Opinion
E068260
04-17-2018
THE PEOPLE, Plaintiff and Appellant, v. CHRISTA HOLLAND, Defendant and Respondent.
Michael A. Hestrin, District Attorney, and Alan D. Tate, Senior Deputy District Attorney, for Plaintiff and Appellant. Steven L. Harmon, Public Defender, and William A. Meronek, Deputy Public Defender, for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. SWF1500902) OPINION APPEAL from the Superior Court of Riverside County. Stephen J. Gallon, Judge. Affirmed. Michael A. Hestrin, District Attorney, and Alan D. Tate, Senior Deputy District Attorney, for Plaintiff and Appellant. Steven L. Harmon, Public Defender, and William A. Meronek, Deputy Public Defender, for Defendant and Respondent.
The trial court granted defendant and respondent, Christa Holland's, motion in support of dismissal of the complaint. The court ruled that plaintiff and appellant, The People, were collaterally estopped from proceeding on the felony complaint due to the administrative law judge's (ALJ) ruling in favor of defendant in an action by the Riverside County Department of Public Social Services (County) to recover an alleged overissuance in CalFresh benefits received by defendant. On appeal, the People contend the court erred in applying collateral estoppel to bar prosecution of defendant because the ALJ did not decide the same issues raised by the People's complaint. We affirm.
I. FACTUAL AND PROCEDURAL HISTORY
On January 3, 2013, defendant completed an application for CalFresh benefits for a household consisting of herself, her husband, and her three minor children. She reported her own employment and the receipt of partial veteran's disability payments. Defendant reported her husband was unemployed.
On October 3, 2013, County personnel reviewed defendant's case; County personnel determined there was a discrepancy regarding possible unreported earnings by defendant. County personnel contacted defendant and her employer regarding the discrepancy.
On December 30, 2013, defendant's case was reviewed by the Integrated Earnings Verification Systems investigative unit, during which they determined possible unreported earnings by defendant's husband had also gone unreported. County personnel contacted defendant and defendant's husband's employer regarding the discrepancy. Also on December 30, 2013, County personnel received wage verification from defendant's employer reflecting defendant had not reported earnings she received in February and May 2013. On January 13, 2014, County personnel received wage verification from defendant's husband's employer of wages earned in May 2013, which had not been reported. County personnel itemized defendant's family's earnings and benefit issuances for the period between April 2013 and September 2013.
On May 20, 2014, County personnel filed a Notice of Action (NOA) asserting defendant had received an overissuance of her CalFresh benefits from April through September 2013, in the amount of $3,552, "due to inadvertent household error in failing to report certain earnings received by her and her husband." The County demanded repayment of that overissuance. On June 5, 2014, defendant timely filed a request for rehearing to dispute the NOA.
On June 18 and 25, 2014, defendant and the County's representative signed a conditional withdrawal agreement of the claim in which defendant "agreed to conditionally withdraw her hearing request based on the [C]ounty's agreement to issue a redetermination notice within 30 days." The County's representative indicated the County was then unable to substantiate the $3,552 overissuance; he agreed to recalculate the amount, to void its demand for repayment, and notify defendant of additional findings.
A different County representative apparently attempted to proceed against defendant based on the original NOA without issuing a redetermination notice. The new County representative indicated she "simply disagreed" with the prior representative's assessment that the County could not substantiate the amount of the alleged overissuance; she refused to comply with the conditional withdrawal agreement. On September 21, 2015, defendant filed a request for a hearing.
On October 15, 2015, the People filed a felony complaint charging defendant with false representation to obtain welfare benefits (count 1; Welf. & Inst. Code, § 10980, subd. (c)) and perjury (count 2; Pen. Code, § 118). At an administrative hearing before an ALJ on December 22, 2015, defendant requested "that the [C]ounty be ordered to comply with the conditional withdrawal agreement and to issue [a] redetermination notice." The ALJ issued a decision in which he granted defendant's request; ordered the County's NOA dated May 20, 2014, be rescinded or voided; and ordered the County to issue a redetermination NOA within 30 days.
On January 6, 2016, County personnel issued another NOA claiming defendant received an overissuance of $3,552 in CalFresh benefits for the period between April 2013 and September 2013 due to unreported earnings. Defendant requested a hearing. At the administrative hearing on August 2, 2016, defendant testified she did not receive payment in the amounts reflected in the payroll documentation provided by the County from her employer. She testified she was separated from her husband, he did not contribute to the household expenses, and he would not provide her with his pay stubs. Defendant testified she told County personnel this and was told that they could easily pull her husband's payroll report themselves because he worked for the County.
The ALJ initially set the hearing for March 15, 2016; however, the ALJ dismissed the hearing request when defendant failed to appear for the hearing. At the administrative hearing on August 2, 2016, defendant testified that she neither received notification of the March 15, 2016, hearing nor of the case dismissal. The ALJ found good cause to excuse defendant's failure to appear or timely request the dismissal be set aside.
In her statement of decision, the ALJ noted that she had "carefully reviewed" the County's budget calculations and found them to be incorrect based upon inconsistencies between defendant's pay stubs and the payroll reports of her employer. The ALJ found the County's use of $2,168.43 as the amount of defendant's unreported income between April and June 2013, to be unsubstantiated by any evidence in the record: "[I]t is unknown where the County got these . . . amounts" and they "could not be verified by any source submitted into evidence." The ALJ ruled: "Based on the evidence, the County has not sustained its burden of establishing that the [defendant] received a $3[,]552 CalFresh overissuance during the period April 2013 through September 2013 . . . ." The ALJ ordered that "the County must rescind its January 6, 2016[,] [NOA] to establish a $3[,]552 CalFresh overissuance for the period April 2013 through September 2013 and must take no further action on the alleged CalFresh overissuance for this period."
On February 28, 2017, defendant filed points and authorities in support of a request for dismissal of the felony complaint as barred by collateral estoppel: "Logic dictates that if there is no money owed to the County that there is no crime and thus there can be no criminal prosecution for willful and intentional misrepresentations made in order to obtain said benefits." On March 2, 2017, the People filed points and authorities in opposition to defendant's motion to dismiss contending the ALJ "made no finding as to whether or not the claimant's intent, or lack thereof, was a contributing factor to rescinding the overissuance. In fact, the [ALJ] made no mention or finding regarding the defendant's intent whatsoever." The next day the People filed amended points and authorities contending the ALJ found only that there was not an overissuance in the amount of $3,552, not that there was no overissuance: "Conspicuously absent from the [ALJ's] conclusion was a finding, or even a reference to, whether or not defendant . . . had made misrepresentations or omissions that amounted to welfare fraud or perjury."
At the hearing on the motion on March 3, 2017, the court summarized the issue before it as whether the ALJ's decision that defendant had not been issued an overissuance in the amount of $3,552 necessarily required findings of fact that there was no "overissuance at all." Defendant argued the ALJ decided there was no error on the part of either the County or defendant and, as such, there was no overissuance at all: "Because if there's no money owed, there's no crime." "Had the [ALJ] found that it was an intentional program violation, that would have increased the reduction of benefits for her." "Simply because the [ALJ] did not use the buzz words of 'intent' or 'fraud' doesn't mean that those issues weren't decided." "Without there actually being any money owed, you can't even—a determination that there's no money owed is equal to a determination that there's no money owed because there w[ere] no omissions and no misrepresentations made. Because if there had been misrepresentations and omissions, it's the defense's belief that the [ALJ] would have come back with either this being an inadvertent household error or an agency error or an intentional program violation." "[T]he fact that there's no money owed by logic dictates that there w[ere] no material omissions, and that the [ALJ] relied on the credible testimony of [defendant] at that hearing to make that ruling."
The People argued that "whether or not the defendant committed some kind of intentional misrepresentation or an omission was not addressed. This was a hearing simply to look at the calculations that were made by [the County]." "And you can see in the [ALJ's] ultimate holding that there was no mention of whether or not the defendant had made any mispresentations or omissions, because the [ALJ] never considered that."
The court noted that the ALJ's prohibition against the County going after defendant again for that same period would have barred recalculation, meaning the ALJ appeared to have determined there was no overissuance for that period. Defendant responded: "The [ALJ] reconciled the differences found between what was reported versus what the income threshold is and found that there was no overissuance, meaning that [defendant] and her family did not receive any CalFresh benefits that they were not lawfully entitled to." The People replied: "The [ALJ], if you read again the conclusion in the order, clearly did not say that there was no overissuance. What the [ALJ] said was that [the County] was not able to establish with certainty what the amount was."
On March 6, 2017, the court delivered its ruling: "It appears to this Court that the [ALJ] was directly called upon to decide whether the defendant received any overpayments to which she was not entitled and ruled that there was insufficient evidence to prove any such overpayments." "[T]he ALJ didn't narrowly rule that the County failed to prove the defendant's own income was material and underreported leaving the matter open for a future claim based on the husband's employment, rather she ruled that the County generally failed to prove there was an overissuance." Thus, the court ruled the People were collaterally estopped from proceeding on the complaint and ordered defendant discharged with prejudice.
II. DISCUSSION
The People contend the court erred in finding they were collaterally estopped from proceeding on the complaint. Specifically, the People maintain that the ALJ's ruling must be limited to only the most narrow, literal interpretation of the language of her determination; i.e., that the ALJ only found that defendant had not received an overissuance in the exact amount of $3,552. Thus, the People argue that the ALJ did not decide that defendant may have received an overissuance in any other amount and whether such an overissuance was due to some misrepresentation or omission on the part of defendant. We disagree.
An administrative hearing conducted by the County may be deemed a sufficiently judicial-like adversarial proceeding such that a final determination by an administrative hearing officer of allegations of the overpayment of certain welfare benefits due to a recipient's misrepresentations may collaterally estop a criminal prosecution based upon the same allegations. (People v. Sims (1982) 32 Cal.3d 468, 477-480 [effective default judgment in favor of welfare recipient by administrative hearing officer due to county's refusal to proceed because of its determination that it had no jurisdiction due to pending criminal charges, collaterally estopped subsequent prosecution because the issues had been actually litigated in the administrative proceeding]; accord, People v. Garcia (2006) 39 Cal.4th 1070, 1087-1089.)
"[C]ollateral estoppel has been found to bar relitigation of an issue decided at a previous proceeding 'if (1) the issue necessarily decided at the previous [proceeding] is identical to the one which is sought to be relitigated; (2) the previous [proceeding] resulted in a final judgment on the merits; and (3) the party against whom collateral estoppel is asserted was a party or in privity with a party at the prior [proceeding].' [Citation.] [¶] It is implicit in this three-prong test that only issues actually litigated in the initial action may be precluded from the second proceeding under the collateral estoppel doctrine. [Citation.] An issue is actually litigated '[w]hen [it] is properly raised, by the pleadings or otherwise, and is submitted for determination, and is determined . . . . A determination may be based on a failure of . . . proof . . . .' [Citation.]" (People v. Sims, supra, 32 Cal.3d at p. 484.)
"'The party asserting collateral estoppel bears the burden of establishing these requirements.' [Citation.]" (Pacific Lumber Co. v. State Water Resources Control Bd. (2006) 37 Cal.4th 921, 943.) "The trial court's application of the doctrine of collateral estoppel or issue preclusion is a question of law subject to de novo review. [Citation.]" (Johnson v. GlaxoSmithKline, Inc. (2008) 166 Cal.App.4th 1497, 1507; Union Pacific Railroad Co. v. Santa Fe Pacific Pipelines, Inc. (2014) 231 Cal.App.4th 134, 179.)
Here, contrary to the People's contention, the issue of whether defendant had received an overissuance due to her own misrepresentations was actually litigated and decided on the merits by the ALJ; thus, the court properly ruled the People were collaterally estopped from proceeding against defendant on the felony complaint. The ALJ noted that she had "carefully reviewed" the County's budget calculations and found them to be incorrect based upon inconsistencies between defendant's pay stubs and the payroll reports of her employer. The ALJ found the County's use of $2,168.43 as the amount of defendant's unreported income between April and June 2013, to be unsubstantiated by any evidence in the record: "[I]t is unknown where the County got these . . . amounts" and they "could not be verified by any source submitted into evidence." If the ALJ found that no amount of alleged unreported income could be substantiated by the evidence adduced by the County, then the ALJ necessarily found defendant had not received an overissuance in any amount, not just the specific amount alleged by the County. Thus, the issue raised by the People's complaint, whether defendant made material representations regarding her income, had been litigated and decided on the merits by the ALJ.
Defendant testified she did not receive payments in the amounts reflected in the documents provided by her employer to the County. The ALJ found there were inconsistencies in the amounts reflected in defendant's pay stubs and the payroll records provided by her employer. Defendant reportedly quit her employment with the employer due to unpaid wages. Thus, implicit in the record is possible malfeasance by the employer in the payment of wages, the documentation of the payment of wages, or both.
The People contend the facts in Garcia are similar to those in the instant case. In Garcia, the California Supreme Court reaffirmed its holding in Sims, but reversed and remanded the case before it because the administrative decision did not foreclose the possibility that the defendant had made misrepresentations contributing to the overpayment of her welfare benefits. (People v. Garcia, supra, 39 Cal.4th at pp. 1090-1091.) This was despite that fact that the "[ALJ] concluded that the overpayment . . . was 'the result of administrative errors of omission committed by the county welfare department,' because the county did not conduct required periodic redetermination reviews and investigations." (Id. at p. 1075.)
As counsel for defendant notes, the crucial difference between this case and Garcia is that the administrative hearing officer in Garcia expressly found there were overpayments; thus, the case required remand to determine if the overpayments were due to any misrepresentations by the defendant. In the instant case, the ALJ did not find there had been any overpayments. In fact, as discussed above, the ALJ's reasoning reflects that she necessarily found defendant had not received an overissuance in any amount. Thus, the ALJ, at a minimum, impliedly found the County had failed to prove nonentitlement to benefits in any amount and that defendant had not made material misstatements of fact which affected her entitlement to benefits. Ergo, the People were collaterally estopped from proceeding with a prosecution for misrepresentation or perjury because the ALJ determined no overpayment of benefits was made; hence, even if defendant had made any misstatements, they could not have affected the outcome, the payment of benefits. (People v. Ochoa (1991) 231 Cal.App.3d 1413, 1420 ["[N]onentitlement to the aid obtained or received is clearly an element of the crime of welfare fraud."]; People v. Kobrin (1995) 11 Cal.4th 416, 420 [conviction for perjury requires proof that the alleged misstatement was material, i.e., affected the outcome of the proceeding in which it was made].) Thus, the court properly determined the People were collaterally estopped from proceeding with prosecution of defendant on the complaint.
The People contend the ALJ did not make a determination that no overpayments were made, only that the County failed to prove overpayment in the exact amount alleged. Thus, according to the People, the ALJ never made any express determination that defendant did not make any misrepresentations in seeking aid. Although true only in the most technical, literal, and narrow interpretation of the language of the ALJ's ruling without considering it in context with her reasoning, we note the original ALJ provided the County additional opportunities to renew its allegations and prove up the allegations; when the County failed to do so, the second ALJ found no proof of overpayment and barred the County from making further attempts to prove overpayment and seek recompense for the period alleged.
The People appear to suggest that the ALJ was limited to determining only whether an oversisuance was in the exact amount specified in the pleadings, $3,552. In other words, if the ALJ found there was an overissuance in an amount one cent less than that specified in the pleading, the ALJ would have been required to rule against the County because it had not proven overissuance in the exact amount listed in the NOA. We disagree with the People's characterization of the ALJ's factfinding powers as being so limited. ALJs have broad discretion to render factual findings within the scope of the pleadings. (Gov. Code, § 11405.20 ["'Adjudicative proceeding' means an evidentiary hearing for determination of facts pursuant to which an agency formulates and issues a decision."]; 9 Witkin, Cal. Procedure (5th ed. 2008) Administrative Proceedings, § 63(2)(a), p. 1186; Cal. Dept. of Social Services, State Hearings Division, Rehearing Review Protocols, p. 8 ["The types of factual findings made by ALJs in state hearing decisions are . . . widely varied . . . ."]<http://www.cdss.ca.gov/shd/res/pdf/RehearingProtocol.pdf>[as of Apr. 17, 2018]; see Cal. Administrative Mandamus (Cont.Ed.Bar 3d ed. 2017) § 1.7, pp. 1-7 - 1-8; see also Welf. & Inst. Code, § 10958.1.) A determination that an overissuance had been made in an amount less than that pled by the County would have been well within the ALJ's factfinding authority.
Here, the ALJs took documents into evidence; the latter ALJ heard testimony from both sides; both ALJs ruled that the evidence was insufficient to prove the allegations; the former ALJ allowed the County an additional opportunity to supplement the evidence; and, failing the County's effort to do so, ruled against the County. This satisfies the "actual litigation" prong for applying collateral estoppel; indeed, the County participated in far more "actual litigation" than the effective default judgment which the ALJ entered in Sims which was found to be determinative on the issue of actual litigation estopping the People in that case from proceeding with subsequent prosecution. The ALJ in Sims never expressly determined whether the defendant had committed fraud or misrepresentation either; however, the effective default judgment was deemed an implicit determination sufficient to estop further prosecution. As discussed above, since the issue of whether any overissuance in any amount had been actually litigated, the ALJ necessarily decided the issue on its merits. Thus, the court properly found the People were collaterally estopped from proceeding with defendant's prosecution.
III. DISPOSITION
The judgment is affirmed.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
MCKINSTER
J. We concur: RAMIREZ
P. J. SLOUGH
J.