The opinion
TO BE PUBLISHED IN THE OFFICIAL REPORTS
OFFICE OF THE ATTORNEY GENERAL
State of California
DANIEL E. LUNGREN
Attorney General
______________________________________
OPINION :
: No. 96-212
of :
: September 16, 1996
DANIEL E. LUNGREN :
Attorney General :
:
CLAYTON P. ROCHE :
Deputy Attorney General :
:
______________________________________________________________________________
THE HONORABLE CHUCK QUACKENBUSH, INSURANCE COMMISSIONER,
has requested an opinion on the following question:
May investigators employed in the fraud division of the Department of Insurance issue
administrative subpoenas to obtain evidence or testimony during criminal investigations being
conducted by the Department of Insurance?
CONCLUSION
Investigators employed in the fraud division of the Department of Insurance may issue
administrative subpoenas to obtain evidence or testimony during criminal investigations being
conducted by the Department of Insurance; however, if a person is compelled to testify after claiming
his privilege against self-incrimination, immunity from criminal prosecution must be granted
concerning the matter.
ANALYSIS
The Department of Insurance ("Department") is charged with enforcing laws
prohibiting insurance fraud. Section 1872 of the Insurance Code1 provides:
1
All references hereafter to the Insurance Code are by section number only.
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"There is created within the department a Bureau of Fraudulent Claims to
enforce the provisions of Section 1871.4 of this code, and Sections 549 and 550 of the
Penal Code, and to administer the provisions of Article 3 (commencing with Section
1873)."
"Section 1871.4" relates specifically to workers' compensation fraud, which it makes unlawful.
"Sections 549 and 550 of the Penal Code" cover all types of insurance fraud, making such acts
unlawful. "Article 3" ('' 1873-1873.4) concerns the reporting of insurance fraud to government
agencies.
The question presented for resolution concerns the powers of Department investigators
who are responsible for enforcing the insurance fraud statutes. May they issue subpoenas to obtain
evidence or testimony when conducting a criminal investigation? We conclude that they may;
however, immunity from criminal prosecution must be given to anyone whose testimony is compelled
after claiming his privilege against self-incrimination.
The two statutes requiring our analysis are sections 1872.3 and 12924. Section 1872.3
provides with respect to the Bureau of Fraudulent Claims:
"(a) If, by its own inquiries or as a result of complaints, the Bureau of
Fraudulent Claims has reason to believe that a person has engaged in, or is engaging in,
an act or practice that violates Section 1871.4 of this code, or Section 549 or 550 of the
Penal Code, the commissioner in his or her discretion (1) may make those public or
private investigations within or outside of this state that he or she deems necessary to
determine whether any person has violated or is about to violate any provision of
Section 1871.4 of this code, or Section 549 or 550 of the Penal Code, or to aid in the
enforcement of this chapter, and (2) may publish information concerning any violation
of this chapter or Section 550 of the Penal Code.
"(b) For purposes of any investigation under this section, the commissioner or
any officer designated by the commissioner may administer oaths and affirmations,
subpoena witnesses, compel their attendance, take evidence, and require the
production of any books, papers, correspondence, memoranda, agreements, or other
documents or records that the commissioner deems relevant or material to the inquiry,
as provided by Section 12924.
"(c) If any matter that the commissioner seeks to obtain by request is located
outside the state, the person so requested may make it available to the commissioner or
his or her representative to be examined at the place where it is located. The
commissioner may designate representatives, including officials of the state in which
the matter is located, to inspect the matter on his or her behalf, and he or she may
respond to similar requests from officials of other states.
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"(d) Except as provided in subdivision (e), the department's papers, documents,
reports, or evidence relative to the subject of an investigation under this section shall
not be subject to public inspection for so long a period as the commissioner deems
reasonably necessary to complete the investigation, to protect the person investigated
from unwarranted injury, or to serve the public interest. Furthermore, those papers,
documents, reports, or evidence shall not be subject to subpoena or subpoena duces
tecum until opened for public inspection by the commissioner, unless the commissioner
otherwise consents or, after notice to the commissioner and a hearing, the superior
court determines that the public interest and any ongoing investigation by the
commissioner would not be unnecessarily jeopardized by compliance with the
subpoena duces tecum.
"(e) The Bureau of Fraudulent Claims shall furnish all papers, documents,
reports, complaints, or other facts or evidence to any police, sheriff, or other law
enforcement agency, when so requested, and shall assist and cooperate with those law
enforcement agencies." (Italics added.)
Section 12924, incorporated by reference in subdivision (b) of section 1872.3, provides:
"(a) The commissioner may issue subpoenas and subpoenas duces tecum for
witnesses to attend, testify and produce documents before him, on any subject touching
insurance business, or in aid of his duties. Such process may be served, obeyed, and
enforced as provided in the Code of Civil Procedure for civil cases. A defaulting
witness may, upon application by the commissioner to the superior court, be required
by order of such court to appear before the commissioner to testify as the court may
order. The court may punish disobedience of its order as a contempt of court.
"All the provisions of the Code of Civil Procedure relating to means of
production of evidence shall be applicable to any hearing or investigation under this
section. The provisions of this subdivision shall not apply to proceedings required by
other provisions of this code to be conducted in accordance with Chapter 5
(commencing with Section 11500), Part l, Division 3, Title 2 of the Government Code.
"(b) A person shall not be excused from testifying or from producing any book,
document, or other thing under his control upon any such hearing or investigation on
the ground that his testimony, or the book, document, or other thing required of him,
may tend to incriminate him, or may have a tendency to subject him to punishment for
a felony or misdemeanor; but no individual shall be prosecuted or be subjected to
punishment for a felony or misdemeanor for or on account of any act, transaction,
matter or thing concerning which he is so compelled, after validly claiming his
privilege against self-incrimination, to testify or produce, except for perjury or
contempt committed in such testimony." (Italics added.)
In analyzing the provisions of sections 1872.3 and 12924, we apply well established
principles of statutory construction. "When interpreting a statute our primary task is to determine the
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Legislature's intent." (Freedom Newspapers, Inc. v. Orange County Employees Retirement System
(1993) 6 Cal.4th 821, 826.) "To determine the intent of legislation, we first consult the words
themselves, giving them their usual and ordinary meaning." (DaFonte v. Up-Right, Inc. (1992) 2
Cal.4th 593, 601.) When "`statutory language is . . . clear and unambiguous there is no need for
construction, and courts should not indulge in it.'" (Rojo v. Kliger (1990) 52 Cal.3d 65, 73.)
"`[C]ourts are no more at liberty to add provisions to what is therein declared in definite language than
they are to disregard any of its express provisions.'" (Wells Fargo Bank v. Superior Court (1991) 53
Cal.3d 1082, 1097.) "`[S]tatutes or statutory sections relating to the same subject must be harmonized,
both internally and with each other, to the extent possible.'" (Walnut Creek Manor v. Fair
Employment & Housing Com. (1991) 54 Cal.3d 245, 268.)
Applying these principles of statutory interpretation, we find that investigators
employed in the fraud division of the Department, when designated by the Insurance Commissioner
("Commissioner"), "may . . . subpoena witnesses . . . and require the production of any books, papers,
correspondence, memoranda, agreements, or other documents . . . ." (' 1872.3, subd. (b).)2 Obtaining
the evidence and testimony, however, must be "as provided by Section 12924." (Ibid.) Section
12924, subdivision (b), prohibits a person from being "prosecuted or . . . subjected to punishment
. . . for or on account of any act, transaction, matter or thing concerning which he is compelled . . . to
testify or produce . . . ."
Reading these two statutes together, therefore, we conclude that while the Department's
fraud investigators have the power to issue administrative subpoenas during a criminal investigation ('
1872.3, subd. (b)), the person subpoenaed receives what is known as "transactional immunity" ('
12924, subd. (b)). He or she may not be prosecuted on account of any act for which testimony is
compelled after claiming the privilege against self-incrimination. (See Pen. Code, '' 1324, 1324.1;
People v. Hunter (1989) 49 Cal.3d 957, 973, fn. 4; People v. Cooke (1993) 16 Cal.App.4th 1361, 1366;
People v. Campbell (1982) 137 Cal.App.3d 867, 873-875; Escamilla v. Superior Court (1969) 271
Cal.App.2d 730, 732-735.)
Sections 1872.3 and 12924 are similar to the general provisions found in the
Government Code concerning the issuance of administrative subpoenas. (See Gov. Code, ''
11180-11188; Brovelli v. Superior Court, supra, 56 Cal.2d at 529; People v. Pappalardo (1993) 12
Cal.App.4th 1723, 1730; Pinney v. Phillips (1991) 230 Cal.App.3d 1570, 1586-1588.) The
enforcement of administrative subpoenas has been examined in numerous contexts. (See United States
v. La Salle National Bank (1978) 437 U.S. 298; See v. City of Seattle (1967) 387 U.S. 541; Reisman v.
Caplin (1964) 375 U.S. 440; Parris v. Zolin (1996) 12 Cal.4th 839; People v. King (1967) 66 Cal.2d
633; Shively v. Stewart (1966) 65 Cal.2d 475; People ex rel. Franchise Tax Bd. v. Superior Court
(1985) 164 Cal.App.3d 526; Barnes v. Molino (1980) 103 Cal.App.3d 46; Board of Medical Quality
Assurance v. Gheradini (1979) 93 Cal.App.3d 669; Fielder v. Berkeley Properties Co. (1972) 23
2
We assume that the subpoena relates to an inquiry which the Department is authorized to make, seeks information
reasonably relevant to that inquiry, and is not too indefinite. (United States v. Morton Salt Co. (1950) 338 U.S. 632,
652-653; Brovelli v. Superior Court (1961) 56 Cal.2d 524, 529.
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Cal.App.3d 30; Escamilla v. Superior Court, supra, 271 Cal.App.2d 730; People v. White (1932) 124
Cal.App. 548.)
Here, the legislative emphasis in sections 1872.3 and 12924 is upon the discovery,
prosecution, and elimination of fraud with respect to auto insurance, workers compensation insurance,
and health insurance. We find inapplicable such cases as United States v. La Salle National Bank,
supra, 437 U.S. 298, Donaldson v. United States (1971) 400 U.S. 517, and Boren v. Tucker (9th Cir.
1956) 239 F.2d 767, involving the issuance of a summons by the Internal Revenue Service to
investigate tax fraud. The state statutes in question are distinctively different from the federal statutes
considered by the courts in those cases. More importantly, Congress has changed the federal statutes
to eliminate the requirement of a civil component for issuance of a tax fraud summons. (See Weiss v.
C.I.R. (9th Cir. 1990) 919 F.2d 115, 116-117, fn. 1; U.S. v. Abrahams (9th Cir. 1990) 905 F.2d 1276,
1281, fn. 4.)
In summary, the Insurance Code grants the Commissioner and his representatives wide
latitude to investigate insurance fraud. In aid thereof, they have the power to issue administrative
subpoenas to obtain the production of books and records or testimony at any time and for any legitimate
investigative purpose, whether with respect to a civil or criminal matter. However, the person
subpoenaed must be granted transactional immunity for any act which is the subject of compelled
testimony after his claiming the privilege against self-incrimination.
We thus conclude that if so authorized by the Commissioner, investigators in the fraud
division of the Department may issue administrative subpoenas to obtain evidence or testimony when
conducting criminal investigations; however, if a person is compelled to testify after claiming his
privilege against self-incrimination, immunity from criminal prosecution must be granted concerning
the matter.
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