Khalili v. Bd. of Chiropractic Exam’rs

Filed 2/14/02

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or
ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

FARAMARZ KHALILI,

B148889

Plaintiff and Appellant,

(Los Angeles County
Super. Ct. No. BS 066965)

BOARD OF CHIROPRACTIC
EXAMINERS, STATE OF CALIFORNIA,

Defendant and Respondent.

APPEAL from a judgment of the Superior Court for the County of Los Angeles.

Dzintra Janavs, Judge. Affirmed.

Buckner, Alani, Khouri, Chavos & Mirkovich, Michael J. Khouri, and Teresa L.

Polk, for Plaintiff and Appellant.

Bill Lockyer, Attorney General of the State of California, Arthur J. Taggart, Lead

Supervising Deputy Attorney General, and Jessica M. Amgwerd, Deputy Attorney

General, for Defendant and Respondent.

___________________________________

SUMMARY

This case presents the question whether findings of the Board of Chiropractic

Examiners were sufficient to support its order revoking Faramarz Khalili’s license to

practice chiropractic. We conclude they were, and reject Khalili’s contention the Board

was required to issue a finding explaining its rejection of the administrative law judge’s

proposed decision imposing a more lenient penalty. Accordingly, the trial court correctly

denied Khalili’s petition for a writ of mandate.

FACTUAL AND PROCEDURAL BACKGROUND

In May 1999, the Board of Chiropractic Examiners of the State of California

instituted a proceeding seeking to revoke or suspend Faramarz Khalili’s chiropractic

license. The Board’s accusation alleged that Khalili was subject to disciplinary action

based on his criminal convictions for mail fraud and making false statements on United

States tax returns. A hearing was held before an administrative law judge (ALJ) in

December 1999.

At the hearing, the Board presented documentary evidence establishing Khalili’s

plea of guilty on September 27, 1996 to (a) a two-count information in the United States

District Court for the Eastern District of California, charging Khalili with one count of

mail fraud and one count of Federal tax evasion, and (b) a one-count indictment out of

the District Court for North Dakota charging him with conspiracy to commit mail fraud.

The transcript of the hearing on his change of plea in the Eastern District of
California shows Khalili admitted to the following conduct. In connection with the North
Dakota indictment, he admitted he “conspired with others in connection with their
scheme whereby they would have staged automobile accidents, and Mr. Khalili would
submit bills, medical bills and chiropractic bills showing that the persons were indeed
injured, when he in fact had not performed the chiropractic treatment and knew that they
weren’t injured in the staged accidents.” Further, in connection with the Eastern District
of California information, he admitted “from on or about January 1, 1990 through
December 31, 1995 . . . Mr. Khalili was involved with a number of attorneys in a scheme
to defraud insurance companies and clients of the attorneys, whereby Mr. Khalili would
give kickbacks to the lawyers from insurance settlement checks that he would receive
from the attorneys, and that . . . Khalili would submit medical bills to the attorney

On February 28, 1997, Khalili was sentenced to eight months imprisonment, served in a

federal half-way house, and was placed on supervised release for a period of three years.

His supervised release was still in effect at the time of the hearing before the ALJ, and

terminated in February 2000.

The Board presented no witnesses at the hearing, but cross-examined Khalili’s

witnesses. Khalili presented testimony from several witnesses, including himself, to

establish that, since his illegal activities ended in late 1995, he was significantly

rehabilitated. This included testimony from Ali Sadeghi, Khalili’s treating clinical

psychologist; Curtis Booraem, an expert witness who conducted a psychological

evaluation of Khalili; and Keith A. Wells, an associate professor at the Los Angeles

College of Chiropractic. Sadeghi testified Khalili sincerely wanted to change his life and

had made significant progress during his months of therapy. Booraem concluded Khalili

was genuinely remorseful for the harm he had caused, had significantly rehabilitated

himself, posed no threat to the public, was unlikely to engage in future criminal behavior,

and was motivated to live a moral and ethical life. Wells verified that Khalili was

employed at a clinic as a salaried chiropractor, was not involved in the billing process,

and was above average competency in delivering chiropractic services to his patients.

Khalili testified regarding his extensive cooperation with the FBI in its investigation of
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the large network of attorneys involved in the kickback scheme.

knowing they were to be submitted to the insurance companies, which concealed the fact
that Khalili was giving kickbacks. As a result of those actions Mr. Khalili was involved
in the defrauding of the clients, of the lawyers and insurance companies out of
approximately $224,000.” In addition, Khalili admitted filing tax returns with the
Internal Revenue Service that “were materially false, in that during this period of time
[between August 19, 1992 and September 20, 1995] they understated Mr. Khalili’s
corporate and individual taxable income by approximately $448,000.” In each instance,
Khalili was asked, “Is that what you did in connection with that charge [or count], Mr.
Khalili?” and he answered in each case, “Yes, your Honor.”
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Khalili’s cooperation began after the FBI issued an ultimatum to his attorney,
demanding Khalili’s cooperation in exchange for a moratorium on an indictment in

On January 13, 2000, the ALJ issued a proposed decision. The ALJ concluded

cause existed to suspend or revoke Khalili’s license, although the matter was appropriate

for probation. The ALJ’s proposed order stayed revocation of Khalili’s license and

placed him on probation for five years. The probationary terms restricted Khalili from

controlling any business, participating in business generation, determining charges for his

services, or preparing billings.

On February 2, 2000, the Board notified Khalili it voted against adopting the

ALJ’s proposed decision, and would decide the case itself. The Board indicated

particular interest in arguments as to why the penalty proposed by the ALJ should not be

reconsidered.

The parties presented written arguments to the Board. Much of the argument

focused on whether Khalili had complied with the term of his plea agreement requiring

him to surrender his license by October 11, 1996. Khalili argued he substantially

complied by placing his license on inactive status at the end of December 1996 and not

engaging in the practice of chiropractic until June 1998. The Board’s counsel argued

Khalili violated the plea agreement by not surrendering the license and instead
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surreptitiously placing it in inactive status.

Counsel also argued that Khalili’s testimony

was not credible on numerous other points. Counsel contended Khalili committed

perjury, either before the federal judge who sentenced him or at the administrative

hearing. This argument was based on Khalili’s testimony before the ALJ. When asked at

another state for alleged involvement in a conspiracy to submit fraudulent accident claims
in that state. Khalili cooperated extensively with the FBI and also testified before a grand
jury. As a result of his cooperation, he was able to negotiate a favorable plea bargain; the
prosecutors filed papers on his behalf so that the sentencing judge could depart
downward from the federal sentencing guidelines.
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Counsel pointed out that Khalili conceded, in an order granting his motion to
change the venue of the administrative hearing from northern to southern California, that
“at no time after the federal criminal conviction did [Khalili] surrender his license to the
Board by notifying the Board of a surrender of license . . . .”

the hearing about his involvement with staged car accidents in North Dakota, Khalili

testified he “never ever, in truth, did it,” and the only reason he pled guilty was because

he “was forced into it.” Counsel further argued Khalili violated the privacy rights of

several patients by permitting his expert, Dr. Keith Wells, to review their records without

authorization.

On June 28, 2000, the Board ordered the revocation of Khalili’s license.

Numerous Board findings were identical to those made by the ALJ; other findings made
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the ALJ were not made by the Board.

Khalili petitioned the trial court for a writ of

mandate, which was denied. Khalili then filed this appeal.

DISCUSSION

Khalili’s appeal asserts the Board’s findings we re insufficient to support its

decision, because it “failed to make any findings to explain why it disagreed with the

ALJ, and why it issued a harsher penalty than that proposed by the ALJ” after the

hearing. Khalili contends the Board’s failure made it impossible for the trial court to

review the Board’s rationale in issuing a harsher penalty.

Khalili’s argument overlooks a fundamental point. The Board had no obligation

to justify the issuance of a harsher penalty than the one proposed by the ALJ, so long as

the Board’s findings supported its decision. The Board is statutorily authorized to reject

the ALJ’s proposed decision and decide the case upon the record, affording the parties
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the opportunity to present written argument.

The Board followed the prescribed

Findings made by the ALJ but not by the Board included findings about Khalili’s
compliance with his agreement to voluntarily surrender his license. The ALJ found
Khalili’s failure to actually return his license was not significant and Khalili substantially
complied with his agreement. The Board made no findings on the subject, or on Khalili’s
alleged perjury and violation of the privacy rights of his patients.
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When a contested case is originally heard by an administrative law judge, the
agency may take any of five actions described in the governing statute. The agency may
(1) adopt the proposed decision in its entirety, (2) reduce the proposed penalty and adopt
the balance of the proposed decision, (3) make technical or other minor changes in the
proposed decision and adopt it as the decision, (4) reject the proposed decision and refer

procedures exactly. Moreover, precedent fully supports the Board’s authority to increase

a proposed penalty. (Alford v. Department of Motor Vehicles (2000) 79 Cal.App.4th 560 ,

567 [an agency may reject an ALJ’s proposed decision and then decide the case by

concluding the ALJ’s proposed penalty was insufficient, while determining the balance of

ALJ’s proposed decision was appropriate and correct]; Donkin v. Director of

Professional and Vocational Standards (1966) 240 Cal.App.2d 193, 195-197 [no abuse

of discretion occurred when the director adopted as his own the entire decision of the

hearing officer except the portion dealing with proposed penalty, which the director

increased to a revocation of the registration and license]; see also Compton v. Board of

Trustees (1975) 49 Cal.App.3d 150, 158 [“it is clear that from the moment of the

agency’s rejection thereof, [the proposed decision] serves no identifiable function in the

administrative adjudication process or, for that matter, in connection with the judicial

review thereof”]; Williamson v. Board of Medical Quality Assurance (1990) 217

Cal.App.3d 1343, 1346-1348 [no abuse of discretion occurred in revoking a license;

findings as to the penalty were not required, where there were findings of fact and a
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determination of the issues for imposing discipline].)

the case back to an administrative law judge to take additional evidence, or, as the Board
did here, (5) “[r]eject the proposed decision, and decide the case upon the record,
including the transcript, or upon an agreed statement of the parties, with or without taking
additional evidence.” (Govt. Code, § 11517, subd. (c)(2).) If the agency rejects the
proposed decision and decides the case itself on the record, the “agency itself shall not
decide any case . . . without affording the parties the opportunity to present either oral or
written argument before the agency itself.” ( Id., subd. (c)(2)(E)(ii).)
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Khalili cites Respers v. University of Cal. Retirement System (1985) 171
Cal.App.3d 864, 870, where the court concluded that the University of California
Retirement System Board “was obligated to articulate its reasons for its rejection of the
ALJ’s decision in the form of ‘findings.’” In Respers, however, the Board rejected the
ALJ’s proposed decision granting disability benefits, and issued its own decision denying
benefits, without making any findings at all. The essence of the holding was merely that
the Board was obligated to make appropriate findings supporting its decision to deny
benefits. In this case, the Board made appropriate findings supporting its decision to
revoke Khalili’s license.

Accordingly, the only relevant inquiry is whether the Board’s decision to revoke
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Khalili’s license was supported by its findings. (Code Civ. Proc., § 1094.5, subd. (b).)

It clearly was. The Board described Khalili’s criminal conduct, his convictions upon his

plea of guilty, and his prison sentence and supervised release, none of which was

disputed. The Board found, as did the ALJ, that Khalili’s convictions were for crimes

“substantially related to the practice of chiropractic,” the crimes “clearly involve

unprofessional conduct,” and “[t]his constitutes cause to suspend or revoke his license.”

The Board also described in detail the evidence Khalili presented by Doctors Sadeghi,

Booraem and Wells, and himself of his remorse and efforts to rehabilitate himself after

his criminal convictions, and found that, “[i]n giving [the] portion of his testimony” about

the embarrassment he caused to his family and his community, and the damage he did to

his profession, Khalili’s remorse was genuine. From these findings, the Board drew the
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following legal conclusion:

An inquiry into the validity of an administrative order or decision “shall extend to
the questions whether the respondent has proceeded without, or in excess of jurisdiction;
whether there was a fair trial; and whether there was any prejudicial abuse of discretion.
Abuse of discretion is established if the respondent has not proceeded in the manner
required by law, the order or decision is not supported by the findings, or the findings are
not supported by the evidence.” (Code Civ. Proc., § 1094.5, subd. (b).) Khalili claims
only that the Board’s findings do not support rejection of the ALJ’s proposed decision.
He does not claim that the Board’s findings are not supported by the evidence.
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The Board’s legal conclusions also recite the Board’s authority to suspend, revoke
or place on probation a license to practice chiropractic for violations of rules and
regulations adopted by the Board or for any cause specified in the Chiropractic Initiative
Act, including a plea of guilty to a charge of a felony. (Bus. & Prof. Code, § 1000-10.)
In addition, the Board cites title 16 of the California Code of Regulations, which provides
that the Board “shall” take action against a licensee who is guilty of unprofessional
conduct, which includes both conviction of a crime substantially related to the
qualifications, functions or duties of a chiropractor and conviction of any crime involving
moral turpitude, dishonesty or corruption. (Cal. Code Regs., tit. 16, § 317, subds. (g) &
(h).) The Board’s disciplinary guidelines permit the penalty of revocation for conviction
of a crime and for conviction of a crime involving moral turpitude, dishonesty or
corruption.

“[Khalili] was involved in widespread illegal activity and continuing
dishonesty for four years. During that time he admittedly did ‘a lot of bad
acts.’ [Khalili]’s actions resulted in his paying illegal kick-backs of
approximately $135,000 and understating his taxable income by nearly half
a million dollars. While it is true that [Khalili] subsequently cooperated
with authorities in the prosecution of others involved in the widespread
illegal activity, and that [Khalili] has presented some evidence of
rehabilitation (as set forth in Findings 10, 11, 12 and 13), considering the
serious nature of the underlying offense it is found that protection of the
public interest demands revocation of [Khalili]’s license.”
No basis exists for disturbing the Board’s order. In reviewing a penalty imposed

by an administrative body, it is well settled that neither a trial court nor an appellate court

may substitute its discretion for that of the administrative body. Indeed, the reviewing

court cannot “interfere with the imposition of a penalty by an administrative tribunal

because in the court’s own evaluation of the circumstances the penalty appears to be too

harsh.” (Williamson v. Board of Medical Quality Assurance, supra , 217 Cal.App.3d at

p. 1347, quoting Cadilla v. Board of Medical Examiners (1972) 26 Cal.App.3d 961, 966

[internal quotations and italics omitted].) A court may interfere only when there is an

“arbitrary, capricious or patently abusive exercise of discretion.” ( Ibid.) In short, if

reasonable minds could differ on the propriety of the penalty, the penalty must stand. So

it is here.

Khalili also argues the trial court improperly accepted new evidence and

constructed a new basis to justify the Board’s determination. We see no merit in these

arguments either.

First, the trial court granted a request from Board counsel for judicial notice that

included a number of documents not available at the time of the administrative hearing.

However, the court was authorized to admit evidence at the hearing on the writ petition

where the court found there was relevant evidence that could not have been produced at
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the administrative hearing. (Code Civ. Proc., § 1094.5, subd. (e).)

9
The documents were submitted to negate Khalili’s position–adopted by the ALJ–
of substantial compliance with his plea agreement. The documents did not exist at the

Second, Khalili complains about the court’s reference to evidence in the record,

but not cited by the Board in its decision, which the court found “fully supports [the

Board’s] decision.” The trial court stated:

“[Khalili] committed perjury, as evidenced by his recanting before
[the Board] of criminal admissions made in his Change of Plea
testimony before a federal judge. He violated his Plea Agreement
by not surrendering his Chiropractic license as agreed. In an effort
to establish his own qualifications as a chiropractor, he allowed a
third party to review his patients’ records without first obtaining
their authorization, thereby violating their Constitutional rights to
privacy.”
Khalili correctly points out that the Board did not make findings on the issues of perjury,

violation of the plea agreement or privacy, and that the trial court cannot cure an agency’s

inadequate findings by supplying its own findings. ( American Funeral Concepts v.

Board of Funeral Directors & Embalmers (1982) 136 Cal.App.3d 303, 311.) This is

unavailing. As discussed above, Khalili incorrectly assumes the Board’s findings were

inadequate. The trial court specifically and correctly found to the contrary:

“This Court concludes that [the Board] did not need to make additional
findings. The [Board] acknowledged that there was some evidence of
rehabilitation, but obviously did not see it as clear and convincing evidence
of rehabilitation. Given [Khalili]’s criminal activity, [the Board] concluded
that public interest was best protected by revocation of [Khalili]’s license.

time of the hearing, and included (1) a license certification issued by the Board of
Chiropractic Examiners on January 23, 2001, stating that Khalili’s plea agreement
required surrender of his chiropractic license by October 11, 1996, and that the Board
received his license on May 16, 2000; (2) a letter dated May 2, 2000, from Assistant
United States Attorney Daniel S. Linhardt to Khalili’s lawyer, memorializing an offer
under which Khalili agreed to surrender his license as envisioned in his plea agreement,
in exchange for which the government agreed to take no action “with respect to any
statement that Khalili made during the course of his plea before The Honorable Edward J.
Garcia pursuant to Rule 11, or statements that he made to the Probation Officer in
connection with his preparation of his presentence report;” (3) a letter dated May 12,
2000 from counsel for Khalili to Linhardt, accepting Linhardt’s offer; and (4) a letter
dated May 13, 2000 from counsel for Khalili to the Board, surrendering Khalili’s license.

[¶] The evidence of [Khalili]’s prolonged, egregious criminal activities
fully supports [the Board]’s decision. …”

In sum, the only relevant question is whether the Board’s findings support its

decision to revoke Khalili’s license. It is undisputed that Khalili’s convictions were

cause for discipline. When the Board rejected the ALJ’s decision and issued its own, the

Board was permitted to increase the penalty. Neither the trial court nor this court may

interfere with the penalty imposed by the Board absent a manifest abuse of discretion.

We find none here.

DISPOSITION

The judgment is affirmed. The Board is to recover its costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

*
BOLAND, J.

We concur:

JOHNSON, Acting P.J.

WOODS, J.

Justice of the Court of Appeal, Second Appellate District, Division Eight, assigned
to Division Seven by the Chief Justice pursuant to article VI, section 6 of the California
Constitution.