Two Californians arrested in $20 million insurance fraud, kickback scheme
Co-conspirators Bradley Dean Groscost and Felix Koltsov self-surrendered to the Orange County Central Justice Center.
California residents Bradley Dean Groscost, 59, and Felix Koltsov, 57, self-surrendered 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.
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 California Department of Insurance’s investigation, with the assistance of the National Insurance Crime Bureau, discovered that Grost 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 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, Groscot owed EDD over $1.6 million in taxes, penalties and interest.
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 Jan. 22, 2020, and posted bail of $500,000. Groscost surrendered to the court on Jan. 24, 2020, and remains in custody; his bail is set at $500,000.
“These co-conspirators allegedly ordered screenings and prescriptions for injured workers in order to enrich themselves, not to protect their patients,” Insurance Commissioner Ricardo Lara said in a statement. “By investigating fraud, my department is helping keep insurance costs down for all California consumers and businesses.”
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