Calif. Man Pleads Guilty to $1.5 Million Workers’ Comp Insurance Fraud

A Riverside, Calif., man has plead guilty to 59 felony counts of grand theft, 59 felony counts of insurance fraud, three felony counts of tax evasion and one felony count of conspiracy, the California Department of Insurance has reported. Rene Montes entered his plea on June 7. His sentencing hearing is scheduled for July 30, 2010. Montes defrauded insurance companies out of $1.5 million by illegally negotiating, settling and collecting payments on liens for workers’ comp insurance claims, the DOI said.

According to the DOI, the case involved the following suspects: Montes (who operated as W.C. Surgery Centers and W.C.S.C. & Associates), Hector Porrata, Cara Cruz Thompson and George Martinez who engaged in the acts of grand theft and insurance fraud by fraudulently soliciting funds from AIG Claims Services and Matrix Absence Management Inc. for outstanding medical liens on workers compensation claims for services provided by medical providers.

Between August 2003 and January 2006, CDI said Montes fraudulently solicited funds from AIG Claims Services and Matrix Absence Management Inc. for outstanding medical liens on workers’ compensation claims for services rendered by medical providers. Montes issued letters to AIG Insurance Co. and Matrix Absence Management Inc., indicating that his two companies had been authorized by the medical providers to negotiate, settle and collect monies to resolve unpaid liens. It is alleged that Montes did not have authority to resolve the unpaid liens.

Porrata, Cruz Thompson and Martinez were employed by AIG as workers’ compensation insurance adjusters. As AIG employees, the three people allegedly made payments of nearly $1.2 million to W.C. Surgery Centers and W.C.S.C. & Associates.

On Feb. 2, 2007, AIG received a demand on behalf of Coast Plaza Doctors Hospital for payment of almost $100,000 in outstanding medical liens. AIG discovered that they had paid W.C.S.C. & Associates for resolution of the lien. They also learned that they made 49 additional payments totaling almost $1.1 million to W.C.S.C, believing that the company was authorized to handle unresolved liens for various medical providers. AIG confirmed that all fifty payments to W.C.S.C. were caused to be paid by only three adjusters: Martinez, Cruz Thompson and Porrata, CDI said.

California Department of Insurance and Orange County District Attorney’s Office investigators discovered that the adjusters had worked together previously at another workers’ compensation claims administrator, Matrix Absence Management, where they allegedly defrauded the company out of more than $310,000.

On May 7, 2010, three additional co-defendants were sentenced in connection with this case. Porrata, 46, of Moreno Valley plead guilty to 50 felony counts of grand theft, 50 felony counts of insurance fraud and one felony count of conspiracy. He was sentenced to eight years in state prison and ordered to pay $1.2 million in restitution.

Cruz Thompson, 47, of Victorville plead guilty to 11 felony counts of grand theft, 11 felony counts of insurance fraud and one felony count of conspiracy. She was sentenced to two years in state prison and ordered to pay $224,653.33 in restitution.

Martinez, 43, of Apple Valley plead guilty to 11 felony counts of grand theft, 11 felony counts of insurance fraud and one felony count of conspiracy. He was sentenced to two years in state prison and ordered to pay $300,003.36 in restitution.

The Orange County District Attorney’s Office is prosecuting this case.

Source: CDI