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People v. Riddles

California Court of Appeals, Fourth District, First Division

March 23, 2017

THE PEOPLE, Plaintiff and Respondent,
v.
JOHN PAUL RIDDLES, Defendant and Appellant.

         APPEAL from a judgment of the Superior Court of San Diego County, No. SCD238770 Runston G. Maino, Judge. Affirmed.

          Jared G. Coleman, under appointment by the Court of Appeal, for Defendant and Appellant.

          Kamala D. Harris, Attorney General, Gerald A. Engler, Chief Assistant Attorney General, Julie L. Garland, Assistant Attorney General, Eric A. Swenson, Lynne G. McGinnis and Jennifer B. Truong, Deputy Attorneys General, for Plaintiff and Respondent.

          BENKE, Acting P. J.

         In this case, defendant and appellant John Paul Riddles pled guilty to one count of workers' compensation insurance fraud in violation of Insurance Code[1] section 11760, subdivision (a). His conviction grew out of his application for workers' compensation insurance, which fraudulently represented that a number of nurses who had been placed in residential care and skilled-nursing facilities by Riddles's staffing agency were computer programmers. His misrepresentation of the nurses as computer programmers substantially reduced the premium his agency was charged by the workers' compensation insurer that accepted his company's application; accordingly, the trial court required that Riddles pay, as restitution to the insurer, $37, 000 in premiums the insurer would have earned in the absence of his misrepresentation.

         Contrary to his argument on appeal, a workers' compensation insurer may recover, as restitution under Penal Code[2] section 1202.4, the premiums it would have earned in the absence of misrepresentations by an insurance applicant. (See People v. Petronella (2013) 218 Cal.App.4th 945, 968-984 (Petronella).) The fact Riddles may have been able to establish that the Labor Code did not require that he provide workers' compensation coverage for the nurses does not relieve him of responsibility for providing the insurer with a fraudulent application or alter the fact the nurses were covered by the policy he obtained.

         We also reject his contention that the trial court erred in imposing an $860 fine.

         FACTUAL AND PROCEDURAL BACKGROUND

         From at least 2005 until 2009, Riddles operated Confident Care, a staffing agency that placed nurses at residential care and skilled-nursing facilities. One facility expressly required that Confident Care provide workers' compensation insurance for the nurses; the record also shows that Confident Care provided certificates of workers' compensation insurance to other facilities where it placed nurses.

         Premium rates for workers' compensation insurance are based on the number of workers employed in various classifications and the amount paid to workers in each classification. Premium rates for computer programmers are as low as 26 cents per $100 of payroll. Premium rates for higher classification workers can be up to $50 per $100 of payroll. Riddles classified the nurses he placed in health care facilities as computer programmers and underreported their payroll.

         Although the People's initial complaint, which was filed in January 2012, alleged Riddles had fraudulently obtained workers' compensation for nurses commencing in 2005, Riddles's plea and conviction is based on a workers' compensation insurance policy he obtained for Confident Care from First Comp Insurance (FCI) for the period between January 21, 2007 and January 21, 2008. As a result of Riddles's fraudulent misclassification, Confident Care paid FCI a premium of $554 for the year ending in January 2008; however, an audit of three facilities that contracted with Confident Care during that period showed the agency should have paid FCI a premium of $39, 604. Thus, an insurance investigator calculated that FCI lost the audited premium for the year ($39, 604) minus the premium Confident Care paid ($554) or approximately $39, 000.

         Initially, following a restitution hearing, the court ordered Riddles to pay FCI $52, 259 in restitution. However, Riddles moved to reconsider and the court amended its order and set restitution at $37, 000. Riddles filed a timely notice of appeal.

         DISCUSSION

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