Prosecutor Probes Alleged Kickbacks on RTD Claims

A Los Angeles County prosecutor said Friday that his office is investigating possible kickbacks and other irregularities in connection with personal injury claims filed against the RTD.

Deputy Dist. Atty. David Disco of the Major Frauds Division said the probe centers on operations at the company that processes the claims, Leonard J. Russo Insurance Services Inc., of Emeryville, Calif. He said some of the firm’s employees may have illegally referred personal injury claimants to favored doctors or lawyers in exchange for kickbacks. Disco declined to offer any further details.

John Richeson, assistant general manager of the Southern California Rapid Transit District, said the investigation was prompted by internal checks on personal injury claim pay-outs that were first brought to the district’s attention by the president of the claim-handling company himself, Leonard J. Russo. In a number of cases, there “was a question of whether claims were being properly reviewed,” Richeson said.

Opened and Closed Quickly

Richeson said the “main thing was the claims were opening up quickly and closing quickly,” sometimes within a matter of days. Normally, he added, the investigation of a claim “takes several months to close out.”

Although the extent of the possible irregularities was not clear, Richeson said that most of the pay-outs involved claims of less than $5,000. Under the RTD’s contract with the Russo firm, the claims administrator has authority to settle any case up to that amount without district approval. Most of the claims arise from people claiming that they were injured in a bus accident.

RTD board member Nicholas Patsaouras said the board was informed in closed session last year of the suspected irregularities and was assured that corrective steps were being taken. Among those steps was the removal “of three or four” Russo employees who had been working on personal injury claims, Patsaouras said.

Spotted Certain Patterns

Reached by telephone Friday, Russo said that he had spotted certain patterns of inflated personal injury claim pay-outs more than a year ago and asked police to investigate. He said that a small number of lower-level employees who had been working on RTD claims in the 50-member Los Angeles office are no longer with the firm, but he would not elaborate.

Russo said he did not know how many claims may have been involved or how much money might be at stake. However, he said the pattern of possible irregularities extended “probably over a period of six to 10 weeks.”

He added that his firm’s own insurance would cover any losses to the district stemming from any proven irregularities.