PEOPLE v. SULLIVAN

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Court of Appeal, Fourth District, Division 1, California.

The PEOPLE, Plaintiff and Respondent, v. Charles W. SULLIVAN, Defendant and Appellant.

No. D027417.

Decided: February 05, 1998

Beatrice C. Tillman, under appointment by the Court of Appeal, San Diego, for Defendant and Appellant. Daniel E. Lungren, Attorney General, George Williamson, Chief Assistant Attorney General, Gary W. Schons, Assistant Attorney General, Keith I. Motley and Pamela A. Ratner, Deputy Attorneys General, for Plaintiff and Respondent.

Charles W. Sullivan (Sullivan) appeals a judgment following his guilty pleas to one count of second degree murder (Pen.Code,1 § 187, subd. (a)) and one count of assault with a semiautomatic firearm (§ 245, subd. (b)) and admissions that he personally used a firearm in committing both offenses (§ 12022.5, subd. (a)) and personally inflicted great bodily injury on one victim (§ 12022.7, subd. (a)).  The trial court sentenced Sullivan to a total term of 32 years to life and ordered that he pay restitution for medical expenses incurred by two victims.   On appeal Sullivan contends the trial court erred by ordering restitution for medical expenses paid by one victim's insurance company and for medical expenses incurred by the other victim for psychiatric counseling and medication.   We affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

On November 3, 1995, Sullivan shot and killed Timothy Lindsey (Lindsey) and shot and wounded Mark Keller (Keller) following a verbal argument between Sullivan and Lindsey.2

On June 4, 1996, Sullivan entered guilty pleas.   At an October 11, 1996 contested restitution hearing, the trial court ordered Sullivan to make restitution to Keller in the amount of $26,000.69 for medical expenses his insurance company paid, and to Lindsey's mother in the amount of $285 for psychiatric medical expenses she paid.3

Sullivan timely filed a notice of appeal.

DISCUSSION

IThe Trial Court Properly Ordered Section 1202.4 Restitution to Keller for His Insured Medical Expenses

Sullivan contends that because Keller suffered no “economic loss” under section 1202.4, the trial court erred by ordering him to make restitution to Keller for medical expenses Keller's insurance company paid.

A

Victim restitution in California began in 1965 when “the Legislature created [by enactment of Government Code section 13967] a special fund to provide compensation to victims of violent crimes.  [Citations.]”  (People v. Broussard (1993) 5 Cal.4th 1067, 1072, 22 Cal.Rptr.2d 278, 856 P.2d 1134.)   The Broussard court further stated:

“In 1982, the voters of California passed Proposition 8, an initiative to reform the state's criminal justice system.   The initiative included this amendment to the California Constitution:  ‘It is the unequivocal intention of the People of the State of California that all persons who suffer losses as a result of criminal activity shall have the right to restitution from the persons convicted of the crimes for losses they suffer.  [¶] Restitution shall be ordered from the convicted persons in every case, regardless of the sentence or disposition imposed, in which a crime victim suffers a loss, unless compelling and extraordinary reasons exist to the contrary.’  (Cal. Const., art. I, § 28, subd. (b).)  The amendment directed the Legislature to adopt implementing legislation.  [Citation.]  The Legislature did so.  [¶] The new legislation, enacted in 1983, included:  [former] Penal Code section 1203.04, requiring trial courts to order restitution from defendants convicted of crimes and placed on probation;  ․ [and] Penal Code section 1202.4, requiring all persons convicted of a felony to pay a ‘restitution fine’ of up to $10,000, payable into the restitution fund for victims of violent crime․”  (People v. Broussard, supra, at pp. 1072-1073, 22 Cal.Rptr.2d 278, 856 P.2d 1134.)

 Effective August 3, 1995, the Legislature amended section 1202.4 to read in part:

“(a)(1) It is the intent of the Legislature that a victim of crime who incurs any economic loss as a result of the commission of a crime shall receive restitution directly from any defendant convicted of that crime.

“․

“(3) The court, in addition to any other penalty provided or imposed under the law, shall order the defendant to pay both of the following:  [¶] (A) A restitution fine in accordance with subdivision (b).  [¶] (B) Restitution to the victim or victims, if any, in accordance with subdivision (f).

“․

“(f) In 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 victims. ․

“(g) Restitution ordered pursuant to subdivision (f) shall be imposed in the amount of the losses, as determined.   The court shall order full restitution unless it finds clear and compelling reasons for not doing so, and states them on the record.   Determination of the amount of restitution ordered pursuant to this section shall not be affected by the indemnification or subrogation rights of third parties.   Restitution shall, to the extent possible, be of a dollar amount that is sufficient to fully reimburse the victim or victims, for every determined economic loss incurred as the result of the defendant's criminal conduct, including all of the following:  ․ [¶] (2) Medical expenses. ․

“․

“(k) For purposes of this section, ‘victim’ shall include the immediate surviving family of the actual victim.”  (Stats.1995, ch. 313, § 5, No. 5 West's Cal. Legis.   Service, pp. 1536-1538, italics added.)

Under this version of section 1202.4, which applies in this case because Sullivan's offenses were committed in November 1995, a trial court generally must order a defendant to make restitution to victims for all “economic losses” suffered as a result of the defendant's criminal conduct.4  (See People v. Pinedo (1998) 60 Cal.App.4th 1403, 71 Cal.Rptr.2d 151 (1998).)

B

The question of whether insured medical expenses are included in the restitution provisions of section 1202.4 appears to be one of first impression.   Neither Sullivan nor the People cite, and we are unaware of, any case that has decided this question.   We therefore interpret the express language of section 1202.4 and its underlying intent, to determine whether the trial court properly ordered Sullivan to make restitution to Keller for medical expenses paid by his insurance company.

 The apparent intent of the voters in passing article I, section 28, subdivision (b) of the California Constitution and of the Legislature in passing section 1202.4 was to require defendants to bear the costs of their criminal conduct and make their victims “whole”-at least “economically” whole.  “Restitution ․ may serve the salutary purpose of making a criminal understand that he has harmed not merely society in the abstract but also individual human beings, and that he has a responsibility to make them whole.”  (People v. Richards (1976) 17 Cal.3d 614, 620, 131 Cal.Rptr. 537, 552 P.2d 97, disapproved on other grounds in People v. Carbajal (1995) 10 Cal.4th 1114, 1126, 43 Cal.Rptr.2d 681, 899 P.2d 67.)  “[Former] Government Code section 13967 [predecessor to section 1202.4] is designed to compensate crime victims for economic losses suffered as a direct result of a crime.”   (People v. Serna (1988) 203 Cal.App.3d 728, 730, 249 Cal.Rptr. 861, superseded by statute on other grounds as noted in People v. Cotter (1992) 6 Cal.App.4th 1671, 1674-1675, 8 Cal.Rptr.2d 606.)  “Although rehabilitation of the criminal is an ancillary purpose of a restitution award under [former Government Code section 13967], the primary purpose is to compensate California residents who suffer loss as a result of crime.”  (People v. Foster (1993) 14 Cal.App.4th 939, 950, 18 Cal.Rptr.2d 1, superseded by statute on other grounds as noted in People v. Sexton (1995) 33 Cal.App.4th 64, 70, 39 Cal.Rptr.2d 242.)   Medical expenses are included in “economic losses” for which restitution must be made. (§ 1202.4, subd. (g).)  Keller incurred medical expenses of $26,000.69.

 The People assert that People v. Sexton, supra, 33 Cal.App.4th 64, 39 Cal.Rptr.2d 242 held that a court can order restitution to a victim for medical expenses paid by an insurance company.   In Sexton, however, the trial court ordered as a condition of probation that the defendant make restitution directly to an insurance company that had reimbursed the victim for damages arising from the theft of the victim's automobile by the defendant.   (Id. at pp. 67-69, 39 Cal.Rptr.2d 242.)   The Sexton court held that the trial court erred because former section 1203.04 (now part of section 1202.4) did not authorize orders requiring restitution be paid to “indirect” victims like the insurance company.5  (Id. at pp. 70-71, 39 Cal.Rptr.2d 242.)   Sullivan argues that restitution payment to victims for insured economic losses is tantamount to payment directly to the insurance company and therefore precluded by Sexton.

The Sexton court noted in dictum:

“Our conclusion that the insurer in this case cannot be the beneficiary of a restitution order does not mean that appellant gains a windfall.   We agree with the Attorney General that it makes no sense to excuse a defendant from paying restitution simply because of the fortuity that the victim has insurance coverage.   A trial court, in its discretion, may still order the restitution paid to the victim and leave it to the insurer and the victim-insured to work out repayment under the terms of their insurance contract.   In the event the insurer pursues its subrogation rights and obtains a judgment against appellant for the indemnified loss he would be entitled to a credit for any payments made to the insured-victim against the judgment for the ‘same’ loss.  [Citation.]”  (Id. at pp. 71-72, 39 Cal.Rptr.2d 242, italics added.)

We agree with the reasoning of the Sexton court's dictum.   A defendant should not receive a windfall and avoid paying restitution if the victim's insurance covered his loss caused by the defendant.   In this case Sullivan should not be allowed to avoid bearing the financial consequences of his criminal conduct merely because Keller had insurance covering his medical expenses.

C

 The effect of our interpretation of section 1202.4 is similar to the effect of the “collateral source” rule in tort law.   The collateral source rule has been described in this way:

“Where a person suffers personal injury or property damage by reason of the wrongful act of another, an action against the wrongdoer for the damages suffered is not precluded nor is the amount of damages reduced by the receipt by him of payment for his loss from a source wholly independent of the wrongdoer.”  (Anheuser-Busch, Inc. v. Starley (1946) 28 Cal.2d 347, 349, 170 P.2d 448.)

The collateral source rule “is firmly established as the California rule.”  (6 Witkin, Summary of Cal. Law (9th ed.   1988) Torts, § 1388, p. 857.)  “The collateral source rule applies where the plaintiff gets compensation from his own insurer or some other source wholly independent of the defendant tortfeasor.”  (Id. at § 1395, p. 866.)  “[U]nder the collateral source rule, [an] insurance payment [cannot be] used to reduce the recovery from the tortfeasor․”  (Norton v. Superior Court (1994) 24 Cal.App.4th 1750, 1758, 30 Cal.Rptr.2d 217.)  “[T]he loss suffered by [a plaintiff or victim] ․ is the same whether or not [the plaintiff or victim] received an insurance payment covering some or all of the loss [the plaintiff or victim] suffered․”  (Id. at p. 1759, 30 Cal.Rptr.2d 217.)

The California Supreme Court in Helfend v. Southern Cal. Rapid Transit Dist. (1970) 2 Cal.3d 1, 84 Cal.Rptr. 173, 465 P.2d 61 applied the collateral source rule to affirm the trial court's exclusion of evidence of payment by an insurance company of most of the plaintiff's medical expenses.   The court stated:

“The Supreme Court of California has long adhered to the [collateral source] doctrine that if an injured party receives some compensation for his injuries from a source wholly independent of the tortfeasor, such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor.  [Citations.]”  (Id. at p. 6, 84 Cal.Rptr. 173, 465 P.2d 61.)

In Helfend, “plaintiff received benefits from his medical insurance coverage only because he had long paid premiums to obtain them.   Such an origin does constitute a completely independent source.”  (Id. at p. 9, 84 Cal.Rptr. 173, 465 P.2d 61.) The court commented:

“The collateral source rule as applied here embodies the venerable concept that a person who has invested years of insurance premiums to assure his medical care should receive the benefits of his thrift.   The tortfeasor should not garner the benefits of his victim's providence.

“The collateral source rule expresses a policy judgment in favor of encouraging citizens to purchase and maintain insurance for personal injuries and for other eventualities.   Courts consider insurance a form of investment, the benefits of which become payable without respect to any other possible source of funds.   If we were to permit a tortfeasor to mitigate damages with payments from plaintiff's insurance, plaintiff would be in a position inferior to that of having bought no insurance, because his payment of premiums would have earned no benefit.   Defendant should not be able to avoid payment of full compensation for the injury inflicted merely because the victim has had the foresight to provide himself with insurance.”  (Id. at pp. 9-10, 84 Cal.Rptr. 173, 465 P.2d 61, fn. omitted.)

The court rejected the argument that application of the collateral source rule would provide the plaintiff with a “double recovery” or windfall, noting that “insurance policies increasingly provide for either subrogation or refund of benefits upon a tort recovery.”  (Id. at p. 10, 84 Cal.Rptr. 173, 465 P.2d 61.)   The court noted that application of the collateral source rule does not require the tortfeasor “to pay doubly for his wrong.”  (Id. at p. 11, fn. 15, 84 Cal.Rptr. 173, 465 P.2d 61.)   The court concluded:

“We therefore reaffirm our adherence to the collateral source rule in tort cases in which the plaintiff has been compensated by an independent collateral source-such as insurance, pension, continued wages, or disability payments-for which he had actually or constructively ․ paid or in cases in which the collateral source would be recompensed from the tort recovery through subrogation, refund of benefits, or some other arrangement.   Hence, we conclude that in a case in which a tort victim has received partial compensation from medical insurance coverage entirely independent of the tortfeasor the trial court properly followed the collateral source rule and foreclosed defendant from mitigating damages by means of the collateral payments.”  (Id. at pp. 13-14, 84 Cal.Rptr. 173, 465 P.2d 61.)

The court in Philip Chang & Sons Associates v. La Casa Novato (1986) 177 Cal.App.3d 159, 222 Cal.Rptr. 800 dismissed a tortfeasor's contention that the collateral source rule should not apply because it would allow the plaintiff to receive a windfall.   It stated at page 170, 84 Cal.Rptr. 173:

“[T]he real issue is not whether a windfall is to be conferred upon either party, but rather which party shall receive the benefit of a windfall which presumably already exists.   As between the insured plaintiff and the tortfeasor, it would seem that justice compels the conclusion the former's claim is the better.  [Citation.]  In any event, it is clear the possibility of a double recovery in favor of [plaintiff] will not impose a double burden on [defendant];  [defendant], as tortfeasor, bears responsibility only for the single burden of his wrong.”

In Shaffer v. Debbas (1993) 17 Cal.App.4th 33, 40, 21 Cal.Rptr.2d 110, the court affirmed the trial court's application of the collateral source rule and stated that a contrary rule “would result in a substantial windfall to those parties principally responsible for a plaintiff's [loss].”

 We conclude that the reasoning in support of the collateral source rule in tort law is similar to our reasoning that section 1202.4 restitution should not be precluded when a victim has insurance coverage for medical expenses created as a result of a defendant's criminal conduct.   Under section 1202.4, as in tort law, a wrongdoer should be held accountable for and bear the costs of the loss the wrongdoer has caused and not be allowed to avoid bearing those costs if the victim's insurance covers all or part of the victim's losses.   The wrongdoer should not receive a windfall and avoid personal accountability because a victim purchased insurance coverage for the victim's losses.   To the extent a victim may receive a double recovery or windfall, we believe it is appropriate for the victim, not the wrongdoer, to receive that windfall.   Furthermore, section 1202.4, subdivision (g) expressly states that the amount of restitution “shall not be affected by the indemnification or subrogation rights of third parties [e.g., insurance companies].”   As noted by the Helfend court, most insurance policies today preclude double recoveries by their insureds because of express subrogation provisions or rights.  (Helfend v. Southern Cal. Rapid Transit Dist., supra, 2 Cal.3d at pp. 10-11, 84 Cal.Rptr. 173, 465 P.2d 61.)   Sullivan therefore must be held accountable for the medical expenses and other economic losses Keller suffered as a result of Sullivan's criminal conduct despite insurance payments toward medical expenses.   The trial court properly ordered Sullivan to make section 1202.4 restitution to Keller for Keller's medical expenses.

D

Our interpretation of section 1202.4 is similar to the court's interpretation of that section in People v. Dalvito (1997) 56 Cal.App.4th 557, 65 Cal.Rptr.2d 679.   The Dalvito court held that section 1202.4 restitution as a condition of probation was properly ordered by the trial court where the victim's loss-the amount he owed on the necklace stolen from him-had been discharged in bankruptcy.  (Id. at pp. 558-559, 562, 65 Cal.Rptr.2d 679.)   The court rejected the defendant's contention that the victim suffered no “economic loss,” stating:

“There is no question that Dorf was the victim of defendant's theft of the necklace and that Dorf suffered an economic loss in a determined amount.   [Citation.]  Defendant stole a necklace from Dorf, for which Dorf paid $15,950, and that is the measure of the economic loss by Dorf. [Citation.]  The restitution for this amount was ordered as part of defendant's criminal penalties.   Whatever actions were taken by the victim of defendant's crime in civil courts in order to mitigate the damage caused by defendant cannot be a subject for our interference.   Under section 1202.4 the amount of restitution shall not be affected by the indemnification or subrogation rights of any third party.  [Citation.]”  (Id. at p. 561, 65 Cal.Rptr.2d 679.)

The Dalvito court also rejected the defendant's argument that the victim would receive a windfall if the court ordered restitution:

“[D]efendant does not mention the windfall he would receive if relieved of the obligation to pay for the stolen necklace․  [W]e believe it would be an anomaly to create a scheme under which a defendant's responsibility to make restitution for property he has stolen would depend on whether or not the victim had chosen or been obliged to seek shelter in the ignominy of bankruptcy before the restitution hearing.”  (Id. at p. 562, 65 Cal.Rptr.2d 679.)

Like the court in Dalvito, we believe it would be an “anomaly” to exempt Sullivan from making restitution for a loss he caused, merely because his victim was insured for the loss.  (Ibid.)

II

The Trial Court Properly Ordered Section 1202.4 Restitution for Psychiatric Medical Expenses

Sullivan contends the trial court erred by ordering him to make section 1202.4 restitution to Lindsey's mother for her psychiatric medical expenses.

Lindsey's mother incurred out-of-pocket psychiatric expenses of $220 for doctor's visits and $65 for prescriptions.   Sullivan asserts that these expenses were “noneconomic losses for psychological harm” and therefore are not covered by section 1202.4 in effect in November 1995.   He argues that restitution orders for noneconomic losses for psychological harm were not authorized by section 1202.4 until January 1, 1997, and then only “for felony violations of [s]ection 288.” 6

 Contrary to Sullivan's contention, the money Lindsey's mother expended for psychiatric medical costs cannot be classified as noneconomic losses.   Her out-of-pocket medical expenses are economic losses, which are not different from nonpsychiatric medical expenses merely because they may have resulted from psychological harm.  Section 1202.4, in effect in November 1995 and at the time of Sullivan's sentencing in 1996, expressly authorized the trial court to order Sullivan to make restitution to Lindsey's mother for her economic losses;  her out-of-pocket psychiatric medical expenses qualify as economic losses for which the trial court could order restitution.

DISPOSITION

The judgment is affirmed.

FOOTNOTES

FN1. All statutory references are to the Penal Code unless otherwise specified..  FN1. All statutory references are to the Penal Code unless otherwise specified.

2.   A detailed description of the incident is unnecessary because Sullivan appeals only the restitution order.

3.   Lindsey's mother incurred psychiatric medical expenses consisting of copayments of $220 for doctor's visits and $65 for prescriptions.   Although Lindsey's mother's insurance company apparently paid amounts in addition to the $285 paid directly by Lindsey's mother, the trial court did not award her any additional amount because no evidence was submitted showing the amount of payments by her insurance company.

4.   Effective January 1, 1997, additional amendments to section 1202.4 were made.  (Stats.1996, ch. 629, § 3, No. 9 West's Cal. Legis.   Service, pp. 2865-2867.)   All future references to section 1202.4 in this opinion are to the version of section 1202.4, effective August 3, 1995, as quoted ante, unless otherwise specified.

5.   This issue is before the California Supreme Court in People v. Birkett (S062379, review granted September 3, 1997).

6.   Effective January 1, 1997, section 1202.4, subdivision (f)(3)(E) was added to authorize restitution orders for “[n]oneconomic losses, including, but not limited to, psychological harm, for felony violations of Section 288.”  (Stats.1996, ch. 629, § 3, No. 9 West's Cal. Legis.   Service, pp. 2865-2867.)

McDONALD, Associate Justice.

BENKE, Acting P.J., and HALLER, J., concur.

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