Filed 3/23/17 CERTIFIED FOR PUBLICATION COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE
STATE OF CALIFORNIA

THE PEOPLE, Plaintiff and Respondent,

v. JOHN PAUL RIDDLES, Defendant and Appellant. D069419

(Super. Ct. No. S C D 238770)

APPEAL from a judgment of the Superior Court of San Diego County, 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 As sistant 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.2

In this case , defendant and appellant John Paul Riddles pled guilty to one count of workers ' compensation insurance fraud in violation of Ins urance Code 1 section 11760,
subd ivision (a). His conviction grew out of his application for workers ' compensation insurance, which fraudulently represented that a number of nurses w ho 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 subs tantially 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 '

c ompensation 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 a n $860 fine

.

1 Riddle s was permitted to plea under the provisions of People v. West (1970) 3 Cal.3d 595, 600

- 601. A plea under West allows a defendant to plead guilty to a charge without admitting that he or she committed the crime alleged

. ( I bid .)
2 All further statutory r eferences are to the Penal Code unless otherwise indicated.3 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. O ne facility expressly required that C onfident Care provide workers ' compen sation insurance for the nurses; t he record also shows t hat Confident Care provided certificates of workers ' compensation
insurance to other facilities where it placed nurses

. Premium rates for wor kers ' compensation insurance are based on the number of workers employed in various classifications and the amount paid to workers in each
classification. P remium rate s for compu ter programmers are as low as 26 cents per $100 of payroll. Premium rates for highe r classification workers can be up to $50 per $ 100 of payroll. Riddles classified the nurses he placed in health care facilities as computer
programmers a nd 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, Riddl es ' 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
misclassificatio n , Confident Care paid FCI a premium of $554 for the year ending in January 2008 ; h owever, 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 FCI4

$52,259 in restitution. However, Riddles moved to reconsider and the court amended its
order and set restitutio n at $37 ,000. Riddles filed a timely notice of appeal.
DISCUSSION
I Riddles contends the trial court abused its discretion when it ordered him to pay restituti on in the amount of premium loss suffered by FC I . We find no abuse of
discretion

. Restitution i n criminal proceedings is mandated by art icle I, section 28,
subd ivision (b) of the California C onstitution , and that mandate has been carried out by

our L egislature in section 1202.4, which provides in part: " (f) [ 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 victim s in an amount established by court order, based on the amount of loss claimed by the victim or victims or any other showing to the court

. . . . The court shall order full restitution. " (See People
v. Mearns (2002) 97 Cal.App.4th 493, 498 .) We review a restitution order for abuse of discretion. ( People v. Baker (2005) 126 Cal.App.4th 463, 467.) " ' " ' When there is a factual and rational basis for the amount of restitution ordered by the trial court, no abuse
of discretion will be found b y the reviewing court. ' " ' " ( Ibid .) The intent of voters in approving art icle 1, section 28 of the California
C onstitution is plain: " [ E ] very victim who suffers a loss shall have the right to restitution from those convicted of the crime giving rise t o that loss. " ( People v. Phelps (1996) 41 Cal.App.4th 946, 950.) Accordingly, " ' " ' [a] victim ' s restitution right is to be broadly and liberally construed. ' " ' " ( People v. Keichler (2005) 129 Cal.App.4th 1039, 1045.)5

By its terms , the restitution statute allows for recovery of a broad variety of
economic losses that are incurred as a result of the defendant ' s criminal conduct. (§ 1202.4, subd. (f)(3).) The categories for which restitution may be ordered " includ[e], but [are ] not limited to " payment for the value of stolen or damaged property, medical expenses, mental health counseling expenses, wages or profits lost by the victim , noneconomic losses including psychological harm, interest, attorney fees, moving expenses, extra security, and e xpenses to retrofit a house or car to make them accessible. ( Ibid .) However , " [ b ] ecause the statute uses the language ' including, but not limited to ' these enumerated losses, a trial court may compensate a victim for any economic loss which is proved to be the direct result of the defendant ' s criminal behavior, even if not specifically enumerated in the statute. " ( People v. Keichler , supra , 129 Cal.App.4th at p. 1046.)
In Petronella , the court directly considered whether, as here, a workers ' compensatio n insurer could recover the amount of premium it failed to obtain because over a number of years the defendant had falsely reported the number and payroll of his employees. At his sente ncing , the prosecutor presented evidence that , in the absence of
defen dant ' s misrepresentations, the insurer would have collected at least $11.6 million in additional premiums. ( Petronella , supra , 218 Cal.App.4th at p. 965.) Nonetheless, the trial court only imposed $500,000 in restitution. On the People ' s appeal, the C ourt of Appeal reversed because the trial court had not considered the evidence of premium loss offered by the People. In doing so, although the defendant had not raised the issue, the court expressly found that such a loss of premium was recoverable as r estitution under section 1202.4, subdivision (f): " No California case appears to have held the willful6

underpayment of insurance premiums constitutes an economic loss under Penal Code section 1202.4. But since ' the statut e uses the language " including, b ut not limited to " the[] enumerated losses, a trial court may compensate a victim for any economic loss which is proved to be the direct result of the defendant ' s criminal behavior, even if not specifically enumerated in t he statute. ' " ( Petronella , at p. 969.) In finding that a loss of premium was a direct result of the defendant ' s conduct, the court relied on the holding in
U nited S tates v. Simpson (6th Cir. 2008) 538 F.3d 459, which found that " unpaid [workers ' compensation] premiums fall squarely with in the definition of ' loss ' " under federal sentencing guidelines , including the award of restitution to victims

. ( Id . at
p. 462.) The court in Simpson in turn stated: " When an individual underreports his payroll, he is attempting to take coverage directly and thereby to deprive a carrier of premiums directly. " ( Id . at p. 464.)
In United States v. Leahy (6th Cir. 2006 ) 464 F.3d 773, 799

- 800, a defendant committed fraud in a manner remarkably similar to t he fraud practiced by Riddles: the
defendant knowingly classified his warehouse workers as clerical workers. In requiring
restitution of the insurer ' s lost premium, t he court in Leahy stated: " The insurance companies were entitled to the benefit of their bargains

— the amount of money they
would hav e charged to insure the actual risk that [the defendant ' s company] presented. [Citation.] Otherwise, [the company] would obtain a windfall through its fraud, receiving coverage for greater risks than the amount of premiums merited. The district court, therefore, did not err in the restitution order when it calculate d the entire amount [the company] should have paid and subtracted what it did pay. The remainder returns the insurance companies to the positions they would have occupied absent the fraud

. " ( Ibid .)7

The fact that Riddles ' s fraud may have given FCI a defense to payment to the
claimant had a claim been made on the policy would not necessarily relieve Riddles of responsibility to FCI for either payment of an appropriate premium or, if FCI chose,
reimbursement from Riddles for the a mount of any amount FCI paid the claimant . (See
De Campos v. State Compensation Ins. Fund (19 54) 122 Cal.App.2d 519, 529.) In such circumstance, the insurer, not the fraudulent insured, chooses the insurer ' s remedy , and , as the court noted in De C ampos , the insurer may determine that it is in its best interest to pay an innocent worker and seek c ompensation from a fraudulent employer. ( Ibid .) Of

course , here , because the term of the policy in question had expired by the time Riddles ' s misrepresentation was discovered , rescission was not a practical remedy for FCI

. R escission would have simply r equired that FCI return the $554 premium Confident Care paid . Thus, the only realistic remedy for FCI was recovery of a premium that fully compensated the insurer for the risk it in fact covered during the policy term. Contrary to Riddles ' s ar gument, thi s is not an instance where , as in People v.
Busser (2010) 186 Cal.App.4th 1503, 1510, even in the absence of the insured ' s false report about a hit and run accident, the insurer would have been required to pay for damage suffered by the insured and a third party. In that case , we found there simply was
no causal link between the defendant ' s false statements to an accident investigator and payments that , in any event , the insurer was required to make under its policy. (See ibid .) Here, in contrast, the record shows that had Riddles accurately represented that the covered individuals were working as nurses, FCI would have recovered substantially more in premiums. The only circumstance that might break the causal link between
Riddles ' s conduct and FCI ' s loss of premium is a finding that Riddles would not have8

paid for any coverage for the nurses had he been required to pay for them as nurses;
under that very hypothetical circumstance , FCI would not lose any premium because the hypothetical assumes an h onest Riddles would no t have obtained any coverage. Such a finding , however , is simply not possible on this record, which shows that over a number of years Riddles in fact obtained workers ' c ompensation coverage and was required to do so by at least one o f the facilities where the nurses worked. Those facts make it far more likely than not that Riddles would have obtained coverage , even if he had to pay a higher premiu m
. We also reject Riddles ' s contention the nurses ' potential status as independent contractors relieved him of responsibility for FCI ' s losses. I t is indisputable th at Riddles obtained coverage for the nurses from FCI and intentionally mischaracterized them.
Their actual status as employees or independe nt contractors under the workers ' compensation law ( Lab

. Code , § 3700 et seq.) is not a defen se to the misrepresentations
Riddles made to FCI and his consequent viola tion of Insurance Code section 11760, subdivision (a) , whic h , by its terms , makes it a cri me to falsely represent any fact

" material to the determination of the premium rate, or cost of any policy of workers ' compensation insurance, for the purpose of reducing the premium, rate, or cost of the
insurance. " Insurance Code section 11760 does not require that the prosecution establish that a defendant was obligated to provide workers ' compensation coverage, only that the
defendant made intentional m isrepresentations for the purpose of reducing the cost of
coverage. Importantly , as we have discus sed, h ad a nurse made a claim on the policy,
Riddles

— having fraudulently induced FCI to issue a policy

— was in no position to then9

insist that FCI assert an independent contractor defense . (See De Campos v. State Comp ensation Ins. Fund , supra , 122 Cal.App.2d at p. 529; United States v. Simpson , supra , 538 F.3d at pp. 467

- 468.) Riddles ' s representation to nursing facilities that the nurses were covered by a workers ' compensation policy , and a n injured nurse ' s likely
contention that he or she r elied on those representations, would substantially undermine
FCI ' s willingness and ability to a ssert such a defense . (See Simpson , at pp. 467

- 468.) Finally, ev en if FCI was willing to assert an independent con tractor defense, contrary to Riddles ' s argum ent on appeal, by no means does the record here show that it would have been successful. In particular, our review of the record shows not only that Riddles represented to facilities that he had secured workers ' compensation coverage for
the nurses, but t hat Confide nt Care itself treated them as employees by paying state unemployment and disability insurance for them. This is significant because " whether or not the parties believe they are creating the relationship of employer

- employee " ( S.G. Borello & So ns, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 351) is an important factor a court must look to in determining whether a worker is an employee for purposes of awarding workers ' compensation benefits. Because the record shows that in many important respects Riddles treated the nurses as employees, FCI would have been hard pressed to prove they were nonetheless independent contractors

. In sum, the record shows that , for the period in question , FCI was exposed t o the
workers ' compensation risk posed by the nurses working through Riddles ' s agency; hence , FCI was entitled to recover an appropriate premium for that risk. Accordingly, the
trial court d id not abuse its discretion in making its restitution order.10 II Riddles also challenges the trial court ' s imposition of a n $860 fine , which he
claims violated the terms of his plea agreement.
As Riddles acknowledges , the change of plea form he signed stated that , among
ot her matters, he understood the trial court mi ght impose a fine of up to $1 , 000. Prior to accepting the plea , th e trial court advised Riddles: " There ' s usually a fine in these things, but my feeling is that since you ' re going to be paying some restitution, I probably impose
the standard fine we seem to have now and then stay it and then have that paid, if at all, after restitution is paid. That would be, I think, sensible

. " Riddles then entered his guilty plea to count 3 of the information under People v. West

. 3 T he People moved to dismiss
the remaining counts , and the trial court stated: " I can do a 3 year probationary period starting right now, okay? Obey all laws. I ' ll make a fine of the standard. It seems like on so many misdemeanors it ' s like 860 bucks. But I ' ll stay all of that pending a restitution hearing. " The court ' s minute order reflected imposition of the $860 fine, stayed pending the restitution hearing. Contrary to Riddles ' s argument on appeal, the trial court did not violate the terms of his plea agreement by imposing the $86 0 fine. The record is clear that before Riddles entered his plea , he was aware that the trial court intended to impose a fine ; and he raised no objection thereafter when the $860 fine was imposed. Under these circumstances , where the record shows that th e parties left to the trial court the power to set the amount of a fine, the trial court did not err in thereafter imposing a fine within any statutory

3 See footnote 1, ante

.11

limits

. ( People v. Villalobos (2012) 54 Cal.4th 177 , 179; People v. Crandell (2007) 40 Cal.4th 1301, 13 09. )
DISPOSITION The judgment of conviction is affirmed.

BENKE, Acting P. J.
WE CONCUR:

NARES, J.

HALLER, J.