Court Opinion

ID: 859389
Source: CourtListenerOpinion
Date Created: 2013-04-26 20:21:15.866244+00
Date Added: 2024-06-11T15:06:37.747710
License: Public Domain

Filed 4/25/13 P. v. Shim CA1/5
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                       FIRST APPELLATE DISTRICT

                                                  DIVISION FIVE

THE PEOPLE,
         Plaintiff and Appellant,
                                                                     A134563
v.
SAM HYUNG GOO SHIM et al.,                                          (San Francisco County
                                                                    Super. Ct. Nos. 212129-01, 212129-02
         Defendants and Respondents.                             & 212129-03)

         This case involves crimes by an employer relating to an employee‘s death while
on the job, and the extent to which benefits paid under a workers‘ compensation policy
can be used to offset direct victim restitution owed under Penal Code sections 1202.4 and
1203.1.1 The trial court credited the defendant-employer with death benefits paid by his
workers‘ compensation carrier to the victim‘s family, following the general rule that a
defendant is entitled to an offset for any amounts paid to the victim by the defendant‘s
own insurance company. (People v. Bernal (2002) 101 Cal.App.4th 155, 167-168
(Bernal).) The People appeal, arguing that the employer was not entitled to an offset
because he had fraudulently failed to report the victim‘s wages to the workers‘
compensation carrier, meaning that the victim‘s employment was not reflected in the
insurance premiums. In light of the defendant-employer‘s restitution to the workers‘

         1
         Further statutory references are to the Penal Code except where otherwise
indicated.

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compensation carrier for that fraud (the subject of a separate criminal count in this
proceeding), and in light of trial court‘s broad discretion to set an appropriate amount of
restitution, we affirm.
                                     BACKGROUND
       Antonio Martinez, an undocumented worker from Mexico, was employed by
defendant California C&R, Inc. (C&R), a roofing company owned by defendant Sam
Hyung Goo Shim. C&R did not report Martinez‘s wages to its workers‘ compensation
insurance carrier, State Compensation Insurance Fund (SCIF), and did not pay state
unemployment insurance taxes on behalf of Martinez.
       Martinez died on the job after a fall from the roof of a four-story apartment
building in San Francisco. Defendant Jwa Young Kim, who was also employed by C&R,
was the foreman at the worksite and Martinez‘s supervisor. Martinez was not wearing a
harness and there were no railings or barriers on the roof to prevent a fall to the sidewalk.
Cal/OSHA regulations (Cal. Admin. Code, Tit. 8, § 1730) require safeguards for roofing
work higher than 20 feet off the ground.
       The grand jury issued an indictment charging C&R, Shim and Kim with felony
counts of involuntary manslaughter and willfully violating an occupational health and
safety standard resulting in death. (§ 192, subd. (b); Lab. Code, § 6425.) C&R and Shim
were also charged with several counts of workers‘ compensation premium fraud and
failure to withhold or pay unemployment insurance tax. (Ins. Code, § 11880, subd. (a);
Unemp. Ins. Code, § 2117.5.)
       Shim pled guilty to one felony count each of involuntary manslaughter, violating
an occupational health and safety standard resulting in death, workers‘ compensation
premium fraud, and failure to pay or withhold unemployment insurance tax, in exchange
for an indicated disposition of five years probation and one year in county jail. (§ 192,
subd. (b); Lab. Code, § 6425, subd. (a); Ins. Code, § 11880; Unemp. Ins. Code, § 2117.5.)
C&R pled guilty to a single felony count of violating an occupational health and safety
standard, with an indicated disposition of five years probation. (Lab. Code, § 6425.) The
district attorney amended the indictment to charge Kim with a misdemeanor count of

                                              2
violating an occupational health and safety standard causing death, and Kim pled no
contest to this single misdemeanor count, with an indicated disposition of 364 days in
county jail and three years probation. (Lab. Code, § 6425, subd. (a).)2 Shim and C&R
entered waivers of their rights under People v. Harvey (1979) 25 Cal.3d 754, thus
allowing the court to consider the dismissed counts when imposing sentence and
calculating the amount of victim restitution. (See People v. Hume (2011) 196
Cal.App.4th 990, 994-995 (Hume).) The court imposed the probationary dispositions
contemplated by the plea agreements and the remaining charges were dismissed.
       As a condition of their pleas, Shim and C&R agreed to pay restitution to the
Employment Development Fund in the amount of $3,152.34 and to SCIF in the amount
of $108,205.61. All defendants reserved their right to challenge the amount of restitution
to be awarded to Martinez‘s heirs, who had already received a settlement of $320,000 in
death benefits from SCIF under C&R‘s workers‘ compensation policy. At a separate
hearing to determine the restitution to be paid to Martinez‘s heirs, the primary issue
presented was whether the defendants were entitled to offset the $320,00 payment made
by SCIF to the family against the obligation to pay restitution. The People took the
position that no offset should be allowed, because Shim and C&R had failed to report
Martinez‘s employment to SCIF and had committed fraud with respect to the workers‘
compensation insurance premiums. Defendants pointed out that SCIF had been made
whole by the $108,000 that Shim and C&R agreed to pay to SCIF as restitution, an
amount that represented the delinquent premium payments owed to SCIF to cover
Martinez‘s employment.
       The parties stipulated to the following facts for purposes of resolving the
restitution issue: (1) C&R and Shim had workers‘ compensation insurance through
SCIF; (2) Martinez was employed by C&R and Shim; (3) after Martinez died on the job,
SCIF paid his family members a death benefit of $320,000; (4) Shim had failed to report

       2
          A violation of Labor Code section 6425, subdivision (a) is a ―wobbler‖ offense,
alternatively punishable as a felony or a misdemeanor. (See § 17, subd. (b); People v.
Myers (2009) 170 Cal.App.4th 512, 516.)

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any of Martinez‘s wages to SCIF in violation of Insurance Code section 11880,
subdivision (a); (5) C&R and Shim had agreed to pay SCIF $108,205.61 in restitution, an
amount reflecting the unpaid premiums associated with Martinez‘s employment; and
(6) SCIF‘s workers‘ compensation payment to Martinez‘s heirs was greater than any
restitution that would be owed by defendants to the family. 3 The parties additionally
agreed that Shim and C&R had paid workers‘ compensation premiums to SCIF for at
least two employees other than Martinez.
       The trial court concluded that defendants were entitled to offset SCIF‘s settlement
with the Martinez family: ―I must say, as the attorneys have pointed out to me, it‘s a case
of first impression. And I‘m going to find that there‘s an offset. I‘m doing that because I
think its clear that in criminal matters such as this, the restitution, the idea is to make the
victim whole. We definitely want to see that happen. [¶] Also, that if a defendant‘s
insurance carrier, that they have paid insurance for, does make the victim whole, then the
defendant is entitled to that offset. [¶] The question here, as I see it, is it‘s clear that the
defendants‘ insurance carrier did make the victims whole. That‘s by stipulation, saying
the 320,000 is more than what would be required. And the real question is should the
defendant then have to pay monies to the victim, doubling whatever the victim got, albeit
he‘s already satisfied himself with his insurance carrier by paying, I think it was 108,000.
[¶] So the defendant has paid 108,000 in settling whatever claims he had with his
insurance carrier that the insurance carrier, workers‘ comp folks are satisfied that he‘s up
to date. . . . [¶] . . . .[¶] . . . . So the workers‘ comp folks would be satisfied with that
108,000, it seems to me, is the way I read that, and they have then said that they paid the
320[,000]. . . . [¶] . . . So it seems to me that the main thing that I am concerned with is

       3
         Case law has held that when an injured party is an undocumented worker, civil
damages for lost future earnings should be based on the wages the injured party could
expect to receive in his or her country of lawful citizenship, not necessarily the wages
that would have been earned in the United States. (See Rodriguez v. Kline (1986) 186
Cal.App.3d 1145, 1149.) The People‘s brief regarding the restitution issue indicated that
the appropriate amount of restitution would be $38,373.35 if Mexican wages were used
to calculate lost support/future earnings, and $411,596.35 if United States wages were
used.

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that the victim becomes whole. In this case, if that has happened, and if there‘s any fraud
here, it was between the defendants and the workers‘ comp, SCIF, and SCIF and [the
defendants] have already settled that claim so I . . . therefore I am going to find it as an
offset.‖
       The People appeal. (§ 1238, subd. (a)(5); People v. Hamilton (2003) 114
Cal.App.4th 932, 938 [post-sentence order regarding restitution affects substantial rights
of the People and is appealable] (Hamilton).)
                                       DISCUSSION
       The People contend the trial court should not have granted defendants an offset for
benefits paid under the SCIF workers‘ compensation policy. They reason that because
Shim and C&R failed to report Martinez‘s employment to SCIF, they should not receive
the benefit of that policy. The People further argue that defendant Kim has no basis for
claiming an offset because he did not, in any event, secure the insurance policy under
which Martinez‘s family members were paid. We reject these claims.
       Two statutes govern a victim‘s right to direct restitution when probation has been
granted. The first, section 1202.4, gives all direct victims of a crime a mandatory right to
restitution ―directly from‖ the defendant, in an amount sufficient to fully reimburse the
victim for every determined economic loss suffered as a result of the crime. (§ 1202.4,
subds. (a)(1), (f)(3) & (k)(1); People v. Anderson (2010) 50 Cal.4th 19, 27-29
(Anderson).) The second, section 1203.1, governs probation conditions in general and
allows a court to impose restitution as a condition of probation. (§ 1203.1, subd. (b).)
The scope of a trial court‘s discretion is broader when restitution is imposed as a
condition of probation under section 1203.1, and restitution under that statute is not
strictly tied to economic losses directly caused by the defendant‘s criminal conduct.
(Anderson, at pp. 27, 29; People v. Giordano (2007) 42 Cal.4th 644, 663, fn. 7
(Giordano).)
       Generally speaking, a defendant who is obligated to pay victim restitution is not
entitled to offset amounts that the victim receives from a collateral source that is
independent of the defendant, such as the victim‘s own insurance, Medicare, or a

                                               5
professional fund designed to compensate parties injured by a member of that profession.
(Hamilton, supra, 114 Cal.App.4th at pp. 940-941; People v. Hove (1999) 76 Cal.App.4th
1266, 1272 (Hove); Hume, supra, 196 Cal.App.4that p. 996.) This is because the fortuity
that the victim has purchased insurance, or qualifies for some other kind of benefit or
compensation not attributable to the defendant, ―should not shield [the] defendant from a
restitution order which requires him to pay the full amount of the losses caused by his
crime.‖ (Hove, supra, 76 Cal.App.4th at p. 1272.) Also, such payments are subject to
claims for reimbursement and subrogation against the defendant. (Bernal, supra, 101
Cal.App.4th at pp. 166-167.) ―As a result of these reimbursement claims, equitable
principles would tend to place the loss on the wrongdoing defendant, preclude a windfall
recovery by the victim, and reimburse the third party.‖ (Id. at p. 167.)
       By contrast, a defendant generally is entitled to an offset for amounts paid to the
victim by the defendant‘s own insurer. (Bernal, supra, 101 Cal.App.4th at pp. 165-168;
see also Hume, supra, 196 Cal.App.4th at p. 996; People v. Short (2008) 160 Cal.App.4th
899, 901, 905 (Short).) As explained in Bernal, when a defendant‘s insurance company
makes payments to a victim pursuant to an insurance contract, it generally has no
recourse against the insured defendant. (Bernal, at p. 167.) ―If [the defendant] paid his
entire restitution obligation with no credit for the . . . insurance payment, the victim
would receive a windfall to the extent that such payments duplicated items already
reimbursed by [defendant‘s] carrier.‖ (Ibid.)
       Additionally, section 1202.4, subdivision (a)(1) mandates that the victim receive
payments ―directly from‖ the defendant. (Bernal, supra, 101 Cal.App.4th at p. 167.)
Unlike a payment from an unrelated source, a payment to the victim under the
defendant‘s insurance policy is a payment ―directly from‖ the defendant: ―The
defendant‘s own insurance company is different than other sources of victim
reimbursement, in that (1) the defendant procured the insurance, and unlike the other
third-party sources, its payments to the victim are not fortuitous but precisely what the
defendant bargained for; (2) the defendant paid premiums to maintain the policy in force;
(3) the defendant has a contractual right to have the payments made by his insurance

                                              6
company to the victim, on his or her behalf; and (4) the defendant‘s insurance company
has no right of indemnity or subrogation against the defendant.‖ (Id. at p. 168; see also
Hume, supra, 196 Cal.App.4th at pp. 996-997.)4
       In the case before us, Shim and C&R maintained workers‘ compensation
insurance through SCIF. SCIF paid Martinez‘s family members $320,000 under this
policy as compensation for Martinez‘s death. The $320,000 came ―directly from‖ Shim
and C&R within the meaning of section 1202.4. As the parties agree, SCIF would have
no basis for recovering any portion of the $320,000 from Martinez‘s family if the family
were to recover restitution from the defendants. The offset avoided double payment to
Martinez‘s family, which had been fully compensated by the insurance payment.
(Bernal, supra, 101 Cal.App.4th at p. 167.)
       The People argue that Shim and C&R should not be credited with SCIF‘s payment
of $320,000 to Martinez‘s family given that those defendants had failed to report
Martinez‘s wages to SCIF and had paid a lower insurance premium as a result. They
note that restitution in this case was authorized by section 1203.1, which, in addition to
compensating the victim, ―addresses the broader probationary goal of rehabilitating the
defendant.‖ (Anderson, supra, 50 Cal.4th at p. 27.) As the People observe, restitution is
― ‗ ―an effective rehabilitation penalty because it forces the defendant to confront, in
concrete terms, the harm his actions have caused.‖ ‘ ‖ (Ibid., citing People v. Carbajal
(1995) 10 Cal.4th 1114, 1124.) The People argue that the offset in this case did not
promote the goal of fostering defendants‘ rehabilitation, because the defendant did not
have to pay anything out of pocket for Martinez‘s death—including the insurance
premiums to SCIF.
       We review a restitution order made as a condition of probation for abuse of
discretion, a standard that requires us to affirm unless the order is ―arbitrary or capricious
or otherwise exceeds the bounds of reason.‖ (Anderson, supra, 50 Cal.4th at p. 32; see
Giordano, supra, 42 Cal.4th at p. 663.) So long as the trial court employed a rational

       4
        The People acknowledge that SCIF has no right of subrogation against the
defendants.

                                              7
method of fixing the amount that was calculated to make the victim whole, the order must
be affirmed. (People v. Fortune (2005) 129 Cal.App.4th 790, 794; People v. Baker
(2005) 126 Cal.App.4th 463, 470.) An abuse of discretion is not established simply by
showing that a different court considering the same facts might have utilized a different
method of calculating restitution and reached a different result. (See People v. Akins
(2005) 128 Cal.App.4th 1376, 1386-1387.)
       We find no abuse of discretion in this case. The trial court considered the People‘s
arguments, but concluded that the defendants‘ fraudulent conduct toward SCIF did not
render an offset inappropriate when calculating the restitution to be paid to the family of
Martinez. Significantly, Shim pled guilty to the separate crime of insurance fraud against
SCIF, and Shim and C&R had agreed to pay SCIF over $108,000 to compensate it for the
unpaid premiums associated with Martinez‘s employment. In light of this restitution to
SCIF, the court did not act arbitrarily and capriciously when it allowed Shim and C&R to
offset the payment made by SCIF on their behalf. Martinez‘s family had been fully
compensated and, presumably, so had SCIF. ―A restitution order is intended to
compensate the victim for its actual loss and is not intended to provide the victim with a
windfall.‖ (People v. Chappelone (2010) 183 Cal.App.4th 1159, 1172; see also People v.
Garcia (2011) 194 Cal.App.4th 612; Fortune, supra, 129 Cal.App.4th at p. 795.)
       We turn next to the People‘s argument that defendant Kim was not entitled to an
offset for SCIF‘s payment to Martinez‘s family because he did not procure the workers‘
compensation policy. We reject the argument for the reasons stated in Short, supra, 160
Cal.App.4th 899, in which the defendant pled guilty to driving under the influence and
causing great bodily injury, a crime that occurred while he was operating his employer‘s
vehicle. The defendant in Short was ordered to pay over $450,000 in victim restitution;
later, his employer‘s insurance company paid the victim the policy limits of two
insurance policies totaling $3 million. (Id. at pp. 901-902.) The appellate court
concluded the employee-defendant was entitled to an offset, even though he had not paid
for the insurance policy: ―This is not, as the People claim, a fortuitous windfall that
should not inure to defendant‘s benefit. Labor Code section 2802 requires an employer

                                              8
to insure or otherwise indemnify an employee ‗for all . . . losses incurred by the employee
in direct consequence of the discharge of his or her duties.‘ (Lab.Code, § 2802.) Thus,
the statute requires an employer ‗to pay any judgment entered against the employee for
conduct arising out of his employment.‘ (Jacobus v. Krambo Corp. (2000) 78
Cal.App.4th 1096, 1100.) Nor was the policy, in the trial court‘s words, ‗procured not for
the benefit of the Defendant [but] rather to protect Defendant‘s employer from vicarious
liability for the acts of its employees.‘ As the purpose of Labor Code section 2802 is ‗to
protect employees from suffering expenses in direct consequence of doing their jobs‘
(Grissom v. Vons Companies, Inc. (1991) 1 Cal.App.4th 52, 59–60[]), procurement of the
insurance policy to cover those losses was a benefit for defendant as much as it was for
the employer.‖ (Short, supra, 160 Cal.App.4th at p. 905; see also People v. Jennings
(2005) 128 Cal.App.4th 42 [defendant who pled guilty to causing injury while driving
under the influence was entitled to offset money paid by his mother‘s insurance policy,
on which he was a named insured, even though mother had paid for the policy].)
       Effective January 1, 2013, prompted by the trial court‘s ruling in this case, the
Legislature amended section 1202.4 to include the following provision as
subdivision (f)(12): ―In cases where an employer is convicted of a crime against an
employee, a payment to the employee or the employee‘s dependent that is made by the
employer‘s workers‘ compensation insurance carrier shall not be used to offset the
amount of the restitution order unless the court finds that the defendant substantially met
the obligation to pay premiums for that insurance coverage.‖ (Stats. 2012, ch. 868, § 3
(Sen. Bill No. 1177), ch. 873, § 1.5 (Sen. Bill No. 1479); see Rep. on Hearing on Sen.
Bill No. 1177 as introduced and amended Feb. 22, 2012, Apr. 11, 2012.)
       The parties agree that this amendment is not retroactive and does not directly
apply to this case. (See § 3; People v. Zito (1992) 8 Cal.App.4th 736, 740-741; Hamilton,
supra, 114 Cal.App.4th at p. 939, fn. 5.) Indirectly, the amendment provides support for
upholding the trial court‘s restitution order. ― ‗An amendment to a statute making a
material change in its wording bespeaks a legislative intent to change the meaning of the
prior statute.‘ ‖ (See People v. Mohammed (2008) 162 Cal.App.4th 920, 932.) The

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Legislature‘s explicit curtailment of a trial court‘s discretion to order an offset under
circumstances like those in this case suggests that such an offset was not prohibited under
previous law.
                                       DISPOSITION
       The judgment is affirmed.

                                           NEEDHAM, J.

We concur.

JONES, P. J.

SIMONS, J.

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