When I saw the news, I felt mixed feelings of sorrow and joy.
It was not unexpected, but it has been a long time coming.
I’m speaking of large scale attorney indictments for alleged fraud in California workers’ comp.
Over the last several years we’ve seen waves of physician and provider indictments involving various schemes to defraud workers’ comp insurers. Some of the names even became iconic.
Reports on some of these cases had mentioned several attorney names, but the prosecutorial focus did not appear to be on attorneys.
On June 5 the Orange County DA announced charges against 10 attorneys and 6 cappers involving a complex insurance referral scheme (see a link to the press release at the end of this post).
All of these defendants are principally located in Southern California, though several of them had set up offices in Northern California. Named in the charges were Jon Woods, Payman Zargari, John Jansen, Fari Rezai, Lionel Giron, Dennis Fusi, Jorge Reyes, Rony Barsoum, Robert Slater, and Robin Jacobs.
The press release notes that this is “Phase I”, so more charges against these defendants and charges against additional defendants may well be coming. The charges are said to be from a 3 year investigation by the Orange County DA and the California Department of Insurance.
I don’t have insider information on the circumstances of any of the particular defendants, all of whom could have their day in court. But what follows is sketch of the allegations…..
Carlos Arguello III of Tustin is alleged to have formed Centro Legal International and have made unlawful referral contracts with 20 to 40 workers’ compensation attorneys. Since only 10 have been named in the announced “Phase I” charges, the math would indicate that a lot more attorneys may be in the legal cross-hairs.
Arguello and Edgar Gonzalez (neither of whom are lawyers) are said to have operated a number of other companies, including copy services, scheduling services and document management services. The group is said to have used cappers. The attorneys are accused of paying a monthly fee for cappers to deliver monthly client targets. Promotional materials were said to be distributed “in predominately Hispanic neighborhoods, businesses, swap meets, and the U.S. Mexico border.”
The cappers were said to have operated a number of misleading websites, and toll free numbers were directed to an El Salvador call center. Callers to the website toll free number would find that a recruiter was sent to their home to get signatures on representation documents. Allegedly, these packets were sent to the participating attorneys.
And the press release notes that they were also sent to participating doctors. The press release notes that “individual medical providers are under investigation for paying for patients recruited by the Cappers”, and then using Capper selected medical equipment, pharmacy and diagnostic imaging providers.
So why my feelings of sorrow and joy?
First, the sorrow. The majority of the applicant attorneys I’ve known as colleagues over my career entered the workers’ comp field for noble reasons. Many wanted to help “the little guy”. Some didn’t like insurance companies or “the system”. Often they gravitated to this niche of the law because they liked talking to people helping out. They didn’t seek a career as a research attorney, doing transactional work representing criminal defendants, or the other legal paths.. Some, myself included, enjoyed the interface of law and medicine.
Being an applicant attorney can pay well if you have enough clients and are good at it. But the work is hard. The better attorneys care about their clients. There is a certain amount of social work in handling cases as well as the legal work,
It saddens me to know that there is likely widespread attorney involvement in abusive schemes. This contributes to cynicism about the comp system generally , and applicant practice in particular. And workers are likely hurt in the process, being treated like cattle.
Second, the joy. For some time it has been clear that medical provider abusers weren’t operating in a vacuum, particularly in Southern California. Attorneys had to be involved in some of the schemes. Rotten apples were festering in the barrel.
So ultimately this is great news for the applicant bar, for workers, and for the system generally.
Lets hope for further house-cleaning.
But the fact that charges have been filed does not necessarily mean that changes occur immediately. In fact, a piece in WorkCompCentral by Greg Jones notes as follows:
“A WorkCompCentral reporter on Tuesday morning called a toll-free number for Centro Legal Internacional and fabricated a story about an injury that his employer denied. After providing basic contact information, a date of injury and description of how the injury occurred, WorkCompCentral was told to wait for a call from a representative to “sign legal representation forms, and that way they can go and start representing you.”
Jones notes that “By Tuesday afternoon, a person claiming to represent a Los Angeles-area law firm contacted the WorkCompCentral reporter to schedule an appointment to sign the necessary documentation for hiring a lawyer.”
Yes, there is a certain amount of wac-a-mole in trying to shut down illegal and abusive behavior. It will never be completely stopped. But putting lawyer involvement on the radar raises the stakes for law firms that get involved with illegal capping and referral schemes.
Here is the Orange County DA’s press release: