INSURANCE-RELATED COURT CASES
Digested from case reports published online
Elaine Estrada worked for the city of La Habra Heights as an accountant and payroll administrator from November 7, 2005, to August 24, 2012. Through her employment she was eligible for retirement benefits as a member of the California Public Employees’ Retirement System (CalPERS).
On April 28, 2016, the Los Angeles County district attorney’s office filed a felony complaint against Estrada. The complaint charged Estrada with one count of misappropriation of public funds in violation of a section of the penal code and one count of embezzlement by a public officer in violation of another section of the code. Both counts alleged that between April 1, 2007, and July 31, 2009, Estrada removed payroll deductions and as a result did not pay the required employee share for dependents covered on her plan. The city did not discover the alleged conduct until an audit in 2012, because Estrada was responsible for the payroll and timekeeping of all city employees.
On June 28, 2017, Estrada appeared for a preliminary hearing. At that time, her counsel advised the trial court that the parties had reached a plea agreement. As part of the plea, the court granted the people’s motion to amend the complaint to add a third felony count for unauthorized computer access in violation of a section of the penal code.
The court stated that the plea would be taken pursuant to a felony provision of the penal code. The sentencing would be set for six months, at which time the felony plea would [be] vacated and a misdemeanor plea of no contest would be entered in its place. Within two weeks of the plea of June 28, Estrada would pay to the city of La Habra Heights the amount of $5,780.20.
According to the court, at the end of the six-month period, when Estrada was sentenced to a misdemeanor, the sentence would then be one year of summary probation, starting on the day of the sentencing of the misdemeanor. At the completion of probation, counsel would move to have the misdemeanor vacated and expunged. The district attorney would agree to the motion after the end of that one year of summary probation. … “The last condition … is regarding the six-month time period from which the plea is taken and the misdemeanor plea and sentencing [that] takes place six months from now. If there’s a failure to pay restitution or any violation of the law, either misdemeanor or felony during that six-month period, the sentencing would result in the sentencing on the felony itself and that would involve a restitution order and formal probation.”
On April 10, 2018, while Estrada was serving probation, the city submitted a forfeiture of benefits form to CalPERS regarding Estrada’s criminal conviction. The form indicated that Estrada was convicted of a job-related felony on June 28, 2017, and that the earliest date of commission of the felony was September 1, 2007.
On May 23, 2018, CalPERS notified Estrada that as a result of her felony conviction, a portion of her accrued retirement benefits was subject to forfeiture under a section of a state statute. In addition, Estrada was no longer eligible to return to CalPERS-covered employment or to accrue further CalPERS benefits. Estrada was informed that any contributions she made to the retirement system during the forfeiture period would be returned to her.
On June 21, 2018, Estrada disputed CalPERS’s forfeiture action. She contended she was not convicted of a felony because on January 3, 2018, she withdrew her plea to a felony and entered a new plea of no contest to a misdemeanor. On September 7, 2018, Estrada appealed the forfeiture action.
On June 24, 2019, an administrative law judge (ALJ) issued a proposed decision denying Estrada’s administrative appeal. The ALJ found that CalPERS was correct in its determination that Estrada was convicted of a felony arising out of her official duties as an employee of the city. As a result, the ALJ concluded that Estrada forfeited her right to retirement benefits for the period from September 1, 2007, the earliest date of the commission of the felony, through June 28, 2017, the date of her felony conviction.
On September 19, 2019, Estrada filed a petition for writ of administrative mandate in Los Angeles County Superior Court. She sought an order that directed CalPERS to set aside its forfeiture decision and to reinstate her retirement benefits. Estrada argued that she was entitled to retain her retirement benefits because she was convicted of a misdemeanor, not a felony, and the criminal case against her was dismissed. CalPERS opposed the petition, asserting that Estrada was convicted of a felony when she pled no contest to a felony charge on June 28, 2017, and that the later reduction of the conviction to a misdemeanor and dismissal of the charge were irrelevant under a section of a state statute.
On December 15, 2021, the trial court denied Estrada’s petition. The later reduction of the felony to a misdemeanor and dismissal of the charge were “of no consequence; [Estrada’s] admission to felonious conduct remains and her pension benefits are subject to partial forfeiture.” Estrada appealed.
On appeal, the court concluded that Estrada’s claims lacked merit and affirmed the order that denied the petition for writ of administrative mandate. The court stated that CalPERS could recover its costs on appeal.
Estrada v. California Public Employees’ Retirement System—Court of Appeal of the State of California, Second Appellate District, Division Eight—September 21, 2023—No. 19STCP04059.