San Diego Physician Arrested on 23 Counts of WC Fraud

June 9, 2003

A San Diego physician indicted on 23 counts of workers’ compensation-related insurance fraud and perjury has been arrested after a joint undercover investigation by the California Department of Insurance (CDI) Fraud Division, the San Diego County District Attorney’s Office, and the Office of the Inspector General, U.S. Postal Service.

James Louis Stakely, 65, was taken into custody and a search warrant was executed at his business, Industrial Physician Medical Group. Investigators found a large amount of cash at the site. Bail was set at $100,000.

Undercover operatives posing as patients with work-related injuries were sent to Stakely’s office beginning in 1999. According to investigators, Stakely reportedly never conducted a physical examination of the first operative, but placed him in a non-work status for 18 months. He also recommended that the operative receive an MRI and undergo other procedures.

A second operative was sent to Stakely in 2001 complaining of an alleged back injury suffered on the job. Investigators allege that Stakely never conducted a physical examination, but supposedly ordered an MRI.

On both operatives Stakely ordered dye injections to allegedly determine if there were spinal injuries, advising them that they would be eligible for a permanent total disability retirement and compensation package.

If convicted of the charges, Stakely could face up to 20 years in prison and/or a $50,000 fine.

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