OC workers’ comp attorney headed to prison for insurance fraud scheme, ordered to pay $700,000 – New Santa Ana

SANTA ANA, CA. A workers’ compensation attorney was sentenced today to four years in state prison and ordered to pay more than $700,000 in restitution to seventeen different insurance companies for his involvement in two separate insurance fraud schemes.

John Woods61, of Cypress, was convicted in August of 37 counts of insurance fraud and a felony enhancement.

All California employers are required to maintain workers’ compensation insurance coverage. Their insurance premiums can go up depending on several factors, including the number of work injury claims filed by their employees and the cost of those claims. Although not required, an injured worker can hire an attorney to represent them in a personal injury claim. Attorneys can collect more than 20% of workers’ comp settlements as attorney’s fees. Over the years, the Legislature has enacted numerous laws to combat rampant workers’ compensation insurance fraud in California, including criminal penalties.

Woods was one of ten workers’ compensation attorneys charged by the Orange County District Attorney’s Office in a complex insurance fraud investigation. Charges were also brought against Carlos Arguelles, Fermin Iglesias and Edgar Gonzalez, as well as four chiropractors and several employees who worked for Carlos Arguelles. Carlos Arguello, his associates and Fermin Iglesias pleaded guilty in their respective cases in Orange County Superior Court. Arguello and Iglesias were also charged in federal court with violating federal laws related to their scheme to work with health care workers, which resulted in a four-year federal sentence for Arguello and five years in federal prison for Iglesias.

“The Orange County District Attorney’s Office is committed to ensuring a level playing field for business owners and insurance companies,” said Orange County District Attorney Todd Spitzer. “By holding criminals accountable and recovering fraudulently paid funds, we help business owners stay competitive and protect consumers from higher premiums.”

Woods was found guilty of participating in two different insurance fraud schemes — one involving a “marketer” named Carlos Arguelaand the second with a subpoena is the owner of the company’s name Edgar Gonzalez. From 2011 to 2016, Woods paid Carlos Arguello to reimburse employment clients acquired through Arguello’s attorney marketing business. Centro Legal Internationaland later Tu Justicia Legalalso how Centro de Abogados.

Targeting primarily Hispanic neighborhoods throughout the state, Arguello’s company distributed more than four million business card-sized flyers per month to attract potential workers’ compensation clients for Arguello’s “marketing” scheme. The flyers contained various toll-free numbers that called a call center in Tijuana, Mexico. The call center operators served as the sales force, responsible for securing clients for Arguelles attorneys, consulting with staff at various law firms about the callers’ cases, and then dispatching an “registration” representative from the Arguelles network to the caller’s home within 24-48 hours to sign the legal documents , to hire a law firm and start a tort action. Arguello allocated clients to law firms based on the amount each law firm paid Arguello for clients that month.
In addition to paying monthly client acquisition fees, Woods also sent subpoenas to companies controlled and operated by Carlos Arguello in an amount equal to the number of clients he received from Arguello. These companies billed the injured worker’s employer’s workers’ compensation insurance policy for all of the subpoena services they provided to Woods because the law requires that the costs of proving an injured worker’s compensation must be paid by the employer’s workers’ compensation insurance. This includes the costs of obtaining documents through a subpoena ordered by the injured worker’s attorney.

Arguello’s scheme required all clients acquired through Arguello’s “marketing” to be directed to clinics selected by Arguello’s organization. Like the lawyers involved in his scheme, a group of doctors or chiropractors also paid Arguello compensation for working patients. Fermin Iglesias, an associate of Carlos Arguelles, oversaw the medical side of the scheme, in which health care providers issued prescriptions for medical products to businesses owned by Iglesias in exchange for referring patients to their clinics.

California’s workers’ compensation laws prohibit any person from paying to refer business to be brought through workers’ compensation insurance and from accepting such business in exchange for any payment, benefit or compensation. At trial, representatives of seventeen different workers’ compensation insurance companies testified that their companies would not have paid any of the bills received from the litigation company if they had known that the services provided were the result of an illegal referral scheme.

Woods was also found guilty of participating in a second fraud scheme in which he sent additional subpoena records to USA Photocopy, a subpoena company owned by Edgar Gonzalez. Gonzalez paid various business expenses to Woods’ law firm as bribes to obtain a subpoena, including paying the salaries of several entry-level employees who worked at Woods’ law firm and paying bills for shredding costs, maintenance of copiers, new scanners, as well as back-office assistants abroad.

Arguello and Gonzalez’s subpoena companies had offshore offices in El Salvador, where employees screened subpoenas to identify other businesses to which they could send more subpoenas on behalf of Woods. These companies billed workers’ compensation insurance companies for each individual claim.

Senior deputy prosecutor of the district Nur Hassan the insurance fraud unit opened the case.