Once the worker was directed to a corrupt doctor, that “gatekeeper” physician repeatedly referred that patient for tests and medical equipment, even if it was not medically necessary. For example, a patient with a simple knee injury might be referred for urine tests, DNA tests, sleep studies, unnecessary medical equipment, and numerous MRIs on body parts in addition to the injured knee. This happened with hundreds of patients.

In infiltrating the group, the investigative team learned this criminal operation operated like many others—with secrecy and money flowing in all directions.

Iglesias and Arguello required corrupt doctors to prescribe a certain minimum quota of medical goods and services, on average, for each patient. To conceal the quota, Iglesias and Arguello required the doctors to enter into sham “marketing agreements.” If the doctor failed to live up to the quota, Iglesias and Arguello would cut off the flow of new patients to the doctor. Attorneys made money from their patients’ settlements, and they, too, paid kickbacks to patient brokers for new clients. Medical providers billed insurance and workers’ compensation at exorbitant rates—one provider billed nearly $6,000 for a single hot/cold pack for pain.

Participants met surreptitiously, often in parking lots, to exchange hidden cash—not the way aboveboard medical professionals and attorneys typically do business.

“A doctor was given cash stuffed in a children’s magazine,” Horner said. “An attorney received an envelope of cash for a spine surgery referral in a coffee house. Another doctor received a wad of cash concealed in a baby shower bag during a meeting in a restaurant parking lot. These trusted professionals were operating like street criminals.”

To date, 32 people and companies in the scheme have pleaded guilty and five have been convicted by a jury, receiving prison sentences as high as 10 years. In February, Iglesias was sentenced to five years in prison, and in April, Arguello was sentenced to four years. To date, more than $1.2 billion in suspect billings have been frozen.

As a result of this case and similar ones, California passed a state law that went into effect in 2017 that requires the state’s workers’ compensation system to suspend bills submitted by medical providers who are charged with fraud or abuse.

“The victims in this case were the injured workers who were denied honest services from their doctor. The judgement of these corrupt doctors, and the medical care they provided, was compromised by the kickbacks or prospect of kickbacks,” Horner said.