Two Arrests in $20 Million Workers’ Compensation Insurance Fraud Scheme

California’s Department of Insurance has announced that two men have been arrested on multiple felony charges after self-surrendering in Orange County. Felix Kolstov, 57, of Beverly Hills, posted bail in the amount of $500,000, and Bradley D. Groscost, 59, of Westminster, remains in custody on the same bail. The two men face charges of insurance fraud, money laundering, and unlawful referrals in a referral kickback scheme. The two men’s alleged conspiracy resulted in billings to insurers of over $20 million between 2014 and 2017.

Groscost, doing business as DSJ MGT Inc., operated five workers’ compensation clinics in Southern California, and controlled treatments and referrals, as well as medical and financial records, despite not being licensed to practice medicine. The investigation by the Department of Insurance revealed that he allegedly received over $2 million in kickbacks from Koltsov for patient referrals for drug screenings and prescription creams. Koltsov’s companies, LFPS Inc. and Resource Pharmacy Inc., billed these claims to workers’ compensation insurance carriers for over $20 million.

In a statement, District Attorney Todd Spitzer referenced a broader crackdown on workers’ compensation fraud by his office and the Department of Insurance. “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. 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.”