California Supreme Court affirms bail regulation promoting jail security and fair competition in the bail industry

News: 2023 Press Release

SAN FRANCISCO, Calif. —The Department of Insurance has notified bail agents that the California Supreme Court upheld the constitutionality of a long-standing regulation barring bail agents from entering into agreements with jail inmates to be notified when individuals have recently been arrested. The August 24, 2023, opinion in People v. Martinez reversed a lower court decision that had overturned the conviction of Monica Marie Martinez of Gilroy, one of 31 bail agents arrested in a law enforcement sweep in August 2015 known as “Operation Bail Out.”

In 2017, Martinez was convicted in Santa Clara County Superior Court as a result of a Department investigation that uncovered schemes by bail agents to scoop business away from competitors by rewarding jail inmates by adding money to their jail accounts for providing information about newly booked individuals in the jails. “Operation Bail Out” found that the schemes undermined security conditions within the jail because the inmates recruited to provide information concerning newly booked individuals would frequently threaten or pressure other inmates to engage the services of certain bail bond firms and would retaliate against those working for rival businesses.

Martinez was sentenced to three years formal probation and ordered to serve four months in custody in the county jail and the Department revoked Martinez’s bail agent license. In 2020, Martinez’s conviction was overturned by the California Court of Appeal. The Supreme Court opinion reversed the judgment of the Court of Appeal and remanded the matter back for further proceedings consistent with its opinion.

“Our Department’s oversight of the bail industry is essential to protecting public safety and upholding the fair administration of justice,” said Insurance Commissioner Ricardo Lara, who has sponsored legislation to expand licensing requirements and other bail reforms. “We will continue to take action against those who violate our laws and regulations to enrich themselves at the public’s expense while putting people’s safety at risk.”

In its ruling, the Supreme Court found that the state had asserted a substantial interest in deterring bail bond agents from engaging in forms of arrestee solicitation prohibited by other provisions of law, in promoting “sound, secure jail administration,” and in fair competition in the bail bond industry. As in People v. Dolezal, another case that addressed the Department’s regulation on solicitation of arrestees, the Court reinforced that soliciting bail is “commercial speech” that is subject to government regulation. Bail agents have enormous power over arrestees' freedom and arrangements between bail agents and inmates undermines the ability to maintain institutional security in the jail environment and harms fair competition in the market place.

The Department of Insurance is committed to protecting consumers and has taken action to address current bail issues including the sponsoring of legislation. AB 2043, sponsored by Commissioner Lara and authored by Assemblymember Reggie Jones-Sawyer, requires all bail fugitive recovery agents, commonly known as “bounty hunters,” to be licensed by the Department of Insurance. This ensures that appropriate education and training requirements are met prior to licensure and that all applicants successfully pass fingerprint-based background checks, obtain an appointment from a licensed bail agent or surety insurer, and maintain a minimum $1 million liability insurance policy so that harmed consumers have an avenue to collect damages. Since the legislation has been enacted, over 100 new licenses have been issued for bail recovery agents.

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Media Notes:

• Monica Marie Martinez, 46, is also known as Monica Marie Milla. She was convicted under California Insurance Code 1814 for violating California Code of Regulations, Title 10, section 2076.
• The Department’s regulation was enacted in 1941 in response to legislation reforming the bail industry in the aftermath of media reports of bail bond agents steering prisoners to attorneys who would split legal fees with those involved in the scheme.