Suspect Held in Insurance Fraud Ring

A West Hills man was arrested Thursday and charged with running a workers’ compensation insurance-fraud ring that state investigators believe may have bilked insurance companies and doctors out of millions of dollars.

Michael Phillip Fleder, 30, is charged with 56 counts of insurance fraud and 19 counts of grand theft. He is expected to be arraigned today in San Diego Municipal Court and is being held in lieu of $1-million bail.

Also arrested was Paul Stanzione, 27, a claims examiner for Republic Indemnity Co. in San Diego. He is charged with 21 counts of insurance fraud and nine counts of grand theft, and is also expected to be arraigned today.

Each count of workers’ compensation insurance fraud carries a maximum penalty of five years in prison.

The alleged fraud scheme involved workers’ comp bills submitted to Republic by Fleder’s medical administration companies, Falcon Medical Services and Medical Specialist Group, both based in Malibu.

According to court documents, from May to December, 1992, Stanzione referred about 20 workers’ comp patients covered by Republic to doctors working under agreements with Fleder’s companies.

But Fleder’s firms allegedly would create new, inflated bills with forged doctors’ signatures to submit to Republic for payment or would submit additional phony bills to Republic, according to court documents.

Stanzione is accused of approving fraudulent bills sent by Fleder’s companies without submitting the bills to the normal review process.

Court documents state that Falcon Medical and Medical Specialist Group collected about $20,000 from Republic, none of which was paid to doctors. “But our investigators believe that the actual fraud ring that Fleder created may have defrauded other insurance companies and involved (other) adjusters not yet apprehended,” said Bill Schulz, a spokesman for the state Department of Insurance, which aided the 13-month investigation. “The actual damage by this operation may run into the millions of dollars.”

Schulz said it’s also believed that Fleder defrauded doctors by withholding insurance payments intended for them. The doctors were not part of the fraud scheme, Schulz said, and many are expected to testify in the case.

Schulz and Deputy Dist. Atty. Don Canning in San Diego declined to say if more arrests would follow. They said the investigation also encompassed activities of Fleder’s father and business partner, Jules Fleder, who has not been charged.