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Moses Luna has been practicing workers’ compensation law in California for roughly half a century. On May 12, 2021, the district attorney charged him in an amended complaint with 22 counts of felony insurance fraud pursuant to Penal Code section 550, subdivision (b)(3) (Penal Code section 550(b)(3)).

At the preliminary hearing, the district attorney presented evidence Luna opened a side business called Adelante Interpreters in 2011. Although Luna controlled and ran the business, he did not mention that on the incorporation papers. Instead, he listed his daughters as its acting officers. When Luna’s legal clients needed interpreter services in connection with their workers’ compensation claims, he invariably enlisted Adelante for those services. Adelante then made insurance claims for the cost of those services. All told, it received payments totaling over $100,000 from 22 different insurance carriers between 2016 and 2020. The parties stipulated those benefits would not have been paid had the carriers known of Luna’s interest in Adelante. He was bound over for trial at the conclusion of the preliminary hearing.

Luna filed a Penal Code section 995 motion to dismiss the information. Luna argued the Williamson rule barred his felony prosecution under Penal Code section 550(b)(3) because his alleged misconduct is specifically addressed in Labor Code section 139.32, which, inter alia, makes it a misdemeanor for workers’ compensation attorneys to refer clients to a business in which they have a financial interest. Luna also argued dismissal was warranted because section 139.32 is unconstitutionally vague, and his conduct falls within the safe harbor provisions of the statute.

The trial court concluded the Williamson rule precluded Luna’s felony prosecution under Penal Code section 550(b)(3). Although Luna prevailed on that issue, the trial court rejected his vagueness argument, and it found his safe harbor argument premature because it presented factual issues that needed to be fleshed out at trial. The court then amended the information by interlineation to change all 22 of the felony charges to misdemeanors under section 139.32. However, upon reconsideration, and at the parties’ request, the court vacated its amendments and dismissed the information altogether.

The Court of Appeal affirmed the trial court dismissal in the unpublished case of People v Luna -G062297 (December 2023).

This appeal turns on the applicability of the Williamson rule, which precludes criminal prosecution under a general statute if there is a more specific statute that applies to the defendant’s conduct. (In re Williamson (1954) 43 Cal.2d 651 (Williamson).)

Generally, when the defendant’s conduct violates more than one statute, prosecutors have the discretion to decide which statute to charge under. However, that discretion is not unlimited. Under the Williamson rule, if a general statute includes the same conduct as a special statute, the court infers that the Legislature intended that conduct to be prosecuted exclusively under the special statute. In effect, the special statute is interpreted as creating an exception to the general statute for conduct that otherwise could be prosecuted under either statute.

The general statute at issue here is Penal Code section 550(b)(3), which makes it unlawful for any person to “[c]onceal, or knowingly fail to disclose the occurrence of, an event that affects any person’s initial or continued right or entitlement to any insurance benefit or payment, or the amount of any benefit or payment to which the person is entitled.”

The special statute at issue is Labor Code section 139.32. Under subdivision (b) of the statute, all interested parties in the workers’ compensation system, including attorneys representing injured employees, are required to disclose any financial interest they have in an entity that provides services to an employee.

Thus “the rule precludes the prosecution from charging Luna pursuant to Penal Code section 550(b)(3) because his culpability under that general statute hinges on whether he violated section 139.32, a special statute which fits Luna’s alleged misconduct to a tee.

Since it was expected the prosecution will charge Luna with violating section 139.32 the Court of Appeal addressed his arguments respecting that prospect. To satisfy due process, a statute must give fair notice of the conduct proscribed and be sufficiently definite to prevent arbitrary and discriminatory enforcement. On the core vagueness question, it agreed with Luna that subdivision (b) of section 139.32 is unconstitutional.

The “statute does not provide any guidance as to whom disclosure must be made. Nor does it shed any light on when or how the requisite disclosure must be proffered. These shortcomings make the disclosure requirement both difficult to obey from a defense perspective, and difficult to enforce from a prosecutorial perspective. Since the requirement is susceptible of multiple interpretations and fails to provide reasonable notice of what it entails, we conclude it is too vague to enforce against Luna in this case.”

While “we strike down subdivision (b) of section 139.32 on vagueness grounds, we see no reason to invalidate the remaining portions of the statute.” “The trial court’s order dismissing the felony charges against Luna is affirmed. If the district attorney files misdemeanor charges against Luna under section 139.32, he cannot rely on subdivision (b) of the statute, which is void for vagueness.”