P. v. Garcia

Filed 11/19/09 P. v. Garcia CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

APPEAL from a judgment of the Superior Court of Los Angeles County. William C. Ryan, Judge. Reversed.

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Alan Ross for Defendant and Appellant.

Edmund G. Brown Jr., Attorney General, Dane R. Gillette, Chief Assistant Attorney General, Pamela C. Hamanaka, Assistant Attorney General, Paul M. Roadarmel, Jr. and Tannaz Kouhpainezhad, Deputy Attorneys General, for Plaintiff and Respondent.

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Jose Luis Garcia was found guilty in a court trial of fraud, grand theft and attempted perjury for receiving vocational rehabilitation benefits under the workers compensation law. The court sentenced Garcia to an aggregate prison term of three years. We reverse the judgment as to each count because there is no substantial evidence that the false statements Garcia made to insurance investigators were material to his eligibility for vocational rehabilitation benefits.

FACTS AND PROCEEDINGS BELOW

Although pled under a variety of theories, the essence of the Peoples case is that Garcia gave materially false testimony in a deposition for the purpose of obtaining vocational rehabilitation benefits under the workers compensation law. The relevant facts are undisputed; only their materiality is in issue.

In September 2003, Garcia applied for workers compensation benefits claiming that he suffered injury to his spine arising out of his employment as an insulation install[er]. In November 2004, Garcias treating physician submitted his final report evaluating Garcias physical condition. The physician determined that Garcias injury had become permanent and stationary, meaning Garcia had reached his maximum medical improvement and his condition was unlikely to change. (Cal. Code Regs., tit. 8, 9785, subd. (a)(8).) With regard to work restrictions, the physician stated Garcia should be prophylactically precluded from heavy work and prolonged weight-bearing. The physician described Garcias former job as requiring frequent lifting of boxes of material weighing up to 100 pounds, frequent bending, stooping, pushing and pulling, as well as standing and walking his entire ten-hour work day and found that Garcia is unable to return to the described extent of these activities. Therefore, the physician concluded, Garcia is considered medically eligible for vocational rehabilitation, meaning that as the result of his injury Garcia is precluded from engaging in his . . . usual occupation or the position in which he . . . was engaged at the time of injury. (Lab. Code, 4635, subd. (a).)

In March 2007, the Workers Compensation Rehabilitation Unit found Garcia eligible for vocational rehabilitation benefits from July 2006 retroactive to November 2004. Garcia received additional rehabilitation benefits for the periods August 9, 2006 to September 11, 2006 and April 11, 2007 to September 4, 2007.

In October 2006, Garcia was deposed by three workers compensation carriers including the State Compensation Insurance Fund. It is undisputed that Garcia made four false statements at the deposition. He lied about where he had lived during some of the time he received vocational rehabilitation benefits ; he lied when he testified that he had not worked since November 2004 ; he lied when he testified that he had not engaged in any income-producing activities from September 2004 to the date of the deposition ; and he lied when he testified that he could no longer do construction work.

Based on these false statements, the People charged Garcia with four counts of workers compensation fraud (Ins. Code, 1871.4, subd. (a)(1)), four counts of insurance fraud (Pen. Code, 550, subd. (b)(1)), one count of grand theft (Pen. Code, 487, subd. (a)) and one count of attempted perjury (Pen. Code, 118, 664). The Peoples theory was that Garcia would not have been entitled to vocational rehabilitation benefits if the insurers had known that he was working in the same type of work, construction work, that he had been doing prior to his injury. The People reasoned that if Garcia could do the same type of work that hed been doing prior to injury . . . he needed no rehabilitation in order to be able to support himself. Garcia lied at his deposition, the People maintained, in order to conceal his employment as a construction worker from the insurers and receive vocational rehab benefits under the workers compensation law that he was not entitled to receive.^[1]

At trial, a witness testified that in January or February of 2006 he saw Garcia in front of a home appearing to be doing masonry work and observed him in another home on a ladder appearing to have just sawed a hole in the ceiling. This same witness testified, and produced documentary evidence, that Garcia was not residing at the address he gave as his residence at his deposition.

A claims adjuster for the State Compensation Insurance Fund testified at trial that if injured workers do any work, they are not entitled to vocational rehabilitation. She further testified that [i]f they have any income at all, they are not entitled to vocational rehabilitation. Even if they go to job training during the day and they have some little part-time job in the evening they usually would not be offered vocational rehabilitation. The witness also testified that she was the adjuster in Garcias case and that in determining Garcias entitlement to vocational rehabilitation benefits it was important for [her] to know whether or not he could work. In addition, it was important for her to know if he was doing construction work. Finally, the adjuster testified it was important for her to know where Garcia was living in case the insurer wanted to send out an investigator to observe Garcias daily activities.

In his closing argument, Garcia did not deny that he lied at his deposition about his residence and that he had not worked since November 2004, had not earned any money between September 2004 and October 2006and could no longer do construction work. He contended, however, that none of this testimony was material to the determination of his eligibility for vocational rehabilitation because eligibility for that program only requires that the worker can no longer engage in the same work he performed before injury. In Garcias case this meant lifting material weighing 100 pounds, frequent bending, stooping, pulling, pushing and standing for 10 hours a day.

The trial rejected Garcias argument and accepted the Peoples theory that the real issue in the case is whether or not [Garcia] was working such that he wasnt entitled to [vocational rehabilitation benefits] because, in fact, he was doing substantially the same kind of work. Based on its understanding of eligibility for vocational rehabilitation benefits, the court found Garcia guilty of two counts of workers compensation fraud (Ins. Code, 1871.4), two counts of insurance fraud (Pen. Code, 550), one count of grand theft (Pen. Code, 487) and one count of attempted perjury (Pen. Code, 118, 664) and sentenced him to prison for three years.

Garcia filed a timely appeal.

DISCUSSION

I. STATUTORY BACKGROUND

To understand the trial courts error in this case it is necessary to have a general understanding of the statutes and regulations governing eligibility for vocational rehabilitation benefits under the workers compensation law at the time Garcia received those benefits.^[2] We summarize the relevant statutes and regulations below.

Labor Code section 139.5 provided for the establishment of a vocational rehabilitation unit within the Division of Workers Compensation to foster, review and approve vocational rehabilitation plans developed by a qualified rehabilitation representative of the employer, insurer, state agency or employee. (Id. at subd. (a)(1).) Vocational rehabilitation benefits were payable to and on behalf of injured workers who were medically eligible and chose to participate in the program. (Id. at subd. (c).) A worker was medically eligible if the workers expected permanent disability as a result of the injury . . . permanently precludes, or is likely to preclude, the employee from engaging in his or her usual occupation or the position in which he or she was engaged at the time of injury. (Lab. Code, 4635, subd. (a)(1).)^[3] A worker, such as Garcia, participating in a vocational rehabilitation program whose medical condition had become permanent and stationary was entitled to a maintenance allowance, a stipend payable every two weeks for a limited time to assist with living expenses and other necessities while engaged in vocational rehabilitation. (Lab. Code, 139.5, subd. (c); Cal. Code Regs., tit. 8, 10125.1, subd. (a).) (These are the payments the People contend Garcia obtained by fraud.)

The maintenance allowance authorized by Labor Code section 139.5, subdivision (c) was not intended to replace lost earnings. (Gamble v. Workers Comp. Appeals Bd. (2006) 143 Cal.App.4th 71, 90 (Gamble).) The allowance was measured at two-thirds of the workers average weekly earnings at the date of injury up to a maximum of $246 a week. (Lab. Code, 139.5, subd. (d).)

Labor Code section 139.5 also directed the Division of Workers Compensation to adopt regulations to ensure that the continued receipt of vocational rehabilitation maintenance allowance benefits is dependent upon the injured workers regular and consistent attendance at, and participation in, his or her vocational rehabilitation program. (Lab. Code, 139.5, subd. (c).) The regulation adopted under this directive provided that the insurers claims administrator could withhold the employees maintenance allowance if the employee unreasonably failed to follow-up on tasks assigned in the development or implementation of a vocational rehabilitation plan. (Cal. Code Regs., tit. 8, 10125.1, subd. (b).)

II. GARCIAS FALSE STATEMENTS WERE NOT MATERIAL

AND THEREFORE CANNOT SUPPORT HIS CONVICTIONS

FOR FRAUD, THEFT OR PERJURY

The crimes charged against Garcia have one element in common. They require that the defendants false statement be material.

Insurance Code section 1871.4, subdivision (a)(1) makes it a crime to [m]ake or cause to be made a knowingly false or fraudulent material statement or material representation for the purpose of obtaining . . . any compensation, as defined in section 3207 of the Labor Code [including vocational rehabilitation benefits]. (Italics added.)

It is unlawful under Penal Code section 550, subdivision (b)(1) to [p]resent or cause to be presented any written or oral statement as part of, or in support or opposition to, a claim for payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any material fact. (Italics added.)

Penal Code section 118, subdivision (a) states: Every person who, having taken an oath that he or she will testify, declare, depose, or certify truly before any competent tribunal, officer, or person . . . willfully and contrary to the oath, states as true any material matter which he or she knows to be false, . . . is guilty of perjury. (Italics added.)

In the crime of grand theft by false pretenses (Pen. Code, 487) involving insurance claims the representations must concern material facts germane to the inquiry into the justness of the claim. (People v. Gillard (1997) 57 Cal.App.4th 136, 151152.)

Relying on the analysis in an earlier civil case, the court in Gillard concluded materiality is determined by its prospective reasonable relevance to the insurers inquiry. . . . [I]fthe misrepresentation concerns a subject reasonably relevant to the [insurers] investigation, and if a reasonable insurer would attach importance to the fact misrepresented, then it is material. (People v. Gillard, supra,57 Cal.App.4th at p. 151, quoting Cummings v. Fire Ins. Exchange (1988) 202 Cal.App.3d 1407, 14161417.)

Garcias false statements that he could not do construction work and that he had not done any type of work or earned any income since 2004 were not material because the ability to do the same type of work as before, or to do any type of work, or to earn income do not disqualify an individual from receiving vocational rehabilitation assistance including maintenance benefits.

Under Labor Code section 4635, subdivision (a)(1), an injured worker qualified for vocational rehabilitation benefits if the disability permanently precludes, or is likely to preclude, the employee from engaging in his or herusual occupation or the position in which he or she was engaged at the time of the injury. (Italics added.) In using the disjunctive the Legislature recognized a distinction between a worker being unable to perform his usual occupation (e.g. construction worker) and being unable to perform the work in which he was engaged at the time of the injury (e.g. installer of insulation). (Vasquez v. Workers Comp. Appeals Bd. (1991) 226 Cal.App.3d 867, 873 [worker eligible for vocational rehabilitation where he could perform messenger duties of previous assignment but not messenger duties of new assignment].)

Here, even if Garcia could perform some tasks that would fall in the category of construction work it is undisputed that his injury precludes him from performing the frequent lifting of boxes of material weighing up to 100 pounds, frequent bending, stooping, pushing and pulling, as well as standing and walking his entire ten-hour work day required in his former position as an insulation installer and there is no evidence that he performed that kind of work after the date of his injury. Thus, Garcia was medically eligible for vocational rehabilitation benefits regardless of whether he could have performed some types of construction work or some other type of work, e.g., driving a taxi.

Nor is there a means test for receipt of vocational rehabilitation maintenance benefits. Nothing in the workers compensation statutes prevents a disabled worker who is engaged in vocational training from supplementing his maintenance allowance with wages earned from outside employment. (Gamble, supra,143 Cal.App.4th at p. 92.) These wages are not set off against the workers maintenance allowance. (Ibid.) The only restriction on outside employment is the requirement that continued receipt of vocational rehabilitation maintenance allowance benefits is dependent upon the injured workers regular and consistent attendance at, and participation in, his or her vocational rehabilitation program. (Lab. Code, 139.5, subd. (c).) There is no evidence that Garcia failed to regularly and consistently attend any vocational rehabilitation program to which he was assigned.

Garcias testimony about his employment and earnings did not become material just because the claims adjuster testified she relied on that testimony in determining Garcias eligibility for vocational rehabilitation benefits. The materiality of a statement by the worker during the investigation of his claim by the insurer is tested under the objective standard of its effect on a reasonable insurer. (People v. Gillard, supra,57 Cal.App.4th at p. 151.) A reasonable insurer would not grant or deny vocational rehabilitation benefits on criteria outside the law.^[4] Thus the claims adjuster in this case could not reasonably have relied on Garcias answers to the questions about his employment and earnings in determining his eligibility for vocational rehabilitation benefits because, for the reasons explained above, those answers had no bearing on his eligibility under the law.

The evidence is also insufficient to prove that Garcias failure to inform the insurer of his change of residence was a material omission. The adjuster first testified that it was necessary to have an accurate residence address for the claimant in case of any investigation. Later she testified that the law only requires a worker to provide a physical address for certain requirements or claims. She did not testify that Garcias case fell within one of those requirements or claims. In any event, there was no showing that Garcias residence address was material information in this case. This was not a case in which the insurer tried to show that the worker could perform tasks that he testified he could not perform but could not locate him. (Cf. People v. Webb (1999) 74 Cal.App.4th 688, 691-692 [video tape showed defendant doing work he claimed he could not do].) None of the insurers questioned the medical report that Garcias injury precluded [him] from heavy work and prolonged weight-bearing.

DISPOSITION

The judgment is reversed.

NOT TO BE PUBLISHED.

ROTHSCHILD, Acting P. J.

We concur:

CHANEY, J.

JOHNSON, J.

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^[1] The People did not contend that Garcia was not entitled to temporary and permanent disability compensation.

^[2] Although the Legislature eliminated the vocational rehabilitation program effective January 1, 2009 (Stats. 2004, ch. 34) the Division of Workers Compensation has held the repealed statutes and regulations remain applicable to issues arising out of injuries occurring prior to January 1, 2004. (Godinez v. Buffets, Inc. (2004) 69 Cal. Comp. Cases 1311; and see 2 Hanna, Cal. Law of Employee Injuries and Workers Compensation (2d rev. ed. 2009) SPA-1 (rel. 69-4/2009), preceding ch. 35, Vocational Rehabilitation.) We will refer to the Labor Code statutes as they existed at the times relevant to this case.

^[3] Once a worker was determined to be medically eligible a Qualified Rehabilitation Representative, not a claims adjuster, determined the workers vocational feasibility based on factors such as the workers current physical limitations, work restrictions and any factors that might prevent the workers participation in vocational rehabilitation services. (Lab. Code, 4635, subd. (a)(2), (b); Cal. Code Regs., tit. 8, 10124.1.)

^[4] Moreover, the State Compensation Insurance Fund has no discretion to deny benefits required by the workers compensation law. (See Tricor California, Inc. v. State Compensation Ins. Fund (1994) 30 Cal.App.4th 230, 239.)