A Beverly Hills physician and eight others were arrested Tuesday for allegedly bilking insurance companies of up to $50 million in what was described as one of the largest workers’ compensation fraud rings in California history.
Dr. Mark Kaplan is charged with masterminding an enterprise that recruited thousands of laid-off workers and persuaded them to make false injury claims. Accomplices allegedly would put them through a battery of unnecessary, overpriced tests at clinics controlled by Kaplan and run up millions in phony bills.
Kaplan and the others arrested Tuesday “were not practicing medicine, they were practicing insurance fraud,” state Insurance Commissioner John Garamendi said at a news conference, adding that Kaplan’s ring took in from $30 million to $50 million over four years.
The arrests were part of a new collective initiative on the part of Garamendi, prosecutors across the state, insurance companies and private businesses to fight insurance fraud by going after the leaders of the big rings rather than individuals who file false claims.
Kaplan, 53, and his ex-wife, Polina Ioffe, who allegedly worked as his office administrator, were arrested at their estate in Beverly Hills. The others arrested include another physician, a chiropractor, a paralegal and operators of a word processing service and a purported employment agency.
Kaplan, an immigrant from the Ukraine who studied medicine in Moscow, was being held in lieu of $10 million in bail. Ioffe was held in lieu of $2 million.
A source close to the investigation said prosecutors were attempting late Tuesday to freeze Kaplan’s extensive assets, reportedly kept in nearly 80 bank accounts.
“This ring was among the most sophisticated and profitable we have ever investigated,” Garamendi said. ". . . This kind of fraud is bleeding California dry and will not be tolerated.”
Fraudulent claims are thought to cost California’s workers’ compensation system an estimated $1 billion a year, with organized rings being responsible for much of the loss. The fraud adds to the high cost of the insurance, which is blamed for driving many businesses out of the state.
Garamendi, who was joined by Los Angeles County Dist. Atty. Gil Garcetti, said Kaplan was responsible for helping drive one company out of state in 1991. He said Pike Trailers, based in Bell Gardens, had operated in Southern California for nearly a century before Kaplan targeted its workers and drove up its insurance rates.
“It was partly because of the recession, but also because its insurance rates skyrocketed,” Garcetti said. “Pike Trailers is now in Colorado.”
Garcetti said the thousands of workers who participated in Kaplan’s scheme were recruited by “cappers,” people who specialize in “selling” men and women to insurance fraud rings.
The cappers allegedly recruited laid-off workers through television spots and advertisements in foreign language publications. Once recruits arrived, they would be persuaded that an insurance claim was better than a job, according to Garcetti.
Claims would be filed against a person’s former employer. Authorities believe that Kaplan targeted undocumented people and non-English speakers because they, in many cases, did not fully understand what they were being asked to do or because they would be unlikely to report what they knew.
The investigation was triggered in March, 1992, by a complaint from an insurance company. Garcetti noted that the effort was aided by a Teamsters local that encouraged its members to provide evidence against the ring.
The others taken into custody were identified as Dr. Shadpour Yashar of Los Angeles, who ran two Kaplan clinics that have closed; Robert Pflager, a chiropractor and La Crescenta resident who worked at those clinics; Karine Nersessian, a West Hollywood office manager; Alina Akopyan of Panorama City, who ran a purported employment agency; James Hahn of Los Angeles, manager of the word processors that prepared medical and legal reports; Hakop Boyadjian of North Hollywood, who served a variety of functions for Kaplan, and Francisco Osuna of Gardena, a major recruiter for the organization.
Authorities were seeking and expected to arrest Marina Keshishian, of Glendale, Karine’s sister and a paralegal. An 11th suspect, Helio Oleveira Azevedo, an alleged capper, remained at large. He also is being sought by the Los Angeles Police Department on unrelated murder charges.
Investigators on Tuesday also served search warrants on six sites associated with Kaplan’s alleged fraud ring.
In an unrelated case, authorities said four arrests were made Monday at Enlace One/LA Labor Orientation, an employment agency that allegedly provided patients and clients for doctors and lawyers who were responsible for fraudulent workers’ compensation insurance claims.
Arrested were an employee of the agency, a medical assistant and two legal assistants.