Law Firm Employees, Vocational School Owners Among Seven Indicted In Workers’ Compensation Insurance Fraud Case

The California Department Of Insurance has announced that a grand jury in Kern County has handed down indictments against seven people, including the owners and several employees of Instituto Hispano Americano (IHA), a vocational school, and employees at two law offices handling workers’ compensation cases. The defendants face allegations that they conspired to misuse and misappropriate Supplemental Job Displacement Benefit vouchers, defrauding 20 separate insurers of over $330,000, in part with illegal kickbacks.

The vouchers, a tool for injured workers to re-enter the workforce in a new trade, are intended to help with tuition, educational materials, tools, supplies, and vocational counseling as they pursue training. The vouchers are a popular target for fraud, from not providing the reported trainings to taking kickbacks and providing cash payments in lieu of training. In this case, the defendants are alleged to have lied about test results required for enrollment eligibility, and paid kickbacks for referrals from the law firm employees. The employees of the law firms, which represent workers’ comp applicants in their case, each received up to $600 for each case they referred.

Insurance Commissioner Ricardo Lara issued a scathing statement regarding this abuse of the workers’ compensation system. “By allegedly misusing benefits designed to help injured workers re-enter the workforce and be able to make a living, this business cheated workers, insurance companies and our state,” he said. “Workers’ compensation vouchers are a vital program for retraining injured workers and the Department of Insurance will continue to protect it.”

The defendants, Anna Ayala-Reyes, Sylvia Carrillo, Evelyn Cruz, Martin Cruz, Nelfido Rolando Cruz, Cynthia Ozaeta, and Sandra Paredez, each face 85 separate charges. The charges include conspiracy to commit insurance fraud, offering or receiving money in exchange for referrals, and charges related to the falsifying of information regarding the eligibility for insurance benefits. The case is being prosecuted by the Kern County District Attorney’s Office.