Inside California's largest healthcare fraud scheme
A vast web of bribes, kickbacks, counterfeit hardware and a legislative loophole allowed one California spine surgeon to cash in on spinal fusion surgeries for which the state paid millions of dollars, according to an article by Los Angeles Magazine.
In 2014, the former owner of a Long Beach hospital, Michael Drobot, pleaded guilty to charges that he bribed California Sen. Ronald S. Calderon, and paid kickbacks for patient referrals for lumbar fusion surgery and cervical fusion surgery. Prosecutors believe the scheme led to as much as $500 million in fraudulent payments. In November, the former chief financial officer of the Long Beach hospital and two orthopedic surgeons were among five additional individuals charged with participating in the eight-year fraud scheme.
Another chapter of the long-running saga is scheduled for May 10, when Calderon's trial begins. Prosecutors say the former senator took bribes from Drobot to uphold a long-standing law that required the state to cover expensive spinal fusion surgeries for employees who were injured on the job through the state's worker's compensation program. The law included a provision, known as the "pass through allowance," which allowed providers to charge for individual pieces of hardware and tack add a surcharge for each item.
That loophole prompted a string of events, according to LA Magazine. Drobot began paying physicians and chiropractors $10,000 to $15,000 for each referral and purchased cheaper, counterfeit hardware that he used to bill the state as much as $12,000 per screw. All the while, Drobot was allegedly paying kickbacks to Calderon, disguised as payments to the senator's son for ghost jobs, which was discovered by an FBI investigation called "Operation Spinal Tap."
Drobot is also accused of providing the senator with luxury golf course memberships, expensive dinners and transportation on private plans in an effort to maintain the state's legislative loophole that allowed him to bill for spinal fusion surgeries. Drobot's suspected payments to Calderon and his brother, Tom Caderon, who served as an unregistered lobbiest for Drobot, ultimately attracted the attention of FBI agents. When the law was finally amended in 2013, spinal surgeries dropped 56 percent, according to the magazine.
Drobot's guilty plea requires him to testify against Calderon in the upcoming trial, after which the former hospital owner will face sentencing.
To learn more:
- read the LA Magazine article
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