Major Workers Compensation Fraud Ring in California: What to Do if You Are the Victim?

In what has become a massive California-wide workers’ compensation fraud ring, 10 attorneys and 6 others were charged with felony fraud after their scheme affected more than 33,000 patients and victims of workplace injury and resulted in an estimated $300 million in insurance payouts. Victims of the mammoth fraud ring in Southern California could now become part of the investigation, while the insurance payouts received by patients would be considered part of the fraud ring.

The Orange County District Attorney’s Office filed felony charges against the 10 attorneys who targeted mostly Spanish-speaking communities, but further investigation may lead to more charges.

Our workers compensation attorney in Los Angeles are closely examining the developments in the case, as the charges could effect tens or hundreds of thousands of California residents who received insurance payouts in the past over a decade.

A workers compensation lawyer here at the Law Offices of Kropach & Kropach, a reputable Californian law firm that has practices in place to prevent any type of fraud or felony on the part of its employees, explained that fraud rings like this drive up the prices of workers’ compensation insurance while alienating businesses from the state.

How did the fraud ring pull it off?

The fishy fraud ring was allegedly operated by Carlos Arguello III, of Tustin and Edgar Gonzalez, of Anaheim. Through a company called Centro Legal Internacional, which was registered as an advertising company, Arguello signed contracts with an estimated up to 30 attorneys who were ‘experts’ in the field of workers’ compensation and personal injury.

These so-called experts cooperated with businesses owned by Arguello and Gonzalez by providing them with employees, also referred to as cappers. These cappers, who were paid by the attorneys their monthly fees for recruitment efforts. Focused on bringing in a minimum number of clients per month.

These clients, innocent victims of workplace injuries mostly from Hispanic neighborhoods, received business cars, fliers and others printed means of advertisement encouraging victims of workplace injuries to call and get a “free consultation.”

Within two days after the call, cappers sent their recruiters to the victims’ homes to offer them to sign legal papers. However, these legal papers were not prepared nor were they looked over by the attorneys (the cappers’ contractors).

When signed, the legal documents were forwarded to the attorneys and the medical providers who participated in the fraud ring. After settling these workers’ compensation cases, the attorneys received a flat percentage straight from the insurance companies.

As a result, an estimated over $300 million in insurance payouts were generated by the fraud ring (the exact percentage of the payouts that went to the attorneys, or Arguello, or Gonzalez is unclear at this point).

Not all workers’ compensation attorneys are frauds

While attorneys are allowed to advertise their services through business cars and fliers, our Encino workers compensation attorney explains, they are not allowed to use cappers to directly recruit for attorneys or insurers.

As the district attorney’s office ruled that the use of cappers is illegal, all of the insurance payouts would be considered part of the fraud ring. While the investigation is ongoing, it’s unclear what this could mean to the legitimate victims of workplace injuries who received insurance compensations.

The 16 people charged so far face the following felonies: insurance fraud, conspiring to refer clients for compensation, as well as referring patients with reckless disregard for the commission of fraud.

Here at the Law Offices of Kropach & Kropach, we prohibit the use of cappers or any other fraudulent practices that may involve referring patients with reckless disregard just to get a commission.

Our workers compensation attorneys in Encino and elsewhere across California are skilled and vetted professionals who have obtained compensations for their clients lawfully.

We have established ourselves as a credible and professional team that prioritizes the best interests of our clients.

If you suffered a workplace-related injury, don’t hesitate to consult with a workers compensation attorney to get the compensation you deserve. Call our offices at 818-609-7005 for a free case evaluation.