Probe widens in workers’ comp insurance fraud ring

Jan. 28--An investigation into what is being billed as one of the largest workers' compensation insurance fraud schemes uncovered in the county's history has swept up additional medical professionals throughout Southern California.

Chiropractors, a radiologist, a pain management physician, a medical equipment provider and others are accused in 13 new indictments of playing varying roles in a bribery scheme that bought and sold patients like commodities, the District Attorney's Office said Thursday. The investigation uncovered nearly a half-million dollars in kickback payments resulting in millions of dollars in fraudulent workers' compensation insurance claims, authorities said.

The indictments come as the investigation into the scheme continues to expand. The first wave of arrests occurred in November and involved federal charges.

On Wednesday, more than 100 law enforcement officers in three counties served early morning arrest and search warrants at seven locations, authorities said. Nine people have been arrested and two remain at large.

According to prosecutors, a group of recruiters would entice workers -- many of them seasonal workers who lived abroad at times -- to file workers' compensation claims. The recruiters were identified as Fermin Iglesias and Carlos Arguello, who operated Providence Scheduling, Medex Solutions, Prime Holdings International and Meridian Rehab Care, and administrator Miguel Morales.

They would advertise in the U.S. and Central America via flyers or cards stuck on windshields to contact a call center if a worker has been injured on the job and needs help filing a claim, said Assistant U.S. Attorney Alana Robinson.

The recruiters would then refer the patients to specific doctors in Southern California, who would in turn prescribe certain medical tests and treatment -- such as chiropractic, MRIs, pain management, echo cardiograms and even sleep studies -- to companies in return for kickbacks, she said. The bribes were usually $50 to $100 per patient, court records show.

The bribes were done without the patients' knowledge.

"It was all predetermined even before the patient came along," Robinson said at a news conference Thursday.

The treatment was then billed to various insurance companies, including Liberty Mutual and Hartford.

Chiropractors would be required to fill a monthly quota of referrals or their patient pipeline and bribes would be cut off, authorities said. In one instance, San Diego chiropractor Steven Rigler was warned that he'd fallen $60,000 behind in referrals for procedures and he'd be cut out of the operation unless he wrote the organization a $20,000 to $30,000 check, according to the latest federal indictment.

Rigler has already pleaded guilty, as well as San Diego workers' compensation attorney Sean O'Keefe.

One of the clinics implicated is Crosby Square Chiropractic, where Rigler worked, which has offices in San Diego, Escondido and Calexico, prosecutors said. Other medical professionals indicted are chiropractors Amir Khan of Orange and David C. Nguyen of Huntington Beach, and pain management Dr. Phong H. Tran of Irvine. Dr. Ronald Grusd of Los Angeles, who was charged federally last year, is also included in a new state indictment.

Authorities called the scheme especially sophisticated, involving intelligent professionals who knew how to cover their tracks.

"But these criminals got greedy," said District Attorney Bonnie Dumanis, referring to the enterprise's effort to expand throughout Southern California.

The FBI, the lead agency on the case, used an undercover agent to infiltrate the scheme, said Eric Birnbaum, special agent in charge of the FBI in San Diego.

Deputy Commissioner George Mueller of the state Department of Insurance said health care fraud is the most costly kind of insurance fraud in California -- costs that get passed down to employers and taxpayers.

kristina.davis@sduniontribune.com (619) 293-1391 ? Twitter @kristinadavis

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