penalty assessment) in the amount of $6,296.30; and victim restitution in the amount of $29,023.29, for a total amount of $42,480.62.

FACTS

In November 2000, Balcom was employed as a driver by the Association for Retarded Citizens (ARC) and fell from the back of a truck. He submitted a workers' compensation claim for the injuries he sustained. Majestic Insurance (Majestic) was the workers' compensation insurance carrier for ARC. Between December 2000 and September 2001, Majestic paid Balcom $9,908.61 in total temporary disability payments and $5,463.05 in medical benefits attributable to the injury.

Majestic informed Balcom in writing that he was required to report any income earned during the period of temporary disability. In addition, the back of each temporary disability check stated: "By affixing my signature to this check I certify I have not been self-employed or worked for wages . . . during the period claimed."

In April 2001, a claims examiner telephoned Balcom and heard a voice mail message advertising a disc jockey business. An investigator for Majestic took sub rosa videos of Balcom working as a disc jockey at the Wagon Wheel Bowling Alley. The general manager of the bowling alley testified that Balcom began working as a part-time disc jockey in January 1999 and worked every weekend from December 2000 through August 2001. During this period, Balcom earned $6,300.

Balcom testified that the job at the bowling alley was the only job he had while collecting temporary disability payments. He asserted he did not know he was required to report the job because he had the job before he filed his workers' compensation claim, it involved a different type of work, and he did not read the back of the checks.

The probation officer recommended and the court ordered victim restitution in the amount of $29,023.29 based on a letter from Majestic listing the following expenses: $9,908.61 in total temporary disability payments, $5,463.05 in medical payments, and $13,651.63 in investigative costs.

In this appeal, Balcom argues he is not required to reimburse Majestic for the entire amount of workers' compensation benefits received, but only that amount resulting from the fraud. The People assert Balcom is precluded from challenging the amount of restitution on appeal because he failed to object in the trial court, and, alternatively, the trial court did not abuse its discretion in calculating the amount of victim restitution.

DISCUSSION

The Victim Restitution Order is Reviewable on Appeal

The People assert Balcom did not object to the amount of victim restitution in the trial court and therefore waived the issue. Balcom admits he did not object specifically to the amount of victim restitution but preserved the issue for appeal by objecting to that portion relating to medical expenses.

As a general rule, only claims properly raised and preserved by the parties are reviewable on appeal. (People v. Scott (1994) 9 Cal.4th 331, 354.) Balcom objected to repaying the medical benefits he received. Medical benefits are an element of workers' compensation benefits. (Lab. Code, § 3207.) The objection is sufficient to preserve the issue of whether the trial court erred in ordering repayment of other workers' compensation benefits as well.

Even if no objection at all had been asserted, the claim would be reviewable. "[O]bvious legal errors at sentencing that are correctable without referring to factual findings in the record or remanding for further findings are not waivable." (People v. Smith (2001) 24 Cal.4th 849, 852.) Sentences in excess of jurisdiction provide a narrow exception to the general rule that failure to preserve an objection in the trial court waives the right of appellate review. (Ibid.; People v. Blackburn (1999) 72 Cal.App.4th 1520, 1533-1534; see also People v. Mills (1978) 81 Cal.App.3d 171, 175-176.) Balcom's claim in essence is that he is being required to pay more than necessary to fully reimburse Majestic. This amounts to a challenge to the jurisdiction of the trial court to enter the restitution order it entered, as the restitution statute authorizes "full restitution," not more. As such, this contention was not waived by failing to specifically assert it in the trial court.

We thus turn to the merits of appellant's claim.

Victim Restitution

Balcom was convicted of violating both Penal Code section 550, subdivision (b)(3)[1] and Insurance Code section 1871.4, subdivision (a)(1).[2] Both statutes relate to insurance fraud. Penal Code section 550 is a general statute prohibiting all types of insurance fraud. Insurance Code section 1871.4 specifically targets workers' compensation fraud.

Balcom was ordered to pay a restitution fine under Penal Code section 1202.4, subdivisions (b) and (m)[3]; a restitution fine under Insurance Code section 1871.4, subdivision (b)[4]; and victim restitution under Penal Code section 1202.4, subdivision (f).[5]

The trial court's restitution order included the total amount of workers' compensation benefits received by Balcom. A trial court has discretion in imposing a restitution fine under Penal Code section 1202.4. (People v. Smith, supra, 24 Cal.4th at pp. 852-853.) Here, however, victim restitution is in the form of workers' compensation benefits, and special rules apply.

Insurance Code section 1871.5[6] expressly limits victim restitution to workers' compensation benefits that were obtained as a direct result of the fraud for which the defendant was convicted. In Tensfeldt v. Workers' Comp. Appeals Bd. (1998) 66 Cal.App.4th 116, 123, the court interpreted Insurance Code section 1871.5 as follows: "[S]ection 1871.5 clearly states that 'Any person convicted of workers' compensation fraud . . . shall be ineligible to receive or retain any compensation . . . where that compensation was owed or received as a result of a violation . . . for which the recipient of the compensation was convicted.'. . . Giving the language its ordinary meaning, section 1871.5 unambiguously provides that an injured worker must return only 'that compensation' obtained by fraud, and may not receive further compensation stemming from the fraud." (See also Farmers Ins. Group of Companies v. Workers' Comp. Appeals Bd. (2002) 104 Cal.App.4th 684, 688, fn. 2 [benefits that were not fraudulently obtained may be retained]; and see People v. O'Casey (2001) 88 Cal.App.4th 967, 973 [workers' compensation insurer was direct victim of fraud and entitled to victim restitution "for losses occasioned by [the] fraudulent claim"].)

Majestic does not dispute the fact that a compensable injury occurred or that Balcom was entitled to benefits. Under Insurance Code section 1871.5 and Tensfeldt v. Workers' Comp. Appeals Bd., supra, 66 Cal.App.4th 116, restitution is limited to the amount of earnings Balcom received while he was receiving temporary disability payments and investigative expenses and attorney's fees that Majestic incurred as a result of the fraud. (Pen. Code, § 1202.4, subd. (f)(3)(H) [requiring restitution for "[a]ctual and reasonable attorney's fees and other costs of collection"]; People v. Maheshwari (2003) 107 Cal.App.4th 1406, 1409-1410 [investigatory expenses attributable to defendant's criminal conduct recoverable under Pen. Code, § 1202.4, subd. (f)(3)(H)].) Balcolm was entitled to retain workers' compensation benefits that were not obtained by fraud.

We reverse the judgment only as it pertains to the amount of victim restitution and remand for recalculation of that amount. The sum to be ordered is the amount Balcom received from working while on temporary disability, Majestic's attorney's fees and investigative costs.

NOT TO BE PUBLISHED.

PERREN, J.

We concur:

YEGAN, Acting P.J.

COFFEE, J.

Rebecca S. Riley, Judge

Superior Court County of Ventura

______________________________

Linda C. Rush, under appointment by the Court of Appeal, for Defendant and Appellant.

Bill Lockyer, Attorney General, Robert R. Anderson, Chief Assistant Attorney General, Pamela C. Hamanaka, Senior Assistant Attorney General, Lance E. Winters, Supervising Deputy Attorney General, Laura J. Hartquist, Deputy Attorney General, for Plaintiff and Respondent.

Publication Courtesy of California lawyer directory.

Analysis and review provided by Escondido Apartment Manager Attorneys.

[1] Penal Code section 550, subdivision (b)(3) states: "It is unlawful to do, or to knowingly assist or conspire with any person to do, any of the following: [¶] . . . [¶] (3) Conceal, or knowingly fail to disclose the occurrence of, an event that affects any person's initial or continued right or entitlement to any insurance benefit or payment, or the amount of any benefit or payment to which the person is entitled."

[2] Insurance Code section 1871.4, subdivision (a)(1) states: "It is unlawful to do any of the following: [¶] (1) Make or cause to be made a knowingly false or fraudulent material statement or material representation for the purpose of obtaining or denying any compensation, as defined in Section 3207 of the Labor Code."

[3] Penal Code section 1202.4 states in pertinent part: "(b) In every case where a person is convicted of a crime, the court shall impose a separate and additional restitution fine, unless it finds compelling and extraordinary reasons for not doing so, and states those reasons on the record. [¶] . . . [¶] (m) In every case in which the defendant is granted probation, the court shall make the payment of restitution fines and orders imposed pursuant to this section a condition of probation. . . ."

[4] Insurance Code section 1871.4, subdivision (b) states in part: "Every person who violates subdivision (a) shall be punished by . . . a fine not exceeding one hundred fifty thousand dollars ($150,000) or double the value of the fraud, whichever is greater . . . . Restitution shall be ordered, including restitution for any medical evaluation or treatment services obtained or provided. The court shall determine the amount of restitution and the person or persons to whom the restitution shall be paid. A person convicted under this section may be charged the costs of investigation at the discretion of the court."

[5]Penal Code section 1202.4, subdivision (f) states in part: "[I]n every case in which a victim has suffered economic loss as a result of the defendant's conduct, the court shall require that the defendant make restitution to the victim or victims in an amount established by court order . . . . The court shall order full restitution unless it finds compelling and extraordinary reasons for not doing so, and states them on the record."

[6] Insurance Code section 1871.5 states: "Any person convicted of workers' compensation fraud pursuant to Section 1871.4 or Section 550 of the Penal Code shall be ineligible to receive or retain any compensation, as defined in Section 3207 of the Labor Code, where that compensation was owed or received as a result of a violation of Section 1871.4 or Section 550 of the Penal Code for which the recipient of the compensation was convicted." The parties failed to raise section 1871.5 in their briefs. Prior to oral argument, we requested the parties file letter briefs discussing the applicability of this statute.