Denise Rivera said she didn’t work for four years while waiting for her workers’ compensation case to be resolved. She ultimately got a settlement for $32,500 -- about a year’s pay. John M. Blodgett for Reveal
Denise Rivera said she didn’t work for four years while waiting for her workers’ compensation case to be resolved. She ultimately got a settlement for $32,500 -- about a year’s pay. (John M. Blodgett for Reveal)

Profiteering Masquerades as Medical Care for Injured California Workers

Profiteering Masquerades as Medical Care for Injured California Workers

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This story was republished with permission from Reveal from The Center for Investigative Reporting. Subscribe to the Reveal podcast, produced with PRX, on iTunes and learn more at

Priscilla Lujan was awake soothing her infant son at 10 p.m. and again in the middle of the night. She let him gum one of the salty pistachios she was eating. She mixed a bottle of formula at the side of their shared bed.

It was the fitful kind of night that’s easily forgotten after a strong cup of coffee and a shy smile from a sleep-refreshed baby.

But that’s not what happened the next morning. When Lujan woke up, her son -- not yet 6 months old on Feb. 3, 2012 -- was cold. His lips, blue. His eyes, half open. She screamed to her mother to call 911.

At the hospital, Lujan stood in a room rocking her baby from side to side, sobbing. By then, Andrew Gallegos already was dead.


Police showed up at Lujan’s East Los Angeles home about a week later -- more than a dozen of them. They seized her medications. They handcuffed her and drove her to the police station, where a detective demanded answers: Why did her baby have toxic levels of pain medicine in his bloodstream?

During the interview, it dawned on Lujan: The pain cream she had slathered on her knee had gotten into her son’s mouth, through the pistachio and bottle of formula.

Photos of tubes of pain cream seized from Priscilla Lujan’s home were presented to an Orange County grand jury. Prosecutors alleged that businessman Kareem Ahmed helped formulate the toxic cream and was culpable in the death of Lujan’s infant son.
Photos of tubes of pain cream seized from Priscilla Lujan’s home were presented to an Orange County grand jury. Prosecutors alleged that businessman Kareem Ahmed helped formulate the toxic cream and was culpable in the death of Lujan’s infant son. (Orange County Superior Court)

“Oh my God, I killed my baby,” she told the detective.

Soon after, the focus of the case shifted. The new target was Kareem Ahmed, a millionaire businessman who made his fortune selling medicated creams for patients like Lujan, who struggled with pain after an injury on the job.

Ahmed eventually would be indicted for involuntary manslaughter in Andrew’s death and accused of a far more sweeping crime: paying more than $25 million in bribes to doctors, including Lujan’s, who prescribed the pain-relief creams.

To the people who combat fraud in California’s $24 billion workers’ compensation system, the case exemplifies unchecked profiteering that jeopardizes injured workers’ health and lives.

It is one of more than a dozen cases that, taken together, outline a medical landscape in which corruption masquerades as medical care for some of California’s injured workers.

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 beginning to turn the tide, 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.

Defendants include a physician assistant accused of “aggravated mayhem” after he operated on dozens of injured workers’ knees and shoulders, despite lacking surgical training. The outcomes often were disastrous.

“It still hurts today,” one worker testified in 2015, describing his unsuccessful 2010 shoulder surgery through an interpreter. “I can’t, you know, bend my arm, really.”

Along with the court records, Reveal analyzed data from more than a million workers’ compensation court cases, which show that over the last decade, workers have been swept into medical billing mills, prescribed unregulated medications and advised to undergo sometimes unneeded or high-risk surgery by doctors who were raking in bribes.

Prosecutors estimate that the accused have burdened the system with more than $1 billion in demands for money intended to help injured workers get back on the job.

The cases are being fought vigorously at every turn. Ahmed’s attorney secured an early victory, getting all but one count in his indictment thrown out; the prosecutor says she will refile the charges. Other attorneys defending the accused say the barrage of cases is a witch hunt that scares medical providers away from the system, limiting workers’ access to care.

Taken together, 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.

Workers such as Tammy Martinez, though, pay the greatest price. The 56-year-old truck driver hurt her back pushing a 1-ton cart.

The workers’ compensation attorney whom she relied on to help her navigate the system pleaded guilty in 2014 to being part of a criminal club: people taking bribes from hospital executive Michael Drobot.

Drobot had 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 the now-defunct Pacific Hospital of Long Beach. Federal prosecutors linked the bribes to more than 4,400 risky spinal operations at the hospital.

Michael Drobot, executive of the now-defunct Pacific Hospital of Long Beach, pleaded guilty in 2014 to paying at least $20 million in bribes to bring spinal surgeries to his hospital.
Michael Drobot, executive of the now-defunct Pacific Hospital of Long Beach, pleaded guilty in 2014 to paying at least $20 million in bribes to bring spinal surgeries to his hospital. (Pacific Hospital of Long Beach website via

Martinez’s lawyer, Sean O’Keefe, recommended that she see a surgeon, who, she later would learn, also was accused of taking bribes from Drobot. O’Keefe’s guilty plea singles out Martinez’s case as one spurred by illegal bribes and a conspiracy compelling her surgeon to perform a particularly complex -- and expensive -- operation.

When it came time for Martinez’s spinal surgery in October 2011, all did not go well. Doctors noted that after the procedure, her left foot grew pale and pulseless. Within weeks, her leg had to be amputated above the knee.

Since then, she said, it’s been a difficult journey to learn to stand again and to discover that her young grandson was not, in fact, afraid of her.

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

Across Southern California, Reveal found, companies employ intensive marketing to tap into a particularly vulnerable segment of the workforce. They blanket Spanish-language media with ads and target Latinos with calls to their homes. They suggest that filing a case could lead to a windfall.

“Receive up to $4,000 per month,” proclaim Spanish-language signs, business cards and fliers posted across Southern California. One workers’ compensation attorney troubled by the ads called the number out of curiosity. After that, messages from a buzzing call center lit up his phone five times a day -- for months.

Callers wanted to know “if I knew anyone who had been injured,” San Diego attorney John A. Don said, “if I could refer anyone to them.”

Christine Baker, director of the state Department of Industrial Relations, which administers workers’ compensation, initially responded to questions with a statement noting that other state authorities oversee medical providers and health fraud. But two weeks ago, she said her department had taken a closer look at unregulated medical care, and “we know there’s a problem.”

“We want workers to get appropriate care,” she said. “We don’t want overcare or undercare; either way is wrong. Delivery of care needs to be evidence-based, appropriate and quickly delivered.”

Baker said medical abuse is a symptom of a “deeper problem,” particularly in Southern California.

There, workers’ comp stands out as an easy target for scammers. While health care programs such as Medicare have developed an arsenal of weapons to ward off fraud, California 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.

Prosecutors filing a growing parade of cases are exposing this leadership vacuum and how it allows operatives to bypass the most competent medical providers for the highest bidder. 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.

“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.”

‘Nobody Cares’ About Workers’ Comp

As investigators began to puzzle over the 2012 death of Andrew Gallegos, it did not take them long to realize they already had a window into the world of the man who ultimately would be charged in the case.

Kareem Ahmed was the owner of Landmark Medical Management. He is not a pharmacist. But prosecutors, in the continuing legal case against him related to Andrew’s death, would point out that he still delved into the science of mixing medications to formulate pain creams.

Ahmed’s goal, they allege, was not to make the most effective salve, but the most profitable one. Experts would testify that, if ingested, the opioid-infused cream was a “loaded gun” that could kill an adult. His firms billed insurers $400 to $1,700 per tube for creams sent to Priscilla Lujan, totaling $59,000, court records show.

An undercover recording made nearly four years before Ahmed’s indictment gives a wider view of the world of workers’ compensation medical executives. In that recording, Ahmed makes it clear that many of them are up to no good -- and no one is stopping them.

Businessman Cyrus Sorat secretly recorded the conversation. Also in the pain cream business, Sorat was working for federal prosecutors as part of an agreement to seek leniency in a separate workers’ compensation fraud case.

As the two men shared a leisurely lunch at an upscale restaurant in Ontario, California, Ahmed marveled over the scale of the exploits of others who, like him, made their millions off health care for injured workers.

One stood out, he said, for paying doctors up to $50,000 a month to perform invasive and risky back surgeries: Drobot, the Long Beach hospital executive who eventually would plead guilty to bribing the surgeons.

“How come nobody does anything to him, man?” Ahmed implores in the recording, pounding the table.

Sorat lowers his voice. “Let me tell you something. If you do Medicare -- the feds hang you,” he says.

“Oh, I know, that’s why I never touch Medicare,” Ahmed says.

“But when it comes to workers’ comp …,” Sorat continues.

“Nobody gives a fuck,” Ahmed finishes the sentence.

“Nobody cares,” Sorat agrees. Ahmed laughs.

The men go on to discuss other workers’ compensation moguls. They cluck about a former chiropractor who they say had gotten a multimillion-dollar settlement from a large insurer. Sorat calls him “a criminal.”

“Yeah, and then he gets money. He’s wanted in six different states,” Ahmed said. “But nobody did anything. … Nobody does shit.”

They also talk about David Wayne Fish, a businessman who pleaded no contest in 2010 to taking money for patient referrals. He was accused of organizing dozens of lawyers and doctors to steer more than 4,000 cases to preferred medical providers and run up high bills.

Fish’s sentence: probation, fines and an order to stop demanding the $60 million he was seeking from insurers.

“He’s … walking! What happened to him? Nothing,” Ahmed said. “Six fucking years of (investigation), thousands of hours, and he’s walking? … He’ll … make a $100 million in one year again.”

“When it comes to workers’ comp …,” Sorat said.

Ahmed finished his sentence once again: “Yeah, nobody cares.”

Abuse Abounds In Specialized Courts

On a sunny Monday in November, the workers’ compensation court in Marina del Rey is swarming with activity. Lawyers weave down the halls from small courtroom to courtroom and gather in clusters. Others fervently broker deals on their cellphones.

There are 24 courts like this up and down the state. But the activity is particularly frenetic in Southern California, where the paperwork that fuels the court’s pace comes in by the virtual truckload.

Christine Baker, director of the California Department of Industrial Relations, says her department has taken a closer look at unregulated medical care, and “we know there’s a problem.”
Christine Baker, director of the California Department of Industrial Relations, says her department has taken a closer look at unregulated medical care, and 'we know there’s a problem.' (California Department of Industrial Relations)

These courts spend the bulk of their time settling liens -- claims for payments that medical and other service providers file against insurers or self-insured employers.

The lien system was created to protect the injured worker. It guarantees that even if insurers deny medical care, workers will have a medical professional to whom they can turn.

But the system also throws its doors open to providers excluded from insurers’ networks of preferred professionals. It allows thousands of unregulated entities to bill for any treatment, whiz-bang device, pain cream or DNA test. The only limit is the providers’ willingness to roll the dice on how much money they’ll rake in at workers’ comp courts.

The lien system thrives in California -- more than in any other state. One national insurance executive estimated in 2010 that his company does one-fifth of its business in California -- but deals with more than four-fifths of its liens there.

That volume creates “a very thick forest for thieves and scoundrels to hide out in,” said Lachlan Taylor, a former special counsel to the Department of Industrial Relations who analyzed the lien system in 2010.

His work informed a 2012 law that cut down on liens with a new $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, said Baker, the Department of Industrial Relations’ chief. And the number of liens filed last year is even higher than it was when Taylor 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.”

The shifting array of schemes is difficult for government authorities to track, much less for workers such as Denise Rivera. Her medical care providers amassed bills -- or liens -- amounting to $95,000. Yet the knee she sought help with continues to ache, swell and give out.

She injured it while working at a center for severely disabled children, a nursing assistant job she loved. She worked the night shift, feeding children, turning them when they slept and getting them ready for the next day.

“When you came in, (the kids) had a smile for you,” said Rivera, who lives in Riverside County.

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 Riverside 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.”

Multiple Medical Procedures

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

The clinic packed her schedule with appointments. Clinic staff gave her what looked like a school lunch 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.

Pain creams that “seemed like Bengay,” according to Rivera, arrived in the mail. For those creams alone, records show that Kareem Ahmed’s company billed $17,102. Ahmed is the pain-cream executive who was charged in baby Andrew Gallegos’ death. The pharmacist who made 145,000 tubes of cream for his company got $35 to $72 per tube, public records say.

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.”

Rivera said she did not work for four years while waiting for her workers’ compensation case to be resolved. Penniless, she set up her bedroom in her mother’s garage.

She ultimately got a settlement in the case to compensate her for a permanent disability. The amount was $32,500 -- about what she would have made in one year at work.

Going After ‘The Godfather’

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.

Heidary is accused of controlling medical treatment at the clinics, even though he’s not a doctor, which is a crime in California. Prosecutors say he also illegally owned and controlled law offices, even though he’s not a lawyer.

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.

Rivera said the allegations were bad news for her, given that she trusted the legal and medical professionals to fight for her best interests.

“It makes me angry,” she said. “I kind of want to cry."

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.”

Workers’ compensation court records show that Heidary’s clinic dropped claims in May for payment in Rivera’s case. Attorneys involved in the case say the bills were resolved in a confidential settlement.

Workers Struggle Physically and Legally

State and federal prosecutors have filed cases against more than 80 people for medical scams victimizing injured workers since 2010. The cases are moving forward in courthouses from Fresno to San Diego and are shaping up to be vigorous fights, with defendants battling every step of the way.

Parallel civil lawsuits also have emerged. They tend to pit insurers against medical providers in disputes over money.

But little is being done in any of the legal venues for injured workers who’ve been victimized.

Roger Brown’s doctor advised him to undergo back surgery in 2011 at Pacific Hospital of Long Beach, at the height of the cash-for-surgery scam. The operation did not go well, and he now relies on a caretaker to help him each day.
Roger Brown’s doctor advised him to undergo back surgery in 2011 at Pacific Hospital of Long Beach, at the height of the cash-for-surgery scam. The operation did not go well, and he now relies on a caretaker to help him each day. (Annie Tritt for Reveal)

Many, such as Denise Rivera, sign away their rights to future medical treatment in workers’ compensation cases. Others move forward with their lives, debilitated by medical care that left them worse off and unaware of the dynamics that shaped medical decisions.

That latter group includes Roger Brown, 59.

His back hurt badly after he was rear-ended in a car, but he still could work as a private investigator for a Riverside County law firm. He went fishing nearly every weekend and looked forward to annual deep-sea expeditions.

Brown’s doctor advised him to undergo back surgery in January 2011 at Pacific Hospital of Long Beach, where, Brown recalled, “he just felt the care was better.” That was at the height of the cash-for-surgery scam.

The surgery did not go well. During the first attempt to drill screws into Brown’s spine, the doctor drove special hardware 9 millimeters into his spinal cord. Even heavily medicated, the pain was unbearable.

“I would have taken my own life if I could have,” Brown said. “It was excruciating pain.”

He underwent a second surgery to fix the problem but emerged unable to drive or even work. Brown relies on a caretaker to help him each day.

The doctor who advised Brown to undergo the surgery in Long Beach has been accused of taking kickbacks from Michael Drobot, the executive who pleaded guilty to bribing doctors to operate at his hospital. Another surgeon who assisted in the case faces the same accusations.

Brown was so disgusted by the care that he sued for malpractice in April 2012. He didn’t get far before he decided to drop the case. As for the civil bribery accusations against his doctors, “I never heard anything like that,” Brown said.

Even if Brown had known about the illegal profiteering allegations over his medical care, it’s not clear that it would have gotten him anywhere.

Workers who’ve sustained medical harm under workers’ comp have little recourse, according to Irvine attorney Kevin Liebeck, partly because there is so little money in it for patients or lawyers.

Lawyers are reluctant to take medical malpractice cases due to caps on payouts in place since the 1970s, said Liebeck, a partner in a firm that takes such cases. Attorneys who want to help workers also are unlikely to go after a doctor for fraud because doctors’ liability insurance usually does not cover fraudulent care.

And most lawyers, he said, know that means they’ll be left struggling to get money from a doctor who can easily hide it.

“If you do stuff that is beyond the pale … and make a lot of money on it, even if you get caught and get a lot of grief, you will ultimately get out ahead,” Liebeck said. “Crime does pay for a lot of this stuff.”

Cases Move Forward for High-profile Defendants

Whether coming out ahead is the case for some of the high-profile defendants in workers’ compensation fraud cases remains to be seen.

Drobot, the Long Beach hospital executive, faces sentencing in June for paying bribes to pack his surgery suites with workers. He also pleaded guilty to bribing former state Sen. Ronald Calderon, who is fighting accusations in a separate case for delaying legislation that cut into the astronomical profit Drobot and others made on spinal surgery hardware. Drobot declined to comment.

Cyrus Sorat, the pain-cream businessman who made the audio recording of his friend Kareem Ahmed, went to prison in 2013 following his stint as a confidential witness for prosecutors. The judge who sentenced Sorat described his undercover work as active and significant, saying it would be valuable in multiple cases.

Although he faced a possible sentence of up to 6½ years, Sorat ultimately served two years in federal prison in California for mail fraud. He pleaded guilty to selling worthless billing rights to a third-party firm for pain creams that never were delivered to workers.

Sorat now faces new insurance fraud charges, also over his pain cream business. He has pleaded not guilty in the case, and his attorney did not return calls seeking comment.

Ahmed is fighting the case prosecutors filed against him in 2014. His attorney, Benjamin Gluck, said their early success in throwing out most of Ahmed’s indictment speaks “loudly about the quality of the allegations and, needless to say, we emphatically dispute them.”

Gluck noted that the undercover tapes obtained by Reveal contain no incriminating statements by Ahmed.

From what Ahmed told Sorat in their freewheeling conversation in 2010, criminal charges were not a fate he expected. Ahmed confided then that he had a plan for his millions. He wanted to build a children’s hospital in San Bernardino County -- a Cedars-Sinai for kids. But, he lamented, “nobody believes me.”

Ahmed faces another legal challenge. Priscilla Lujan filed a civil lawsuit against Ahmed and her doctor in 2013. Lujan declined to be interviewed for this article, but a transcript in Ahmed’s criminal case details the hours of Andrew’s death and all that her encounter with Ahmed’s company cost her.

After losing her baby, she testified, Ahmed’s companies kept sending the pain cream to her home and billing insurers for them -- $33,000 in all. She threw the boxes in her garage. She also lost custody of her older son. Child welfare officials declared her home unsafe, she said, because they believed she fed the toxic cream to her baby.

Contact the reporter at cjewett@cironline and follow her on Twitter @By_Jewett.