Opinion
G051679 c/w G052824
03-29-2018
THE PEOPLE, Plaintiff and Appellant, v. ROY C. DICKSON, MARIA DEJESUS LICEA ROSALES, PANCHA KEOPHIMPHONE, SUE NANDA, WILLIAM WILSON HAMPTON, NGOC TRANG HUYNH, ROSALINDA RODRIGUEZ LANDON, MICHAEL CHEELUEN CHAN, OLGA LILIA TOSCANA, THUY THU HUYNH, NICHOLAS VU, AMANDA PHUC TRAN, TAM VU PHAM, HUONG THIEN NGO, HENRY TRUONG, LAN THI NGUYEN, DEE FRANCIS, ANDREW ROBERT HARNEN, Defendants and Respondents.
Joanna Rehm, under appointment by the Court of Appeal, for Defendant and Respondent Roy C. Dickson. Rex Williams, under appointment by the Court of Appeal, for Defendant and Respondent Dee Frances. Thea Greenhalgh and Patricia Ihara, under appointments by the Court of Appeal, for Defendant and Respondent Pancha Keophimphone. Barbara Smith, under appointment by the Court of Appeal, for Defendant and Respondent Sue Nanda. Leonard Klaif, under appointment by the Court of Appeal, for Defendant and Respondent William Hampton. Reed Webb, under appointment by the Court of Appeal, for Defendant and Respondent Ngoc Trang Huynh. Correen Ferrentino, under appointment by the Court of Appeal, for Defendant and Respondent Rosalinda Landon. Christopher Love, under appointment by the Court of Appeal, for Defendant and Respondent Michael Chan. Kenneth Nordin, under appointment by the Court of Appeal, for Defendant and Respondent Maria Rosales. Jeanine Strong, under appointment by the Court of Appeal, for Defendant and Respondent Olga Toscano. Jared Grant Coleman, under appointment by the Court of Appeal, for Defendant and Respondent Thuy Huynh. Marta I. Stanton, under appointment by the Court of Appeal, for Defendant and Respondent. Robert Angres, under appointment by the Court of Appeal, for Defendant and Respondent Amanda Tran. Richard Fitzer, under appointment by the Court of Appeal, for Defendant and Respondent Tam Pham. Valerie G. Wass, under appointment by the Court of Appeal, for Defendant and Respondent Huong Ngo. John Schuck, under appointment by the Court of Appeal, for Defendant and Respondent Henry Truong. Randall Conner, under appointment by the Court of Appeal, for Defendant and Respondent Lan Thi Nguyen. Forest M. Wilkerson, under appointment by the Court of Appeal, for Defendant and Respondent Andrew Harnen. Tony Rackauckas, District Attorney, Stephan Sauer and William Lawrence Overton, Deputy District Attorneys, for Plaintiff and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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. Nos. 08ZF0025, 05CF1869 & 04CF2197) OPINION Appeal from a postjudgment order of the Superior Court of Orange County, Thomas M. Goethals, Judge. Affirmed as modified. Appeal as to Respondent Roy C. Dickson dismissed. Joanna Rehm, under appointment by the Court of Appeal, for Defendant and Respondent Roy C. Dickson. Rex Williams, under appointment by the Court of Appeal, for Defendant and Respondent Dee Frances. Thea Greenhalgh and Patricia Ihara, under appointments by the Court of Appeal, for Defendant and Respondent Pancha Keophimphone. Barbara Smith, under appointment by the Court of Appeal, for Defendant and Respondent Sue Nanda. Leonard Klaif, under appointment by the Court of Appeal, for Defendant and Respondent William Hampton. Reed Webb, under appointment by the Court of Appeal, for Defendant and Respondent Ngoc Trang Huynh. Correen Ferrentino, under appointment by the Court of Appeal, for Defendant and Respondent Rosalinda Landon. Christopher Love, under appointment by the Court of Appeal, for Defendant and Respondent Michael Chan. Kenneth Nordin, under appointment by the Court of Appeal, for Defendant and Respondent Maria Rosales. Jeanine Strong, under appointment by the Court of Appeal, for Defendant and Respondent Olga Toscano. Jared Grant Coleman, under appointment by the Court of Appeal, for Defendant and Respondent Thuy Huynh. Marta I. Stanton, under appointment by the Court of Appeal, for Defendant and Respondent. Robert Angres, under appointment by the Court of Appeal, for Defendant and Respondent Amanda Tran. Richard Fitzer, under appointment by the Court of Appeal, for Defendant and Respondent Tam Pham. Valerie G. Wass, under appointment by the Court of Appeal, for Defendant and Respondent Huong Ngo. John Schuck, under appointment by the Court of Appeal, for Defendant and Respondent Henry Truong. Randall Conner, under appointment by the Court of Appeal, for Defendant and Respondent Lan Thi Nguyen. Forest M. Wilkerson, under appointment by the Court of Appeal, for Defendant and Respondent Andrew Harnen. Tony Rackauckas, District Attorney, Stephan Sauer and William Lawrence Overton, Deputy District Attorneys, for Plaintiff and Appellant.
* * *
The People appeal from the trial court's restitution order requiring the defendants to repay $16 million to insurance companies they defrauded over a two-year period in a medical billing scam. The district attorney argues the court abused its discretion in failing to set the restitution sum at more than $22 million as the full amount insurance companies paid on every claim submitted for health care at defendants' surgery centers during the two-year period — including by health care providers not involved in the scheme. Based on the trial court's finding there was "legitimate patient care mixed liberally with insurance fraud," the evidence amply supports the court's decision to award less than the $22.7 million the district attorney requested.
The district attorney also argues the trial court erred in declining to impose joint and several liability on the defendants and by failing to order that interest accrue on the restitution amount from the date of the individual insurance claim payments, in some cases more than a dozen years before the restitution hearing. As we explain, these contentions are without merit, but we modify (Pen. Code, § 1260) the underlying restitution order to expressly include 10 percent simple interest from the date of the restitution order, as required by law. As we also explain, the People's appeal as to respondent Roy C. Dickson is dismissed for failure to appeal from a final order.
I
FACTUAL AND PROCEDURAL BACKGROUND
The health care fraud underlying this case consisted of paying personnel at two Buena Park outpatient surgery centers to recruit and reimburse patients to undergo unnecessary medical procedures, and then billing the patients' insurance companies for the procedures. As reflected in the factual statements supporting the guilty pleas entered by many of the participants in the scheme, their fraudulent activities included "accepting compensation for the referral or procurement of patients (i.e. capping) as prohibited by California Insurance Code section 750" and "submit[ing] fraudulent insurance claims to insurance companies for . . . patients [treated] because they were compensated and not because they needed the treatment, as prohibited by California Insurance Code section 550(a)(1)." The patients induced to undergo treatment in this manner received "compensation . . . either in monetary payment or in dramatically reduced rates for cosmetic surgery," and the "cappers" or "marketers" who recruited the patients similarly "received a commission for each procedure . . . ."
As explained by one of the cappers, who were not medically trained, "I found insured patients willing to have unnecessary surgical procedures for money . . . . I had to ensure that my patients had insurance and I scheduled their surgical procedures, most often before they had even been seen by a doctor. As their recruiter, I helped the patients sign the surgery center forms, including affidavits which stated the patients had not received or been offered any compensation for being treated at the surgery centers. . . . I arranged for my patients' transportation to the surgery center and when necessary coached them so they knew the right symptoms for the procedures I had scheduled."
According to another capper, the "most common procedures performed were colonoscopies and [unspecified] EGDs," but two of the doctors involved in the scheme admitted performing significant gynecological or thoracic surgeries. Defendant Dr. Michael Cheeluen Chan, the medical director at the Unity Outpatient Surgery Center (Unity), explained in his plea documentation that he "performed invasive gynecological procedures (including D&C Laparoscopy, Tubali[]gation, Colporrhaphy and Hysterectomy) on 161 patients," none of whom "were referred by a doctor." Instead, he admitted "using cappers (aka 'marketers') to recruit patients from across the country who were compensated to submit to unnecessary outpatient surgical procedures which would then provide the basis for fraudulent claims against the patients' medical insurance providers."
Similarly, defendant Dr. William Wilson Hampton, Jr., admitted he performed "thoracic sympathectomies (known as the sweaty palms procedure) on 157" of 180 patients he operated on at Unity, and he knew an unspecified number, but apparently a large majority of these patients, had been "recruited by 'marketers' known to me as Henry, Olga, Sue, Maria, Pancha, Thuy, Johnny, and Amanda." Hampton "knew the surgery centers compensated these 'marketers' to induce them to recruit and refer patients to them so they could process, present, and negotiate claims under the patients' insurance policies."
Defendant Tam Vu Pham, whom the trial court later identified at the restitution hearing as the "mastermind" behind the fraud, described the massive scope of the scheme in entering his guilty plea, as follows. "[A]s the on-site manager for both the Unity Outpatient Surgery Center and the St. Paul Outpatient Surgery Center and their related billing companies, I personally oversaw the submission of well over $90,000,000.00 in fraudulent insurance claims for patients treated at these two facilities." Illustrating a portion of these billings, Pham explained that at the time of his plea, "[o]ver $27,000,000.00 was billed to Blue Cross/Blue Shield," of which the insurance company paid $7.5 million, the Aetna insurance company paid $650,000 on $9 million in billings, and the State Compensation Insurance Fund paid $3,900 on $600,000 billed to it.
The fraud at the surgery centers was so extensive it comprised more than half the patient volume. Based on his "principal role . . . oversee[ing] insurance company billing," Pham admitted, "I knew that well over half the patients treated at these centers had been brought [there] not because they needed medical treatment, but because they received a benefit for each procedure performed on them," including "either a cash payment or cosmetic surgery they received . . . for free or at a reduced rate."
Pham identified other leaders in the scheme, including defendant Dee Francis, the Unity "administrator/owner principally responsible for recruiting doctors and also for managing the marketers," defendant Rosalinda Landon, "another administrator/owner . . . responsible for recruiting and managing the marketers," and Pham's wife, defendant Huong Ngo, who, together with Unity's attorney, defendant Roy Chester Dickson, engaged in money laundering offenses to transfer and conceal the ill-gotten funds. Ngo's aunt, defendant Lan Thi Ngoc Nguyen, admitted she similarly helped Ngo and Pham "hide their illicit profits," including by "purchasing property with the surgery center proceeds [and] allowing them to use my name to hide their involvement in this scheme." Defendant Andrew Harnen also played a significant role in the fraud, admitting he knew as Unity's controller that "the[] cappers were unlawfully recruiting patients who then underwent unnecessary medical procedures."
The cappers or marketers included defendants Maria De Jesus Rosales, Olga Lilia Toscano, Sue Nanda, Henry Truong, Pancha Keophimphone, Thuy Huynh, Johnny Huynh, Amanda Tran, and Nicholas Vu. They typically signed "Agreements for Marketing & Transportation Services," which fraudulently stated, as Rosales explained in her plea, "that I was . . . paid on a monthly rate," rather than on a commission basis for each patient procedure.
Defendants committed their fraudulent activities over a two-year period between June 2002 and July 2004, followed by a lengthy investigation, extensive grand jury proceedings, and apparently a parallel federal prosecution. Between 2005 and 2012, multiple indictments against different groups of defendants charged the individuals in each grouping with more than 100 counts of various iterations of capping, insurance fraud, conspiracy, money laundering, tax fraud, and other offenses. In individual plea agreements entered between 2005 and 2013, each of the defendants pled guilty to at least some of the offenses, acknowledging restitution would be determined at a later date. Defendants' sentencing terms ranged from suspended prison sentences, with jail and probation terms, to 16 years in prison. A group of defendants elected to go to trial on the tax counts against them and, following their conviction in a jury trial, a panel of this court upheld the verdicts. (People v. Francis (Aug. 26, 2015, G047819) [nonpub. opn.].)
The trial court informally consolidated the different cases for a global restitution hearing in December 2014. The parties had begun filing restitution briefs in their separate cases in 2013 and continued to file briefs, supplemental briefs, and reply briefs before and after the restitution hearing. In all, the trial court considered dozens of briefs, probation reports and updates, plea agreements, and the transcripts of the grand jury proceedings in which the prosecutor laid out the case against the defendants.
The district attorney has not included the grand jury transcripts in the record on appeal.
Lisa Diller, a forensic accountant at the district attorney's office, testified as the only witness at the restitution hearing. Tasked with "conduct[ing] an investigation concerning as series of medical centers . . . collectively . . . referred to as Unity," Diller reviewed between 1.5 and 2 million documents obtained from the surgery centers, their banks, and from suspects' homes. The documents included "medical files, paid claim files, unpaid claims file[s], Unity's database, marketer files, . . . surgery logs . . . list[ing] dates of surgery and dollar amounts, as well as bank records." As Diller explained, Unity kept detailed records on the claims it submitted to insurers for payment, including "notebooks that were kept after a claim was paid" and "boxes of unpaid claim forms for when a procedure hadn't been yet paid." The paid claim files typically included "a photocopy of the claim form, and behind that was a photocopy of the explanation of benefits as well as a photocopy of the check and payment for that specific procedure." The unpaid claim files included "the . . . claim form as well as documentation of the phone calls that were made to the insurance companies trying to get payment, . . . additional documentation [in] many cases, [and] medical files that had been sent to the insurance companies in trying to get that claim paid."
In the 13 years she worked on the case, Diller compiled a detailed database of the information she reviewed. For the hearing, the district attorney asked Diller to summarize Unity's "total" insurance company "billings and payments" for "what we are referring to as the Unity time period, which is July 5th of 2002 through July 18th of 2004," corresponding with the period of alleged fraud. Diller testified that the gross amount "billed to the insurance companies" for procedures performed on 1,036 patients at Unity facilities during the two-year period totaled $117 million, of which the insurance companies paid $22.7 million.
Based on her "exhaustive" review of the records, Diller concluded the billings reflected procedures that Unity doctors actually performed, rather than fictitious billings. Diller explained her review as follows: "Basically I culled all the information I had," asking herself, "Now, do I have a medical record to show that this E.G.D. was actually performed? I went and looked for the medical record. Yes, the medical record says that. Do I have a paid claim file that supports this database number that this amount was billed and this amount was paid? Okay, if I do, then that supports this as well. [¶] And I went through that with each type of evidence that I had . . . in order to substantiate the fact that the procedure actually was performed on the date that was stated and that the specific dollar amount had been billed and paid." The medical documentation she reviewed included "in some cases an initial consultation," "operative reports," "anesthesia records," and "nurses' reports."
Diller emphasized that her tabulation of $22.7 million paid out by various insurance companies reflected "billings . . . and payments for the entire Unity time period"; in other words, the sum of "every single billing and payment" for "all procedures that occurred at Unity during this time period." (Italics added.) Phrased differently, the $117 million Unity billed insurance companies for procedures performed at its facilities represented 100 percent "of Unity's billing, the total billing for that two-year period
But Diller acknowledged not every doctor or medical provider at Unity's facilities participated in the fraud, and she gave no indication of the percentage that did. Diller did not "pull the patient files or billing of particular doctors," but instead included them all in her tabulation. On cross-examination, in response to the question, "[E]ven if the file that you reviewed showed billing from a person who was not of interest, that billing would still be included if it went through Unity in the billing amount," Diller affirmed, "Yes. This includes everything."
Nor did Diller attempt to correlate the patients known to have been recruited by marketers with the 1,036 total patients treated at Unity during the two-year period. Diller testified she reviewed Unity's detailed "marketer files [that] kept track by each individual marketer" of "dates of service, patient name, what procedure they were going to have, I believe the name of the doctor who performed the procedure, as well as the dollar amount that the marketer expected to be paid for that procedure." Similarly, the claim forms Unity submitted to the insurance companies for payment included each "patient name, date of service, the insurance company that the claim is billed to, and the dollar amount of the claim." But Diller did not testify she cross-referenced Unity's insurance claims with the patient names and dates of service in the marketer files to compile a billing or payment figure attributable solely to capping and insurance fraud, as reflected in the marketer files. Instead, she included in the total $117 million billed and $22.7 million paid by the insurance companies "every patient that I could find documentation for" in the two-year period.
Diller's analysis did not "involve any determination or formulation of any opinion about how many of the performed procedures were medically necessary" because, as she acknowledged, she was not "in a position with [her] background, training, and experience to make that call."
The district attorney sought more than $20 million in restitution on behalf of the defrauded insurance companies as the total amount they paid on Unity insurance claims in the applicable two-year period. In a detailed order after the hearing, the trial court limited aggregate restitution to $16 million. The court explained, "The figure is based upon this court's finding that roughly seventy five percent of the amounts paid out by the victim insurance companies were related to criminal activity on the part of these defendants."
The trial court rejected the district attorney's claim that "'every procedure at Unity can conclusively be presumed fraudulent,'" explaining, "This court respectfully disagrees . . . and finds that payment by a health insurance carrier to a medical services provider for a necessary medical procedure does not constitute an 'economic loss' for restitution purposes. Health insurance companies receive premiums in return for their agreement to pay at least a contractually required portion of the cost of their insureds' legitimate medical treatment." Concluding "that in this case there was legitimate patient care mixed liberally with insurance fraud," the court confronted the difficulty, "based on the record, [of] distinguish[ing] one from the other for restitution purposes."
As a guiding principle, the trial court observed, "It is clear . . . that the People bear the burden of proving the basis for any claimed restitution by a preponderance of the evidence [citation]." The court also recognized crime victims' state constitutional right to restitution and that "no defendant should be unjustly enriched as a result of his or her criminal misconduct," while balancing considerations precluding "a financial windfall" to victims in the form of restitution for insurance company payouts "generat[ing] no 'economic loss' . . . because such payment was necessary and appropriate under the terms of the patient's insurance policy."
The trial court also turned to the factual record, having "spent many years dealing with all aspects of this case." In particular, the court noted: "It has read and reread the entire grand jury proceeding. It has ruled on a variety of motions. It has engaged in protracted plea negotiations and read numerous reports from the Orange County Probation Department. It presided over a trial involving four of the defendants that lasted several months. It has evaluated all of the evidence presented during the formal restitution hearing." "As a result of this entire exposure," the court concluded "that certain procedures performed and billed for were medically necessary and others were not," and that while "[e]vidence is sparse as to which were which," on the record as a whole, "roughly" 75 percent of the insurance company payments on Unity billings "related to" the defendants' "criminal activities." Consequently, the court set restitution at $16 million, concluding, "in the exercise of its discretion . . . that this figure represents a fair approximation of the total 'economic losses' suffered b[ecause of] the defendants here."
The trial court allocated each defendant's restitution obligation according to his or her "proportional degree of responsibility." The court ordered Pham, the scheme's mastermind, to pay $10 million in restitution. The court ordered each of the two defendant doctors at the hearing, Chan and Hampton, to pay three million dollars in restitution, and tentatively ordered the same sum for a third doctor, Mario Rosenberg, who still awaited his sentencing hearing. The court ordered the nine cappers (see p. 6, fn. 1, ante) to pay $500,000 each in restitution, and imposed a $1 million restitution obligation on six defendants the court identified for their leadership roles in the scam (see p. 6, ante), including tentative restitution sums for Dickson and Harnen, whose sentences were stayed pending appeal or otherwise had not been finalized.
The trial court recognized that the sum of the individual restitution orders extended into "the mid twent[y]" millions, which was greater than the victims' established $16 million economic loss. The court explained at a hearing following its earlier tentative restitution order, which also set an aggregate restitution ceiling of $16 million, that it was attempting to ensure restitution for the victims' actual losses while also accounting for the defendants' respective individual culpability, in which no defendant caused the full $16 million loss. The court also sought to ensure full restitution despite the practical reality that many of the defendants effectively were judgment proof. As the court explained to one attorney at the hearing, "I didn't make your client liable for $16,000,000 worth of restitution," but rather "made rulings as to each defendant that I thought were representative of the degree of liability of the individual defendants and their level of culpability." Accordingly, the court declined to order joint and several liability because its "intention [i]s to make it possible to collect up to the maximum amount indicated for each defendant . . . ."
The trial court similarly explained that "the insurance companies cannot receive a windfall by getting the maximum amount from everybody"; instead, the court explicitly stated it "intend[s] the aggregate total not to exceed $16,000,000." Consequently, if the victims recovered that amount "from three defendants, that's it," but the court did not preclude the defendants from seeking proportional contribution from each other based on amounts they paid, while relieving the victims of that process. In rejecting claims by several defendants of "significant economic[/]financial issues," the court observed "practically" that "whether or not the order means anything as to certain defendants with respect to the possibility of collection is a completely different issue." The court left open the possibility that "once this order becomes final, [if] any individual defendant feels that the result of the order would create a manifest injustice as to that defendant for some reason that I cannot perhaps foresee at this moment, I do not preclude the possibility of any counsel notifying the People and coming back to express . . . why they feel I should modify their individual client's restitution obligation somewhere down the road."
The trial court entered final restitution orders for all but one of the defendants at the time the People filed its appeal, to which we now turn.
II
DISCUSSION
A. Dismissal of Appeal as to Respondent Dickson
As a preliminary matter, we address the appeal as it relates to defendant and respondent Dickson, for whom the People have not appealed from a final restitution order. As noted above, the restitution order appealed by the People states as to Dickson that he is "tentatively ordered to pay $1 million in victim restitution." While the tentative nature of the order similarly was true for defendant and respondent Harnen and defendant Rosenberg, the People separately appealed the subsequent final order entered as to Harnen (G052864), which we consolidated with this appeal. To our knowledge, the People have not appealed from a final restitution order entered as to Rosenberg, if any.
The district attorney suggests the trial court "orally made final its order and findings regarding Dickson's restitution obligation" when it entered its written ruling, but the record does not bear out the claim, with no mention of Dickson at the cited page numbers. The district attorney also argues the appeal as to Dickson is proper because "the People may appeal a judgment made by a trial court that affects a substantial right of the People," citing Penal Code section 1238, subdivision (a)(5). But neither that section nor any other authority provides for an appeal from tentative rulings. To the contrary, an appeal may be taken only from final judgments or orders precisely because, until the ruling is final, it has not affected the substantial rights of the parties. (§§ 1237, 1238; see People v. Hatt (2018) 20 Cal.App.5th 321, 324 ["A tentative ruling is, by definition, not final"].) We therefore dismiss the appeal as to respondent Dickson. B. Governing Restitution Principles and Standard of Review
All further undesignated statutory references are to the Penal Code.
On the merits, the People challenge the amount of restitution the trial court ordered, its decision not to impose joint and several liability, and the omission of interest accruing on the restitution amount, which the People assert should run from when the victims paid claims, as early as 2002. We set out the applicable law and standard of review governing restitution orders, and then address each of these contentions in turn.
A crime victim has the right to restitution for losses caused by the defendant. (Cal. Const., art. I, § 28, subd. (b)(13)(A) & (B); People v. Giordano (2007) 42 Cal.4th 644, 652 (Giordano).) A corporation may be a direct victim of a crime entitled to restitution. (§ 1202.4, subd. (k)(2).) "[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 victims in an amount established by court order . . . ." (§ 1202.4, subd. (f).) "To the extent possible, the restitution order . . . shall be of a dollar amount that is sufficient to fully reimburse the victim or victims for every determined economic loss incurred as a result of the defendant's criminal conduct[.]" (Id., subd. (f)(3).)
"The burden is on the party seeking restitution to provide an adequate factual basis for the claim." (Giordano, supra, 42 Cal.4th at p. 664; People v. Sy (2014) 223 Cal.App.4th 44, 63.) "A restitution order is intended to compensate the victim for its actual loss and is not intended to provide the victim with a windfall. [Citations.] While the court need not order restitution in the precise amount of loss, it 'must use a rational method that could reasonably be said to make the victim whole, and may not make an order which is arbitrary or capricious.' [Citations.]" (People v. Chappelone (2010) 183 Cal.App.4th 1159, 1172-1173 (Chappelone).)
We review a trial court's restitution order under the deferential abuse of discretion standard. (People v. Santori (2015) 243 Cal.App.4th 122, 126 [appellate court must presume lower court's ruling is correct, applying all presumptions to support it unless error is affirmatively shown].) "'"'An appellate tribunal is neither authorized nor warranted in substituting its judgment for the judgment of the trial judge'"'" (People v. Carmony (2004) 33 Cal.4th 367, 377 (Carmony).) "'The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason'" (In re Stephanie M. (1994) 7 Cal.4th 295, 318-319; People v. Hove (1999) 76 Cal.App.4th 1266, 1275 (Hove)), rendering a "decision . . . so irrational or arbitrary that no reasonable person could agree with it." (Carmony, at p. 377.) "'"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 by the reviewing court."' [Citations.]" (In re Johnny M. (2002) 100 Cal.App.4th 1128, 1132.) C. Amount of Restitution
The district attorney contends the trial court erred in finding the victim insurance companies were entitled only to $16 million in restitution, rather than the full sum exceeding $20 million they paid on Unity's insurance billings during the period of fraudulent activity, as Diller identified in her testimony. There is no dispute that insurance companies induced by fraud "to make payments they otherwise would not have made" are entitled to restitution on those amounts. (People v. Busser (2010) 186 Cal.App.4th 1503, 1509.) But a victim's proper measure of restitution does not necessarily include every dollar it parts with, but instead is calculated "by subtracting the amount [it] would have paid had no acts of fraud occurred." (People v. Crow (1993) 6 Cal.4th 952, 961-962 (Crow).)
The district attorney's basic premise on appeal in challenging the amount of restitution is mistaken. The district attorney contends the trial court was required to order $22.7 million in restitution as the full amount paid on Unity's billings because "the evidence presented at the restitution hearing did not include all claims submitted by the respondents to victim insurance companies but [instead] focused solely on those claims where Diller found evidence that cappers or patients were paid for the procedure billed . . . ." (Italics added.) Not so. The district attorney's contention is contrary to the plain evidence below and the standard of review.
Diller expressly admitted she did not restrict her summary of Unity's paid insurance claims to those that were "the product of capping." In response to the question, "[I]n the context of preparing your summary, did you take into account those procedures that were from your view either the product of capping, meaning a patient came from a referral by a marketer or capper who was paid for . . . provi[ding] that patient, or a payment to those patients," Diller stated, "That is not included in this summary." To the contrary, her testimony reflected 100 percent "of Unity's billing, the total billing for that two-year period," and therefore, her tabulation of $22.7 million the various insurance companies paid out arose from "every single billing and payment" for "all procedures that occurred at Unity during this time period." (Italics added.)
Nor did Diller restrict her calculation to procedures performed by doctors implicated in the fraud. She did not "pull the patient files or billing of particular doctors," but instead included them all in arriving at the total sum the insurance companies paid out on Unity claims. She frankly acknowledged this total "include[d] everything, "even if the file that [she] reviewed showed billing from a person who was not of interest, that billing would still be included if it went through Unity in the billing amount." In light of Diller's admissions, the trial court reasonably could conclude the district attorney did not make a prima facie case for restitution at the full billing figure exceeding $20 million because that sum included amounts not attributable to fraud.
On appeal, we must view the record in the light most favorable to the judgment below. (People v. Elliot (2005) 37 Cal.4th 453, 466.) Because an appellate court must "give due deference to the trier of fact and not retry the case ourselves," an appellant challenging the sufficiency of the evidence "bears an enormous burden." (People v. Sanchez (2003) 113 Cal.App.4th 325, 330 (Sanchez).)
Here, the evidence amply supported the trial court's conclusion the insurance companies were not entitled to restitution for all claims paid during the applicable period because not every claim was the product of fraud. Instead, as the court explained, "there was legitimate patient care mixed liberally with insurance fraud." The court acknowledged the "[e]vidence is sparse at best as to which w[as] which." But Diller's admission her figures included billing and payment amounts for Unity physicians not engaged in fraud and for procedures she did not limit — despite access to the marketers' detailed files — to capping activity supports the court's decision not to award the full amount the district attorney sought.
Indeed, the trial court as the trier of fact was entitled to regard the district attorney's request for purportedly "full" restitution with skepticism where, at the People's request, Diller did not correlate the patients known to have been recruited by marketers with the 1,036 total patients treated at Unity during the relevant time frame. Though she reviewed and recorded in a database all the information in Unity's "marketer files, which kept track by each individual marketer" of "dates of service, patient name, what procedure they were going to have, I believe the name of the doctor who performed the procedure, as well as the dollar amount that the marketer expected to be paid for that procedure," she did not cross-reference this information with Unity's insurance claims to compile billing or payment figures attributable solely to capping and insurance fraud. To the contrary, Diller testified she "was asked to summarize for this [hearing] the total facility's fees, billings, and payments for the entire Unity time period." (Italics added.)
Pham, as the scheme's mastermind, admitted in his plea agreement that the fraud at the Unity surgery centers touched more than half the patient volume. In its discretion, the trial court may have decided to render a Solomonic decision, splitting the difference between the vague "well over half" figure Pham suggested as the scope of the billing fraud and the district attorney's unsupported request for restitution at 100 percent of all Unity claims. The court set the restitution sum at "roughly seventy five percent of the amounts paid out by the victim insurance companies." Because it was the trial court's exclusive province to weigh the evidence, assess credibility, and resolve conflicts in the testimony (Sanchez, supra, 113 Cal.App.4th at p. 330), and Pham's plea alone supports the court's restitution percentage, there is no merit to the district attorney's challenge to the restitution amount.
Moreover, well-established appellate principles preclude reversing the trial court's $16 million restitution figure on the record presented. As noted, we must presume the ruling is correct and indulge in all presumptions in favor of correctness, but additionally "the appellant bears the burden of providing an adequate record affirmatively proving error." (Fladeboe v. American Isuzu Motors, Inc. (2007) 150 Cal.App.4th 42, 58 [requirement is "natural and logical corollary" to appellate court's limited role].)
Here, the trial court explicitly noted in making its ruling that it "read and reread the entire grand jury proceeding," and the district attorney cited those proceedings extensively in briefing the restitution issue, but does not include that material in the record on appeal. As appellate courts routinely observe, "To the extent the court relied on documents not before us, our review is hampered. We cannot presume error from an incomplete record." (Christie v. Kimball (2012) 202 Cal.App.4th 1407, 1412.) To the contrary, the standard of review requires that we infer any gaps in the record support the ruling. "'"[I]f any matters could have been presented to the court below which would have authorized the order complained of, it will be presumed that such matters were presented."' [Citation.]" (Foust v. San Jose Construction Co., Inc. (2011) 198 Cal.App.4th 181, 187; Estate of Fain (1999) 75 Cal.App.4th 973, 992 ["it is presumed that the unreported trial testimony would demonstrate the absence of error"].) For all we know and must assume, the grand jury proceedings provided incontrovertible evidence Unity fraudulently billed on three out of every four insurance claims it submitted, at a rate of roughly 75 percent.
In any event, the record as presented does not support the district attorney's claim the trial court found "insurance companies should be treated differently, in terms of restitution," than other crime victims "because they receive payments in the form of a 'premium' for their insurance protection." The court made no finding treating insurance companies differently from other crime victims. The court properly tied its observations regarding premiums to an insurer's "agreement to pay at least a contractually required portion of the cost of their insureds' legitimate medical treatment." (Italics added.) As discussed, the court rejected the district attorney's assertion that "'every procedure at Unity can conclusively be presumed fraudulent,'" found "there was legitimate patient care mixed liberally with insurance fraud," and set restitution at "roughly" 75 percent "of the amounts paid out" because that sum "related to criminal activity on the part of these defendants." At a minimum, Pham's plea and Diller's testimony supported these findings and, like other crime victims, the insurance companies were entitled to restitution for amounts they paid due to fraud, but no more. (Crow, supra, 6 Cal.4th at pp. 961-962.)
Nor does the record support the district attorney's claim the trial court abused its discretion in reducing restitution from full reimbursement to a lesser sum "based upon respondents' inability to pay." The fact the court did not award restitution in the amount the district attorney requested does not mean the court failed "to fully reimburse the victim or victims," but rather that the court "determined [the victims' actual] economic loss incurred as a result of the defendant's criminal conduct" was less than the district attorney sought. (Hove, supra, 76 Cal.App.4th at p. 1270; People v. Rowland (1997) 51 Cal.App.4th 1745, 1751 (Rowland) [amount ordered as full restitution rests in trial court's discretion].)
At the time of the restitution hearing, section 1202.4 provided: "The court shall order full restitution unless it finds compelling and extraordinary reasons for not doing so and states those reasons on the record. A defendant's inability to pay shall not be considered a compelling and extraordinary reason not to impose a restitution order, nor shall inability to pay be a consideration in determining the amount of a restitution order." (§ 1202.4, subd. (g), italics added; see People v. Harvest (2000) 84 Cal.App.4th 641, 650 [because restitution is limited to actual and demonstrated economic loss, it can hardly be condemned as excessive; it is a restorative civil remedy, not a criminal penalty].) We presume the trial court was aware of the governing law (Evid. Code, § 664), and the record demonstrates as much. The court recognized expressly in its ruling that its "obligation to issue restitution orders in favor of crime victims is mandatory even when defendants may lack the financial wherewithal to make any restitution payments." (Italics added.) Consequently, there is no merit to the district attorney's claim the court misunderstood or misapplied its discretion. D. Joint and Several Liability
The district attorney argues the trial court erred in failing to make each defendant jointly and severally liable for the $16 million restitution sum. The court instead imposed an individual restitution obligation on each defendant according to his or her "proportional degree of responsibility." As we explain, the court did not abuse its discretion. (See People v. Carbajal (1995) 10 Cal.4th 1114, 1125, fn. 11 [trial court afforded wide discretion in "how to fashion the amount and manner in which restitution is to be made"].)
Section 1202.4 "does not expressly authorize joint and several liability restitution orders, neither does it[] . . . prohibit such orders." (People v. Arnold (1994) 27 Cal.App.4th 1096, 1099.) Ample precedent recognizes courts may require joint and several restitution. (Ibid.; see, e.g., People v. Neely (2009) 176 Cal.App.4th 787, 800; People v. Blackburn (1999) 72 Cal.App.4th 1520, 1535; People v. Madrana (1997) 55 Cal.App.4th 1044, 1049, 1051-1052.) Joint and several liability can have the "'salutary purpose'" of helping a convicted defendant realize his or her responsibility to make the victim whole (People v. Zito (1992) 8 Cal.App.4th 736, 744 (Zito)); in any event, it "increases the likelihood that the victim will be fully compensated," "an important component of the restitution scheme." (Ibid.)
Restitution need not be exact (Chappelone, supra, 183 Cal.App.4th at pp. 1172-1173), but it generally traces the harm the defendant caused, requiring recompense "from the persons convicted of the crimes causing the losses [that victims] suffer." (Cal. Const., art. 1, § 28, subd. (b)(13)(A), italics added; People v. Birkett (1999) 21 Cal.4th 226, 246 [defendant "to make full restitution for all losses his crime had caused"].) Joint and several liability requires repayment of the victim's loss by all defendants contributing to the harm. "'Where two or more persons act in concert, it is well settled both in criminal and in civil cases that each will be liable for the entire result.' [Citation.]" (People v. Flores (1961) 197 Cal.App.2d 611, 616.) The restitution order is treated as a civil judgment (§ 1202.4, subd. (i)), and the defendant has the right to due process protections in the imposition and enforcement of the order. (E.g., id., subds. (f)(1), (j); Zito, supra, 8 Cal.App.4th at pp. 744-745.)
But where the defendant does not cause the victim's harm in a particular instance, joint and several liability does not apply. Thus, in People v. Leon (2004) 124 Cal.App.4th 620 (Leon), the trial court imposed joint and several restitution though the defendant was only involved in forging one check, while his codefendant forged three other checks from the same victim. (Id. at p. 622.) The Court of Appeal reversed, explaining the defendant could only be liable for the check he forged because nothing showed he aided and abetted his codefendant in forging the three other checks. (Ibid.) As the reviewing court explained, "the trial court was not authorized by section 1202.4 to order Leon to pay restitution for a crime he did not commit." (Ibid.)
Here, the trial court recognized joint and several liability often applies when several defendants unite to commit a crime together, as in the case of a bank robbery "committed by five people, and you got two gunmen inside and . . . a getaway driver [outside] and . . . two other people who are peripherally involved, and the gunmen steal a million dollars." In such instances, as the court explained, "[A]ll five of the defendants [can be found] responsible for restitution . . . for the whole amount." But here the court concluded "given the convoluted and complicated nature of this scheme" that individual restitution orders were more appropriate, "representative of the degree of liability of individual defendants and their level of culpability."
The trial court did not abuse its discretion. "'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 by the reviewing court.'" (People v. Mearns (2002) 97 Cal.App.4th 493, 499.) Rather than a single, large-scale robbery committed together by all the members of a criminal enterprise for a joint purpose, the individual capping offenses and fraudulent surgeries the marketers and physicians committed here were more like the discrete instances of check fraud committed in Leon. Each instance appears to have been motivated by individual greed, with the marketer files showing each capper expected a particular, identifiable sum for each particular, identifiable patient and procedure they arranged, without any right to share in the proceeds of the whole operation. The same appears to have been largely true of the two physicians' involvement, with each profiting according to the particular procedure he performed. The scheme, although convoluted and complicated, appears to have been a series of discrete frauds perpetrated on varying insurance company victims. It was as if different combinations of individual defendants committed a slew of robberies over the two-year period, sometimes joining together with one or more defendants — but not others — to commit an offense. It does not appear any defendant participated in or aided and abetted each instance of capping or insurance fraud, nor engaged in the scheme for its whole duration.
The district attorney sought a blanket joint and several restitution award against all the defendants, including the marketers and physicians, but had a stronger case against leaders like Pham. Many (but not all) of the defendants the trial court identified as leaders did engage in profit-sharing, forming fictitious billing companies to cloak the scope of so many billings originating at one or two surgery centers. Indeed, some (but not all) of the leaders reaped percentage shares of the billing companies' profits, ranging from "4.65 %" to the 35 percent share Pham acknowledged "in the billing companies that by contract were responsible for . . . operating and managing the surgery centers."
Nevertheless, no defendant participated in every fraud. Nor did the district attorney allege as much, lodging particular claims against particular defendants as reflected in three separate indictments. The defendants' plea agreements appear to have been prompted by the evidence presented in the grand jury proceedings, and we must presume those proceedings, which the district attorney has omitted on appeal, support the trial court's restitution order. No defendant pled guilty to all of the hundreds of counts lodged against three different groupings of defendants in three indictments. Rather, each admitted participating in some counts, but not others, which supports the trial court's decision to impose individual rather than joint and several liability. (Leon, supra, 124 Cal.App.4th at p. 622.)
The charges against Pham illustrate the point. Even as the mastermind, Pham's participation appears from the charges against him to have been limited to the beginning period of the fraud, from June 2002 to April or October of 2003, depending on the operative instrument's specific allegations. He agreed in his plea to "restitution on all counts, even if any of these counts have been dismissed as part of the plea agreement," but his role apparently did not warrant charges for offenses committed in the latter third of the Unity billing period, extending into July 2004. The trial court therefore could not order Pham to pay the full $16 million restitution sum, which presumably included losses occurring over the full period of fraud. (People v. Lai (2006) 138 Cal.App.4th 1227, 1247; see People v. Woods (2008) 161 Cal.App.4th 1045, 1049 [restitution limited "to those losses arising out of the criminal activity that formed the basis of the conviction"].) Because the evidence did not establish the defendants acted in concert on each instance of fraud over the two-year period, a factual and rational basis supports the court's decision not to impose joint and several liability, and therefore the district attorney's challenge lacks merit. E. Interest
The People contend the trial court erred in failing to impose interest on the $16 million restitution sum, which the district attorney argues should have included preorder interest dating from the victim insurance companies' payments on Unity claims, up to 13 years before the court's restitution order. Section 1202.4 provides that "to fully reimburse the victim or victims for every determined economic loss" (id., subd. (f)(3)), 10 percent simple interest on the court's restitution award "accrues as of the date of sentencing or loss, as determined by the court" (id., subd. (f)(3)(G)) "[S]ection 1202.4, subdivision (f) creates a presumption [the] victim restitution loss should be ascertained at 'the time of sentencing,' subject to the trial court's discretion to ascertain the date of loss at another time." (People v. Pangan (2013) 213 Cal.App.4th 574, 581, fn. 7.) The time of sentencing is deemed to be "the time of the restitution order." (Ibid.)
Defendants argue the district attorney forfeited the challenge he now raises to the absence of an express order requiring interest. Alternatively, they argue any error was harmless because "[a] victim restitution order is enforceable as if it were a civil judgment," and "[c]ivil monetary judgments also accrue interest at 10 percent as a matter of law" from "the date of the entry of the judgment." (Citing Code Civ. Proc., § 685.020, subd. (a).) Defendants also explain the court acted within its discretion in declining to impose preorder interest.
Dickson joined in respondents' arguments concerning interest, including that no correction is required because the award automatically accrued 10 percent interest under civil law.
At the hearing on the trial court's tentative restitution order, the district attorney made no mention of interest, whether accruing before or from the date of the restitution award. Similarly, the district attorney's written response to the tentative order primarily challenged the restitution amount and advocated for joint and several liability, but made no mention of interest until the concluding sentence, requesting "interest at the rate of 10% from the date of the loss," but without providing any supporting facts, argument, or authority.
Because the decision whether to award preorder interest is necessarily fact-intensive and committed to the trial court's sound discretion (§ 1202.4, subd. (f)(3)(G)), and because the party seeking restitution bears the burden to support its claim (Giordano, supra, 42 Cal.4th at p. 664), we decline the district attorney's appellate bid for preorder interest. On the record presented and the district attorney's bare, unsupported claim below, we cannot say the trial court erred in denying preorder interest. We also decline defendants' request to leave the matter of interest to the vagaries of civil enforcement proceedings. There is no dispute the Legislature has expressly mandated the imposition of interest on every award of victim restitution. (§ 1202.4, subd. (f)(3) & (f)(3)(G); People v. Wickham (2014) 222 Cal.App.4th 232, 238.) An award without a required restitution element is invalid. (People v. Brown (2007) 147 Cal.App.4th 1213, 1225, fn. 7; Rowland, supra, 51 Cal.App.4th at p. 1751.) We therefore exercise our authority (§ 1260) to correct the underlying restitution order as a matter of law, including the subsequently entered order as to Harnen, to include 10 percent simple interest from the date the court entered each order. (§ 1202.4, subd. (f)(3)(G).)
III
DISPOSITION
The People's appeal as to respondent Roy C. Dickson is dismissed for failure to appeal from a final order. We correct (§ 1260) the underlying restitution order as to all other respondents to include 10 percent simple interest from the date the order was entered. (§ 1202.4, subd. (f)(3)(G).) As so modified, the order is affirmed.
ARONSON, J. WE CONCUR: O'LEARY, P. J. IKOLA, J.