Health & Medicine

Profiteering masquerades as medical care for injured California workers

Denise Rivera injured her knee while working as a nursing assistant in 2011. Her workers’ compensation medical care proved worthless, and she was astonished when she found out the massive cost for that care – over $95,000.
Denise Rivera injured her knee while working as a nursing assistant in 2011. Her workers’ compensation medical care proved worthless, and she was astonished when she found out the massive cost for that care – over $95,000. Reveal

Racked with back pain, Tammy Martinez relied on her workers’ compensation attorney to help her navigate the complex system. It would take years, though, for anyone to understand how thoroughly he betrayed her trust.

San Diego attorney Sean O’Keefe pleaded guilty in 2014 to accepting kickbacks to refer his clients to certain doctors, who in turn operated on patients at the now-defunct Pacific Hospital of Long Beach. That was how O’Keefe came to introduce Martinez to the surgeon who operated on her back. Martinez, a truck driver, hurt it pushing a 1-ton cart.

O’Keefe admitted to conspiring with Martinez’s surgeon to recommend particularly complex and expensive procedures. Surgeons installed spinal rods and screws to essentially build a bridge along her spine.

For Martinez, the operation was disastrous. Her left foot was pulseless after the operation. Within weeks, she lost the leg to above the knee.

Since then, she said, it's been a difficult journey to learn to stand again.

"I lost myself," Martinez said. "I struggle every day to get the person I used to be back."

The case is one of more than a dozen that, taken together, outline a medical landscape in which corruption masquerades as medical care for some of the injured workers who rely on California’s $24 billion workers’ compensation system.

A review of thousands of criminal court records by Reveal from The Center for Investigative Reporting shows a system in which pay-to-play schemes trump patient care, particularly in unregulated treatments rejected by insurers and disputed in obscure courts throughout the state.

Prosecutors are pursuing charges against more than 80 medical professionals who’ve handled more than 100,000 injured-worker cases, most of them originating in Southern California. They allege that the cases account for $1 billion in fraud.

The alleged schemes inject cynicism into a system in which workers already are at odds with insurers, which can save money when they deny care. They heap costs in the form of higher premiums on employers, who in turn raise prices for goods or services or stem hiring as they pay the highest workers’ compensation rates in the nation.

The case against Martinez’s attorney came out of the ongoing prosecution against Michael Drobot, a hospital executive who pleaded guilty in early 2014 to paying at least $20 million in kickbacks to dozens of marketers, doctors and others who helped him fill the surgery suites at Pacific Hospital of Long Beach. Federal prosecutors linked the bribes to more than 4,400 risky spinal operations at the hospital.

Drobot’s case also reached to the highest levels of state government. He admitted to bribing former state Sen. Ron Calderon, a Democrat from Montebello, who is fighting accusations in a separate case that he worked to delay legislation that cut into the astronomical profit Drobot and others made on spinal surgery hardware. Drobot declined to comment.

We’re talking about a patient that has become a commodity. It’s become something to trade and sell on the open market for no other reason than to generate income.

Don Marshall, chairman of the state’s Fraud Assessment Commission

Graft took root in a system in which even insiders have been caught on undercover recordings marveling at Drobot’s decadelong scheme and concluding that nobody cares about policing health care for injured workers.

It also stems from an only-in-California network of 24 workers’ compensation courts. There, thousands of unregulated medical providers can spurn legislated checks and balances on medical care.

Anyone can demand money – a process known as filing a medical lien – for unregulated medical treatments that include the use of questionable devices, pain creams, shockwave therapies and DNA tests. And in an overburdened system that favors settlements over trials, they often succeed.

“We know there’s a problem,” said Christine Baker, director of the state Department of Industrial Relations, which administers workers’ compensation.

Baker’s agency worked with lawmakers on a 2012 law that was meant to limit the filing of medical liens. It established a $150 fee required to demand payment in workers’ compensation courts. It also gave insurers new powers to deny money to providers that aren’t approved to treat injured workers.

Yet claims for unapproved care still are cropping up, Baker said. And the number of liens filed last year is even higher than it was when one of Baker’s advisers initially concluded that the system “rewards bad behavior.”

Baker said her department has begun reviewing the medical providers who currently file the largest number of liens. The result: “We do note that many are (criminally) indicted.”

While health care programs such as Medicare have developed an arsenal of weapons to ward off fraud, state regulators have few tools at their disposal. For one thing, the state shares oversight with hundreds of insurers and self-insured employers, leaving no one clearly in charge.

“We’re talking about a patient that has become a commodity,” said Don Marshall, chairman of the state’s Fraud Assessment Commission, which distributes funds to prosecutors who fight workers’ compensation fraud. “It’s become something to trade and sell on the open market for no other reason than to generate income.”

Workers who’ve been hurt on the job often are the last to find out that they have been exploited – if they find out at all.

Denise Rivera injured her knee while working at a center for severely disabled children. Two days after Thanksgiving in 2011, she slipped and fell while giving a child a shower. Rivera said she immediately felt paralyzed by leg and back pain. Her company’s doctor said she needed knee surgery, but her employer’s insurance company denied the request.

Rivera saw a commercial on TV for legal help with a work-injury case, called the number and got connected to California Injury Lawyer Inc. The Corona-based company sent people to her house to take her information and referred her to a clinic, she said.

Teena Barton is familiar with this kind of advertising through her work as a special investigator in San Diego for the ICW Group Insurance Cos., a workers’ compensation insurance firm.

Barton said marketers and advertisers are invasive, often pressuring workers to refer friends and co-workers, who get cold calls at home. She said workers often are pressured into filing work injury claims and put on a lengthy course of medical treatment.

“The problem is, once you’re on that wave, that wave’s going to take you,” Barton said. “That’s what the system is. ”

The people who asked Rivera, 54, to sign papers advised her to report to a Riverside clinic, she said.

The clinic packed her schedule with appointments. Staff gave her what looked like a menu, with the names of doctors and companies she was expected to see three times per week.

Rivera cobbled together the gas money or borrowed family members’ cars to make her appointments. She sat in the clinic’s jammed waiting room for hours at a time and watched medical staff wheel in suitcases full of devices to treat workers.

She said she received MRIs, acupuncture, shockwave therapy and treatments with a device that seemed like a jackhammer thumping her knee. At one point, clinic staff sent her home with an electrical pain treatment device, but they forgot to include the electrode pads needed to make it work.

Records in Rivera’s case show the total bill sent by providers to the insurer for her care: $95,257. She had never seen that total, and it shocked her.

“No way,” she said, then added: “None of the treatments they’ve given me has helped.”

Riverside County prosecutors now allege that Rivera walked into a clinic, with eight affiliate sites, that ran a $122 million scam.

They filed charges in July 2014 against attorney Cary Abramowitz and chiropractor Peyman Heidary. Prosecutors say in court records that Heidary is nicknamed “The Godfather” for masterminding the profit-centered medical network that Rivera encountered.

Prosecutors claim that workers came into the network via “cappers” – people paid to recruit patients – who got referrals from English- and Spanish-language 800 numbers. At Heidary’s direction, clerical staff allegedly padded the cases with additional supposedly injured body parts, according to court records.

Of the $122 million Heidary’s group sought, one document from prosecutors indicates that it had collected $18 million from insurers as of April 2015.

Heidary has pleaded not guilty. His attorney, Michael Khouri, said the case lacks legal and factual merit and has ruined Heidary’s reputation. All the care, he said, was medically necessary.

When told about Rivera’s plight, Khouri said he’s not moved by the case of one worker disappointed with her care, given that patients “die in the best hospitals … all the time.”

Reveal data reporter Sinduja Rangarajan contributed to this report. Christina Jewett:, @By_CJewett.

This story was produced by Reveal from The Center for Investigative Reporting, a nonprofit newsroom based in the Bay Area. Learn more at and subscribe to the weekly podcast, produced with PRX, on iTunes.