Tuesday, June 27, 2017
California Supreme Court Holds:
Independent Contractor May Be Subject to Conflicts Law
By a MetNews Staff Writer
The California Supreme Court held yesterday that a doctor who was an independent contractor for a county hospital may be prosecuted under a conflicts-of-interest statute that applies to government “officers and employees.”
A unanimous court declared that the Court of Appeal took too narrow a view of Government Code §1090 which provides, in part:
“Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by anybody or board of which they are members.”
The Riverside District Attorney’s office charged Dr. Hossain Sahlolbei with violation of that statute—which carried a $1,000 fine and or imprisonment—along with grand theft.
Sahlolbei was a surgeon at Palo Verde Hospital, and was an independent contractor there. He served on the executive committee.
He made arrangements in 2009 with a Dr. Brad Barth, to work at the hospital for $36,000 a month, and to receive a one-time relocation fee of $10,000. What the board approved, however, was a $48,000-a-month salary and a relocation fee of $40,000, in addition to $3,000 a month for serving as a director.
The funds went into Sahlolbei’s account and, unbeknownst to the board and Barth, he pocketed the difference.
Appeals Court Decision
The Riverside Superior Court dismissed the count based on §1090 based on the 2016 Court of Appeal decision in People v. Christiansen. There, Div. One of this district’s Court of Appeal held, in an opinion by Presiding Justice Frances Rothschild:
“Under the common law test, independent contractors are not employees….Because it is undisputed that at all relevant times [the appellant] was an independent contractor, she was not an employee within the meaning of section 1090, so her convictions must be reversed and the charges against her dismissed.”
The District Attorney’s Office, challenging the dismissal of the count under §1090, sought a writ, which Div. Two of the Fourth District’s Court of Appeal last year denied in an opinion that was not certified for publication. Writing for the majority, then-Justice Jeffrey King (since retired) said:
“To resolve the present matter we need look no farther than the plain language of section 1090, the case of People v. Christiansen (2013) 216 Cal.App.4th 1181, and the common law indicia of employment.”
Justice Thomas Hollenhorst dissented.
Yesterday’s opinion reversing the Court of Appeal was written by Justice Goodwin Liu.
Specifying that “we do not hold that all independent contractors are covered by section 1090,” he said:
“We conclude that independent contractors are not categorically excluded from section 1090. Liability under the statute can extend to independent contractors who have duties to engage in or advise on public contracting. Because Sahlolbei’s duties brought him within the scope of the statute, we reverse.”
Liu noted that it was held in the 2010 case of Hub City Solid Waste Services, Inc. v. City of Compton that independent contractors come within the ambit of §1090, and it was so held in subsequent decision.
Chronology of Events
In a portion of his opinion in which he appeared to refer to Sahlolbei’s 2009 conduct occurring after the Court of Appeal’s 2010 opinion, he wrote:
“In light of the unbroken line of cases holding that independent contractors can be liable under section 1090 and the consistent cross-pollination between criminal and civil cases interpreting section 1090, we find it was sufficiently clear at the time of Sahlolbei’s alleged misconduct in 2009—after Hub City and before Christiansen—that independent contractors could be held criminally liable under section 1090. We express no view on whether an independent contractor can be held criminally liable under section 1097 for conduct occurring between Christiansen and this decision.”
The case is People v. Superior Court (Sahlolbei), 17 S.O.S. 3235.
Oct. 6, 2016, Sahlolbei was convicted of felony grand theft, and was on Feb. 24 was sentenced to three years’ probation.
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