Defendant’s convictions for violating Insurance Code section 1871.4 were not supported by substantial evidence because he received compensation from an agency that does not fall under the provisions of the relevant statutes. A jury convicted Hamilton, a former U.S. Postal Service employee, of three counts of making a false or fraudulent statement for the purpose of obtaining compensation under the state workers’ compensation law (Ins. Code, § 1871.4, subd. (a)(1)). On appeal, Hamilton argued that there was insufficient evidence to support his conviction under the statute because it applied only to false or fraudulent statements made for the purpose of obtaining compensation afforded under the state workers’ compensation law, which was not applicable to him as a federal employee. His workers’ compensation benefits were provided under the Federal Employment Compensation Act (FECA). Held: Reversed. Insurance Code section 1871.4 makes it a crime to make a knowingly false statement for the purpose of obtaining compensation as defined in Section 3207 of the Labor Code. The relevant provisions of the Labor Code make clear that its provisions do not apply to federal agencies engaged in interstate commerce. Respondent acknowledged that the workers’ compensation benefits Hamilton received from the U.S. Department of Labor were not “compensation” under Labor Code section 3207 because the United States Postal Service does not fall under any of the categories set forth in the statutory definition of “employer.” The evidence was insufficient to support the jury’s verdict of guilty for the Insurance Code violations.
Amendment of the judgment to reflect convictions for lesser included offenses of concealing an event affecting entitlement to any “insurance benefit or payment” or attempted petty theft by false pretenses was not warranted. Respondent argued that the Court of Appeal should modify Hamilton’s convictions to lesser included offense to reflect convictions either under Penal Code section 550, subdivision (b)(3) or attempted petty theft by false pretenses. Penal Code section 1181, subdivision (6) gives the appellate court authority to reduce a conviction to a lesser included offense if it finds that insufficient evidence supports the conviction for the greater offense in lieu of granting a new trial. (People v. Navarro (2007) 40 Cal.4th 668, 671.) This authority is permissive, not mandatory. The appellate court is authorized to reduce a conviction only to a lesser included offense, not a lesser related offense. Without determining whether Penal Code section 550, subdivision (b)(3) is a lesser included offense of Insurance Code section 1871.4, the court concluded there was no reason to modify the judgment to that crime because substantial evidence does not support a finding that Hamilton violated section 550 because FECA is not an “insurance benefit or payment” within the meaning of the statute. Further, the magnitude of the fraud was far greater than three counts of misdemeanor attempted petty theft. The court declined to exercise its discretion to modify the judgment to convictions to a lesser included offense.
Federal preemption does not prevent state law prosecutions based on a federal employee’s fraud in obtaining compensation under FECA. Hamilton also argued that the doctrine of federal preemption bars him from being prosecuted under California law because his workers’ compensation benefits were provided under FECA. The supremacy clause of the United States Constitution establishes a constitutional choice-of-law rule, makes federal law paramount, and vests Congress with the power to preempt state law. In determining whether federal law preempts state law, a court’s task is to discern congressional intent “through the lens of a presumption against preemption.” In reviewing the provisions of FECA, the court determined that Congress has unambiguously expressed its intent to approve state law prosecution. A state law fraud prosecution determines the extremely limited question of whether a federal employee has made misrepresentations or otherwise committed fraud in obtaining FECA benefits and does not frustrate Congress’ interest in uniform regulation of FECA. Preemption did not apply in this case to bar a state law prosecution for fraud in obtaining benefits under FECA.
The full opinion is available on the court’s website here: https://www.courts.ca.gov/opinions/archive/D073034.PDF
