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TO BE PUBLISHED IN THE OFFICIAL REPORTS
 

OFFICE OF THE ATTORNEY GENERAL
 

State of California
 

DANIEL E. LUNGREN
 

Attorney General
 

OPINION : 

: No. 96-212 

of : 

: September 16, 1996 

DANIEL E. LUNGREN : 

Attorney General : 

: 

CLAYTON P. ROCHE : 

Deputy Attorney General : 

: 

THE HONORABLE CHUCK QUACKENBUSH, INSURANCE COMMISSIONER, 

has requested an opinion on the following question: 

May investigators employed in the fraud division of the Department of Insurance issue 

administrative subpoenas to obtain evidence or testimony during criminal investigations being 

conducted by the Department of Insurance? 

CONCLUSION 

Investigators employed in the fraud division of the Department of Insurance may issue 

administrative subpoenas to obtain evidence or testimony during criminal investigations being 

conducted by the Department of Insurance; however, if a person is compelled to testify after claiming 

his privilege against self-incrimination, immunity from criminal prosecution must be granted 

concerning the matter. 

ANALYSIS 

The Department of Insurance ("Department") is charged with enforcing laws 

prohibiting insurance fraud. Section 1872 of the Insurance Code1 provides: 

1 All references hereafter to the Insurance Code are by section number only. 

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"There is created within the department a Bureau of Fraudulent Claims to 

enforce the provisions of Section 1871.4 of this code, and Sections 549 and 550 of the 

Penal Code, and to administer the provisions of Article 3 (commencing with Section 

1873)." 

"Section 1871.4" relates specifically to workers' compensation fraud, which it makes unlawful. 

"Sections 549 and 550 of the Penal Code" cover all types of insurance fraud, making such acts 

unlawful. "Article 3" ('' 1873-1873.4) concerns the reporting of insurance fraud to government 

agencies. 

The question presented for resolution concerns the powers of Department investigators 

who are responsible for enforcing the insurance fraud statutes. May they issue subpoenas to obtain 

evidence or testimony when conducting a criminal investigation? We conclude that they may; 

however, immunity from criminal prosecution must be given to anyone whose testimony is compelled 

after claiming his privilege against self-incrimination. 

The two statutes requiring our analysis are sections 1872.3 and 12924. Section 1872.3 

provides with respect to the Bureau of Fraudulent Claims: 

"(a) If, by its own inquiries or as a result of complaints, the Bureau of 

Fraudulent Claims has reason to believe that a person has engaged in, or is engaging in, 

an act or practice that violates Section 1871.4 of this code, or Section 549 or 550 of the 

Penal Code, the commissioner in his or her discretion (1) may make those public or 

private investigations within or outside of this state that he or she deems necessary to 

determine whether any person has violated or is about to violate any provision of 

Section 1871.4 of this code, or Section 549 or 550 of the Penal Code, or to aid in the 

enforcement of this chapter, and (2) may publish information concerning any violation 

of this chapter or Section 550 of the Penal Code. 

"(b) For purposes of any investigation under this section, the commissioner or 

any officer designated by the commissioner may administer oaths and affirmations, 

subpoena witnesses, compel their attendance, take evidence, and require the 

production of any books, papers, correspondence, memoranda, agreements, or other 

documents or records that the commissioner deems relevant or material to the inquiry, 

as provided by Section 12924. 

"(c) If any matter that the commissioner seeks to obtain by request is located 

outside the state, the person so requested may make it available to the commissioner or 

his or her representative to be examined at the place where it is located. The 

commissioner may designate representatives, including officials of the state in which 

the matter is located, to inspect the matter on his or her behalf, and he or she may 

respond to similar requests from officials of other states. 

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"(d) Except as provided in subdivision (e), the department's papers, documents, 

reports, or evidence relative to the subject of an investigation under this section shall 

not be subject to public inspection for so long a period as the commissioner deems 

reasonably necessary to complete the investigation, to protect the person investigated 

from unwarranted injury, or to serve the public interest. Furthermore, those papers, 

documents, reports, or evidence shall not be subject to subpoena or subpoena duces 

tecum until opened for public inspection by the commissioner, unless the commissioner 

otherwise consents or, after notice to the commissioner and a hearing, the superior 

court determines that the public interest and any ongoing investigation by the 

commissioner would not be unnecessarily jeopardized by compliance with the 

subpoena duces tecum. 

"(e) The Bureau of Fraudulent Claims shall furnish all papers, documents, 

reports, complaints, or other facts or evidence to any police, sheriff, or other law 

enforcement agency, when so requested, and shall assist and cooperate with those law 

enforcement agencies." (Italics added.) 

Section 12924, incorporated by reference in subdivision (b) of section 1872.3, provides: 

"(a) The commissioner may issue subpoenas and subpoenas duces tecum for 

witnesses to attend, testify and produce documents before him, on any subject touching 

insurance business, or in aid of his duties. Such process may be served, obeyed, and 

enforced as provided in the Code of Civil Procedure for civil cases. A defaulting 

witness may, upon application by the commissioner to the superior court, be required 

by order of such court to appear before the commissioner to testify as the court may 

order. The court may punish disobedience of its order as a contempt of court. 

"All the provisions of the Code of Civil Procedure relating to means of 

production of evidence shall be applicable to any hearing or investigation under this 

section. The provisions of this subdivision shall not apply to proceedings required by 

other provisions of this code to be conducted in accordance with Chapter 5 

(commencing with Section 11500), Part l, Division 3, Title 2 of the Government Code. 

"(b) A person shall not be excused from testifying or from producing any book, 

document, or other thing under his control upon any such hearing or investigation on 

the ground that his testimony, or the book, document, or other thing required of him, 

may tend to incriminate him, or may have a tendency to subject him to punishment for 

a felony or misdemeanor; but no individual shall be prosecuted or be subjected to 

punishment for a felony or misdemeanor for or on account of any act, transaction, 

matter or thing concerning which he is so compelled, after validly claiming his 

privilege against self-incrimination, to testify or produce, except for perjury or 

contempt committed in such testimony." (Italics added.) 

In analyzing the provisions of sections 1872.3 and 12924, we apply well established 

principles of statutory construction. "When interpreting a statute our primary task is to determine the 

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Legislature's intent." (Freedom Newspapers, Inc. v. Orange County Employees Retirement System 

(1993) 6 Cal.4th 821, 826.) "To determine the intent of legislation, we first consult the words 

themselves, giving them their usual and ordinary meaning." (DaFonte v. Up-Right, Inc. (1992) 2 

Cal.4th 593, 601.) When "`statutory language is . . . clear and unambiguous there is no need for 

construction, and courts should not indulge in it.'" (Rojo v. Kliger (1990) 52 Cal.3d 65, 73.) 

"`[C]ourts are no more at liberty to add provisions to what is therein declared in definite language than 

they are to disregard any of its express provisions.'" (Wells Fargo Bank v. Superior Court (1991) 53 

Cal.3d 1082, 1097.) "`[S]tatutes or statutory sections relating to the same subject must be harmonized, 

both internally and with each other, to the extent possible.'" (Walnut Creek Manor v. Fair 

Employment & Housing Com. (1991) 54 Cal.3d 245, 268.) 

Applying these principles of statutory interpretation, we find that investigators 

employed in the fraud division of the Department, when designated by the Insurance Commissioner 

("Commissioner"), "may . . . subpoena witnesses . . . and require the production of any books, papers, 

correspondence, memoranda, agreements, or other documents . . . ." (' 1872.3, subd. (b).)2 Obtaining 

the evidence and testimony, however, must be "as provided by Section 12924." (Ibid.) Section 

12924, subdivision (b), prohibits a person from being "prosecuted or . . . subjected to punishment 

. . . for or on account of any act, transaction, matter or thing concerning which he is compelled . . . to 

testify or produce . . . ." 

Reading these two statutes together, therefore, we conclude that while the Department's 

fraud investigators have the power to issue administrative subpoenas during a criminal investigation ('

1872.3, subd. (b)), the person subpoenaed receives what is known as "transactional immunity" ('

12924, subd. (b)). He or she may not be prosecuted on account of any act for which testimony is 

compelled after claiming the privilege against self-incrimination. (See Pen. Code, '' 1324, 1324.1; 

People v. Hunter (1989) 49 Cal.3d 957, 973, fn. 4; People v. Cooke (1993) 16 Cal.App.4th 1361, 1366; 

People v. Campbell (1982) 137 Cal.App.3d 867, 873-875; Escamilla v. Superior Court (1969) 271 

Cal.App.2d 730, 732-735.) 

Sections 1872.3 and 12924 are similar to the general provisions found in the 

Government Code concerning the issuance of administrative subpoenas. (See Gov. Code, ''

11180-11188; Brovelli v. Superior Court, supra, 56 Cal.2d at 529; People v. Pappalardo (1993) 12 

Cal.App.4th 1723, 1730; Pinney v. Phillips (1991) 230 Cal.App.3d 1570, 1586-1588.) The 

enforcement of administrative subpoenas has been examined in numerous contexts. (See United States 

v. La Salle National Bank (1978) 437 U.S. 298; See v. City of Seattle (1967) 387 U.S. 541; Reisman v. 

Caplin (1964) 375 U.S. 440; Parris v. Zolin (1996) 12 Cal.4th 839; People v. King (1967) 66 Cal.2d 

633; Shively v. Stewart (1966) 65 Cal.2d 475; People ex rel. Franchise Tax Bd. v. Superior Court 

(1985) 164 Cal.App.3d 526; Barnes v. Molino (1980) 103 Cal.App.3d 46; Board of Medical Quality 

Assurance v. Gheradini (1979) 93 Cal.App.3d 669; Fielder v. Berkeley Properties Co. (1972) 23 

2

We assume that the subpoena relates to an inquiry which the Department is authorized to make, seeks information 

reasonably relevant to that inquiry, and is not too indefinite. (United States v. Morton Salt Co. (1950) 338 U.S. 632, 

652-653; Brovelli v. Superior Court (1961) 56 Cal.2d 524, 529. 

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Cal.App.3d 30; Escamilla v. Superior Court, supra, 271 Cal.App.2d 730; People v. White (1932) 124 

Cal.App. 548.) 

Here, the legislative emphasis in sections 1872.3 and 12924 is upon the discovery, 

prosecution, and elimination of fraud with respect to auto insurance, workers compensation insurance, 

and health insurance. We find inapplicable such cases as United States v. La Salle National Bank, 

supra, 437 U.S. 298, Donaldson v. United States (1971) 400 U.S. 517, and Boren v. Tucker (9th Cir. 

1956) 239 F.2d 767, involving the issuance of a summons by the Internal Revenue Service to 

investigate tax fraud. The state statutes in question are distinctively different from the federal statutes 

considered by the courts in those cases. More importantly, Congress has changed the federal statutes 

to eliminate the requirement of a civil component for issuance of a tax fraud summons. (See Weiss v. 

C.I.R. (9th Cir. 1990) 919 F.2d 115, 116-117, fn. 1; U.S. v. Abrahams (9th Cir. 1990) 905 F.2d 1276, 

1281, fn. 4.) 

In summary, the Insurance Code grants the Commissioner and his representatives wide 

latitude to investigate insurance fraud. In aid thereof, they have the power to issue administrative 

subpoenas to obtain the production of books and records or testimony at any time and for any legitimate 

investigative purpose, whether with respect to a civil or criminal matter. However, the person 

subpoenaed must be granted transactional immunity for any act which is the subject of compelled 

testimony after his claiming the privilege against self-incrimination. 

We thus conclude that if so authorized by the Commissioner, investigators in the fraud 

division of the Department may issue administrative subpoenas to obtain evidence or testimony when 

conducting criminal investigations; however, if a person is compelled to testify after claiming his 

privilege against self-incrimination, immunity from criminal prosecution must be granted concerning 

the matter. 

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