Lawyer Convicted of Workers’ Compensation Fraud
Post 5031
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In The People v. Jon Woods, G061948, California Court of Appeals, Fourth District, Third Division (March 18, 2025) a jury convicted Jon Woods of 37 felony counts of workers’ compensation fraud.
Woods was a worker’s compensation attorney who had made business arrangements that involved unlawful kickback and referral fees.
Woods contended that the Williamson rule (In re Williamson (1954) 43 Cal.2d 651, 276 P.2d 593) precluded convictions on counts 5 through 37. The Williamson rule states that where the Legislature has defined a specific crime with a lesser punishment, the conduct described by that crime may not be charged as a more general crime with a harsher punishment. Woods argued that his conduct was covered by a more specific statute, Labor Code section 139.32, which makes it a misdemeanor to refer work to third-party servicers in exchange for compensation.
THE WORKERS’ COMPENSATION SYSTEM
Workers’ Compensation is a scheme where employers agree to promptly compensate employees for injuries sustained on the job regardless of fault, and employees agree to the limited remedies available under the scheme.
The Legislature passed laws to protect insurers and the overall workers’ compensation system from abuse, including making it a crime to participate in a kickback scheme which was the criminal conduct of Woods, Gonzales and Arguello.
FACTS
Woods arranged with Edgar Gonzales to use copy services business called USA Photocopy, which provided subpoena services for workers’ compensation attorneys. USA Photocopy paid for some of Woods’s business expenses, including the salary of certain employees hired by Woods.
Woods’s arrangement with Arguello involved a marketing company that advertised to obtain workers’ compensation clients. Using Arguello’s copy service for subpoenas was a condition of engaging his advertising service. Woods paid Arguello’s businesses $1,425,000 in fees for advertising services over the course of their relationship.
Arguello pleaded guilty to federal criminal charges related to worker’s compensation fraud and was sentenced to four years in federal prison. He also pleaded guilty to charges brought by the Orange County District Attorney.
The Attorney General alleged four aspects of Woods’s relationships with Gonzales and Arguello that were illegal. These included operating as a runner or capper service, providing fully signed and retained clients prior to any interaction with Woods, a quid pro quo arrangement, and an illegal cross-referral service.
After conviction Woods was sentenced to four years in prison and ordered to pay restitution in the amount of $701,452.
THE APPEAL
Woods appealed, and the court reversed counts 5-37 based on the Williamson rule. Woods contended that his conduct is covered by a more specific statute that criminalizes kickback schemes, which is what Woods was accused of participating in, Penal Code Section 550.
DISCUSSION
Absent some indication of legislative intent to the contrary, the Williamson rule applies and there does not need to be perfect overlap between the general and specific statutes.
The People’s theory of how Woods violated Penal Code section 550 was precisely that he violated Labor Code section 139.32 and, therefore, the Williamson rule applies. The Court of Appeals agreed with Woods under these circumstances, and thus reversed his conviction on counts 5-37. This will also require reversal of the white-collar sentencing enhancement based on these charges, as well as a restitution award based on these charges. The restitution order of $701,452 was reversed without prejudice to the court reassessing restitution at a new sentencing hearing. In all other respects, the judgment was affirmed.
ZALMA OPINION
A lawyer committing fraud taking advantage of the Workers’ Compensation system where his crimes resulted in more than a million dollars of kickbacks and payment for cappers who illegally signed up clients for Woods. The court only found that the state overcharged Woods and required him to serve an appropriate sentence for his fraud on the Workers’ Compensation system, employers and their insurers. Jail and an appropriate amount of restitution to the defrauded insurers should be assessed.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Go to X @bzalma; Go to the Insurance Claims Library – https://lnkd.in/gwEYk
Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105
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Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.
In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.
BACKGROUND
Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....
Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104
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Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy
In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.
The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS
Parties Involved:
CAEA is insured by Associated Industries Insurance Company, Inc. ...
Exclusion Establishes that There is No Duty to Defend Off Site Injuries
Post 5103
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Attack by Vicious Dog Excluded
In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)
Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that
1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.
Presently before the Court are two ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...
