Investigators Launch Major Workers’ Comp Fraud Probe

More than 120 investigators and prosecutors looking into workers’ compensation fraud in Southern California served search warrants Wednesday at 31 sites, including the homes and offices of a string of doctors and lawyers suspected of paying illicit kickbacks.

The investigation is one of several major workers’ compensation fraud probes launched by authorities in the region since the beginning of last year.

Authorities gave few details about the emerging kickback investigation, and the affidavits supporting the search warrants were ordered sealed. But sources confirmed that the probe is linked to an alleged scheme in which doctors and lawyers paid kickbacks to middlemen who arranged referrals. State law bars doctors and lawyers from paying for individual referrals.

Among the locations searched by investigators was the Upland home of Mary Lou Potter, an account executive with a firm known as Walker Advertising. Potter’s role in allegedly arranging illegal referrals for doctors was a subject of an undercover investigation by ABC television’s “PrimeTime Live.”

In a nationally televised broadcast in February, Potter was shown soliciting business from the operators of a supposed medical clinic, which, unbeknown to her, was set up by ABC News and monitored by hidden cameras. Potter told the undercover ABC employees that “the overall concept of workers’ comp is big money” and that “a million dollars is chump change to a medical office when they do workers’ comp.”

Also searched on Wednesday were six law practices considered suspects in the investigation: the offices of Baumann & Rose in Beverly Hills, El Monte and Chatsworth; Lake & Levine in Sherman Oaks; Veronika de Carol Hayes in Los Angeles and Inglewood; Irving J. Levin in Commerce; Robert Perkins Jr. in Santa Ana, and Nkwo Cheaney in Los Angeles.

In addition, the offices of four doctors under investigation were searched: Aldolfo Zwatlow of Hancock Medical Group in Los Angeles; Charles Wexler in Tarzana and Encino; Fred Hafezi in Anaheim, Rancho Cucamonga and Whittier, and Ali Mumtaz in Los Angeles.

Among other sites searched were nine offices of doctors and lawyers who are not considered targets of the investigation. No arrests were made.

The searches, some of which continued late into the night Wednesday, were directed by the California Department of Insurance.

Also participating were the district attorney’s offices of Los Angeles and Orange counties, along with the California Medical Board and the U.S. Postal Service.