View this article online: https://www.insurancejournal.com/news/west/2020/01/28/556746.htm

2 Arrested in $20M Workers’ Comp Fraud And Kickback Scheme

A pair of California men have been charged with multiple felonies in a reported $20 million kickback scheme involving worker’s compensation.

Bradley Dean Groscost, 59, of Westminster, and Felix Koltsov, 57, of Beverly Hills, self-surrendered last week to the Orange County Central Justice Center after being charged with multiple felony counts of insurance fraud, money laundering, and unlawful referrals for allegedly conspiring to bill insurers in excess of $20 million as part of a kickback referral scheme.

From 2014 to 2017, Groscost reportedly operated five workers’ comp clinics in Southern California. Doing business as DSJ MGT, Inc. in Fountain Valley, Groscost reportedly controlled treatments, referrals, and medical and financial records at the clinics even though he was not licensed to practice medicine.

A California Department of Insurance investigation, with the assistance of the National Insurance Crime Bureau, discovered that Groscost allegedly received roughly $2.1 million in kickbacks from Koltsov, owner of LFPS Inc. and Resource Pharmacy Inc., for patient referrals for urine drug screenings and compound cream prescriptions.

Koltsov’s companies reportedly billed workers’ comp insurance carriers over $20 million for these claims.

The investigation also revealed that Groscost allegedly failed to report employees to the Employment Development Department and paid them as independent contractors. He failed to report over $5.1 million in wages to EDD and as a result, avoided paying over $510,000 in taxes. As of July 5, 2019, Groscost owed EDD over $1.6 million in taxes, penalties, and interest, according to the CDI.

Koltsov surrendered to the court on Jan. 22 and posted bail of $500,000. Groscost surrendered to the court on Jan. 24 and remains in custody. His bail is set at $500,000.

The case is being prosecuted by Deputy District Attorney Christine Oh of the Insurance Fraud Unit of the Orange County District Attorney’s Office.