Credit: Shutterstock

Sean E. O’Keefe was a well-known attorney in San Diego, advertising on his website that his team put injured workers’ needs first. Public records list him as the lawyer on 9,000 injured workers’ cases.

But O’Keefe didn’t get success the old-fashioned way, helping clients and building a great reputation.

He paid cash for the bulk of the clients who walked through his door.

In recently released court records, O’Keefe testified that he paid a firm to send him two-thirds of his clients. He also promised the recruiter, Carlos Arguello, that he would make sure those workers ran up bills at certain medical providers who offered MRIs, sleep studies, psychology, medications and toxicology screenings.

“I was greedy and stupid,” O’Keefe told a San Diego grand jury Dec. 1. “Clients or patients were essentially treated as commodities and billing opportunities.”

O’Keefe’s revelations came in testimony recently unsealed in one of more than a dozen criminal cases against more than 100 people who made their living off the medical care rendered to California’s injured workers.

His testimony highlights Arguello’s recruitment firm, Centro Legal, as a big player. It was so efficient, O’Keefe said, that the kickback cash flow was “almost universal” in the treatment of Latino injured workers in Southern California.

The testimony sheds light on the way injured workers are used for profit, regardless of their medical needs. It also reveals the ongoing efforts of prosecutors to clean up a system that California lawmakers and officials are charged with governing.

An investigation by Reveal from The Center for Investigative Reporting found that the state labor department’s court-based system for medical liens, or demands for payment, has allowed questionable providers to reap millions for medical care that otherwise would go unpaid. The investigation also showed holes that allow such operators to profit from the system with virtually no oversight.

The stories have spurred a lawmaker to call on a state panel to conduct a review and were cited in the analysis of a pending bill that would ban felons from treating injured workers. The state labor secretary also has called on the state Department of Industrial Relations to convene a working group to examine the medical fraud problem.

As those efforts have gotten underway in recent weeks, even more prosecutions have been filed. They include a federal case against John Garbino, an Orange County marketer accused of getting kickbacks for generating business for certain pharmacies.

While Garbino’s case involves creams dispensed in a federal health program, he was a board member of an Orange County pharmacy firm that in 2015 reported net revenues of more than $66 million, much of it for medicated pain creams billed to insurers that cover California’s injured workers.

Another federal case unsealed in June against pharmacist Hootan Melamed and four co-defendants alleges that they paid doctors to prescribe medicated pain creams. The indictment says Melamed’s New Age Pharmaceuticals, based in Beverly Hills, crafted $20 medications that – in packs of five – could draw a $5,000 payment from the workers’ compensation system in California.

The cases bring the number of defendants accused of bilking the medical system for injured workers, mostly in the last three years, to more than 100.

O’Keefe, the San Diego attorney, is among them. Now barred from practicing law, he testified that he earned about $1.1 million a year representing injured workers, mostly by collecting a 15 to 18 percent fee from the settlement of their injury cases.

He pleaded guilty in August 2014 to federal charges of health care fraud and agreed to cooperate with prosecutors in hopes for a more lenient sentence.

In the recently unsealed San Diego County Superior Court testimony, he broke down how the kickback scheme worked.

O’Keefe said he paid Arguello for each client. Arguello has pleaded not guilty to federal charges related to his alleged patient recruiting and referral scheme. His attorney did not respond to a call or email for comment.

An FBI agent who testified in the case said Arguello’s firm engaged in “guerrilla marketing,” passing out cards at the border crossing to Tijuana, Mexico; putting them on parked cars; and displaying them in restaurants. The cards advised workers that they could earn up to $4,000 per month if they were injured at work.

O’Keefe said Arguello told him which chiropractor or doctor to which the patient would be referred. The doctor, in turn, would cut his or her own deals over the patient’s referrals for MRIs, sleep studies, nerve tests and medicated pain creams.

“And so whether I was paying for a referral or receiving a bribe, I could also be exchanging those clients for other clients, so to speak, more clients,” O’Keefe testified.

Steven Rigler, a San Diego chiropractor who pleaded guilty in the case, admitted that he paid recruitment and scheduling firms about $3,000 per month for the referral of 30 to 40 clients. The agreement bound Rigler to send patients to certain medical service firms.

O’Keefe noted that he didn’t send all of his clients into Arguello’s network of preferred doctors and chiropractors. He said he would engage in some “smoke and mirrors” and “spread the clients around a little bit” so workers’ compensation insurers wouldn’t cry foul over his practices.

“Otherwise,” he testified, “you couldn’t do what I’ve been doing for decades.”

This story was edited by Fernando Diaz and copy edited by Nikki Frick.

Christina Jewett can be reached at Follow her on Twitter: @By_CJewett.

Creative Commons License

Republish our articles for free, online or in print, under a Creative Commons license.

Christina Jewett is a reporter for Reveal, covering labor and workplace issues with a focus on the workers' compensation system. With reporting partner Will Evans and CNN, she exposed widespread fraud and failed government oversight of California’s network of addiction treatment centers for the poor. The stories led to the defunding of more than 200 rehab clinics and changes in state law. The Emmy-nominated series won the 2013 broadcast award from Investigative Reporters and Editors. Jewett – as part of California Watch, a project of The Center for Investigative Reporting – won the 2011 George Polk Award for medical reporting with Lance Williams and Stephen K. Doig. The series exposed outsized rates of rare but lucrative medical conditions at a rapidly growing hospital chain and spurred a federal investigation. She was also a Livingston Award finalist in 2010. Previously, Jewett worked at ProPublica and The Sacramento Bee, where a story she broke about contracting malfeasance led to arrests and convictions. She and a colleague also chronicled jail abuse and medical mistreatment, spurring countywide policy reforms. Those stories were honored with awards from the John Jay College of Criminal Justice and the National Council on Crime and Delinquency. Jewett is based in Sacramento, California.