Five more arrested in widespread $600M kickback scheme

The former chief financial officer at a Southern California hospital and two orthopedic surgeons are among five individuals arrested and charged with participating in a widespread fraud scheme that lasted eight years and led to more than half a billion dollars in false claims.

All of the defendants have pleaded guilty or have agreed to plea deals that would require them to assist in the ongoing investigation, dubbed by investigators "Operation Spinal Cap," according to the Department of Justice. The individuals were part of a long-running kickback scheme that paid $15,000 for each lumbar fusion referral and $10,000 for each cervical fusion referral, amounting to tens of millions of dollars in illegal kickbacks.

James Canedo, former CFO of Pacific Hospital in Long Beach, pleaded guilty to fraud charges in September. Canedo admitted to paying kickbacks to dozens of doctors, chiropractors and marketers, and tracking payments made by the hospital, along with the number of referrals provided by various physicians. Orthopedic surgeons Philip Sobol and Michael Cohen, along with Las Vegas chiropractor Alan Ivar, received more than $8 million in kickbacks in exchange for 200 patient referrals.

Phil Ricard Randall, a marketer with Pacific Hospital and Tri-City Regional Medical Center in Hawaiian Gardens, pleaded guilty to charges that he introduced physicians to hospital administrators and coordinated kickback agreements.  

Tuesday's announcement added more defendents to a high-profile investigation that has already ensnared a hospital CEO and a California senator. In 2014, Michael Drobot , the former owner of Pacific Hospital, pleaded guilty to submitting more than $500 million in fraudulent workers compensation claims over a 16-year period. Drobot also admitted to bribing Democratic state Sen. Ron Calderon to pass legislation that allowed him to bill insurers for the full cost of spinal implants.

For more:
- here's the DOJ announcement

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