Farmers Insurance Group of Companies/Truck Insurance Exchange v. Workers' Compensation Appeals Board

104 Cal. App. 4th 684, 2002 Daily Journal DAR 14353, 67 Cal. Comp. Cases 1545, 128 Cal. Rptr. 2d 353, 2002 Cal. Daily Op. Serv. 12227, 2002 Cal. App. LEXIS 5185
CourtCalifornia Court of Appeal
DecidedDecember 19, 2002
DocketNo. B159191
StatusPublished
Cited by6 cases

This text of 104 Cal. App. 4th 684 (Farmers Insurance Group of Companies/Truck Insurance Exchange v. Workers' Compensation Appeals Board) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Farmers Insurance Group of Companies/Truck Insurance Exchange v. Workers' Compensation Appeals Board, 104 Cal. App. 4th 684, 2002 Daily Journal DAR 14353, 67 Cal. Comp. Cases 1545, 128 Cal. Rptr. 2d 353, 2002 Cal. Daily Op. Serv. 12227, 2002 Cal. App. LEXIS 5185 (Cal. Ct. App. 2002).

Opinion

Opinion

SPENCER, P. J.

Introduction

Michael Sanchez has been receiving workers’ compensation benefits pursuant to an ongoing award for medical treatment and life pension. He was convicted in superior court of fraudulent misrepresentation in the acquisition of medically required special footwear in the amount of $84,527.56 pursuant to Insurance Code sections 1871.4, subdivision (a)(1) and 1871.5.1 The superior court ordered restitution of that sum at the rate of $100 per month. [687]*687Sanchez has paid no restitution. His employer’s insurer, Farmers Insurance Group of Companies/Truck Insurance Exchange, seeks a credit against the life pension in the workers’ compensation action in order to satisfy the restitution order. We hold that the Workers’ Compensation Appeals Board has jurisdiction to bar receipt of that portion of the benefit obtained by fraud, the special footwear. We further hold that the employer has no right to a credit against any species of benefit, in whole or part. We therefore annul the board’s decision and remand the matter for further consideration based on our opinion.

Background

On January 27, 1978, Michael Sanchez (Sanchez) injured his right lower extremity and psyche while employed as a security guard by Tony’s Auto Wrecking. He was awarded 73% percent permanent disability amounting to $28,787.50, payable at $70 per week, and thereafter a pension of $22.21 per week for the remainder of his life, as well as coverage of further medical treatment.

In accordance with the award, Sanchez was entitled to reimbursement for expenditures he made to acquire special footwear that he needed as a result of his injuries. Each pair of shoes cost $1,300. Sanchez submitted stolen purchase slips from a defunct store, which he then forged. Over a three-year period, Sanchez pocketed $84,527.56 from the fraud. He was prosecuted under Insurance Code sections 1871.4 and 1871.5. He pled no contest. The court ordered him to pay restitution of $84,527.56, at the rate of $100 per month. Sanchez had made no payments to Farmers of the court-ordered restitution.

Farmers petitioned to bar all further workers’ compensation benefits pursuant to the fraud conviction, or in the alternative, for credit. Citing Tensfeldt v. Workers’ Comp. Appeals Bd. (1998) 66 Cal.App.4th 116 [688]*688[77 Cal.Rptr.2d 691], Sanchez argued he should not be barred from further benefits, and no credit should be allowed.2

The workers’ compensation judge (WCJ) found all benefits were not barred and Farmers was entitled to a credit against future medical treatment but not against the life pension. The WCJ suggested that the future receipt of medical treatment and supplies could be barred if Farmers had filed such a request within five years of the date of injury. The WCJ concluded he did not have jurisdiction to reopen the award beyond that time.

Farmers petitioned for reconsideration, contending credit may be allowed against a different species of benefit. Farmers distinguished Tensfeldt v. Workers’ Comp. Appeals Bd., supra, 66 Cal.App.4th 116, arguing a credit is not the same as barring future recovery.

In his report upon reconsideration, the WCJ reasoned, based on Tensfeldt, that inasmuch as the fraud pertained solely to the medical award, Farmers’ right to a credit also was limited to Sanchez’s receipt of medical benefits. The board denied Farmers’ petition for reconsideration and adopted the WCJ’s report as its decision.

Discussion

Farmers no longer contends that Sanchez should be barred from receiving all benefits. Farmers now contends it is asking only for restitution from any source available of money fraudulently obtained.

Farmers argues that while Tensfeldt prohibits barring a benefit that was not the subject of the fraud, it does not address restitution and credit rights. In support of its argument, Farmers cites decisions where credit for overpayment of one species of benefit has been allowed against liability for another species of benefit. (See, e.g., Safway Steel etc. Co. v. Ind. Acc. Com. (1942) 55 Cal.App.2d 388 [130 P.2d 484] [lien allowed for living expenses advanced against unpaid compensation regardless of species]; Berry v. Industrial Acc. Com. (1959) 24 Cal.Comp.Cases 126 [overpayment of temporary disability allowed against future permanent disability liability and medical-legal expense liability]; Arroyo v. Workers’ Comp. Appeals Bd. (1997) 62 [689]*689Cal.Comp.Cases 950 [overpayment of temporary disability credited against permanent disability]; Hofer v. Workers’ Comp. Appeals Bd. (1996) 61 Cal.Comp.Cases 277 [overpayment of indemnity credited against future medical care].) Farmers requests that we follow Safway’s reasoning.

In Safway, the board awarded Alyce Helmick benefits for the wrongful death of her husband. Safway Steel Scaffold Co. was found guilty of serious and willful misconduct, which was not covered by the company’s insurance. Helmick enforced the judgment against Safway and was awarded $654.78. Upon rehearing, the board revoked the finding of serious and willful misconduct. Safway filed a lien for the $654.78 against the remainder of the workers’ compensation benefits awarded Helmick. The board permitted the lien, reasoning the monies paid were equivalent to living expenses for which a lien may be allowed pursuant to Labor Code section 4903, subdivision (c).3 The Safway court reasoned that compensation paid to an injured worker under the mistaken belief the worker was entitled to such payments was the equivalent of furnishing the injured worker with living expense advances. By allowing a lien against unpaid compensation, the Safway court effectively allowed a credit against future compensation whatever the species. (Safway Steel etc. Co. v. Ind. Acc. Com., supra, 55 Cal.App.2d at pp. 388-389.)

Safway and the other decisions cited above, permitting restitution from any benefit due, did not involve workers convicted of fraud and restitution ordered pursuant to Insurance Code sections 1871.4 and 1871.5. Moreover, a lien claim for living expenses is vastly different from the criminal penalty of restitution: while the WCJ may reduce the lien pursuant to a settlement agreement, he has no power to modify or compromise a criminal restitution order absent a specific agreement to that effect. (People v. Shelton (1986) 188 Cal.App.3d 371, 373 [232 Cal.Rptr. 783].) Allowing Farmers a credit against Sanchez’s lifetime pension would be tantamount to modification or compromise of the criminal restitution order. We therefore decline Farmers’ request.

Farmers also cites Moreno Valley Unified School Dist. v. Workers’ Comp. Appeals Bd. (1996) 61 Cal.Comp.Cases 1214 (writ den.),4 for the proposition that the board may not interfere with restitution ordered [690]*690by the superior court. Fanners implies that the Board must see that Sanchez pays the restitution ordered.

In Moreno Valley, the parties had settled the injured worker’s claim by a compromise and release agreement prior to a criminal conviction under section 1871.4.

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Bluebook (online)
104 Cal. App. 4th 684, 2002 Daily Journal DAR 14353, 67 Cal. Comp. Cases 1545, 128 Cal. Rptr. 2d 353, 2002 Cal. Daily Op. Serv. 12227, 2002 Cal. App. LEXIS 5185, Counsel Stack Legal Research, https://law.counselstack.com/opinion/farmers-insurance-group-of-companiestruck-insurance-exchange-v-workers-calctapp-2002.