Two arrested in $20 million health care insurance fraud and kickback scheme

Case # 20CF0207

Two arrested in $20 million health care insurance fraud and kickback scheme

LOS ANGELES/ORANGE, Calif. — Bradley Dean Groscost, 59, of Westminster, and Felix Koltsov, 57, of Beverly Hills, self-surrendered last week to the Orange County Central Justice Center after being charged with multiple felony counts of insurance fraud, money laundering, and unlawful referrals for allegedly conspiring to bill insurers in excess of $20 million as part of a kickback referral scheme.

“These co-conspirators allegedly ordered screenings and prescriptions for patients in order to enrich themselves, as part of a kickback referral scheme,” said Insurance Commissioner Ricardo Lara. “By investigating health care fraud, my department is helping keep insurance costs down for all California consumers and businesses.”

From 2014 to 2017, Groscost operated five workers’ compensation clinics in Southern California. Doing business as DSJ MGT, Inc. in Fountain Valley, Groscost controlled treatments, referrals, and medical and financial records at the clinics even though he was not licensed to practice medicine.

The Department of Insurance’s investigation, with the assistance of the National Insurance Crime Bureau, discovered that Groscost allegedly received approximately $2.1 million in kickbacks from Koltsov, owner of LFPS Inc. and Resource Pharmacy Inc., for patient referrals for urine drug screenings and compound cream prescriptions. Koltsov’s companies billed workers’ compensation insurance carriers over $20 million for these claims.

The investigation also revealed that Groscost allegedly failed to report employees to the Employment Development Department (EDD) and paid them as independent contractors. He failed to report over $5.1 million in wages to EDD and as a result, avoided paying over $510,000 in taxes. As of July 5, 2019, Groscost owed EDD over $1.6 million in taxes, penalties, and interest.

“These fraudulent workers’ compensation claims funnel resources away from injured workers and make it more difficult to provide the treatment to those workers who truly need it,” said District Attorney Todd Spitzer. “The Orange County District Attorney’s Office is collaborating with the California Department of Insurance to crack down on workers’ compensation fraud and preserve resources for the truly injured.”

This case is being prosecuted by Deputy District Attorney Christine Oh of the Insurance Fraud Unit of the Orange County District Attorney’s Office. Koltsov surrendered to the court on January 22, 2020, and posted bail of $500,000. Groscost surrendered to the court on January 24, 2020, and remains in custody. His bail is set at $500,000.