The former owner of a Los Angeles-area hospital will plead guilty to federal charges that he bribed a state senator as part of a wide-ranging kickback scheme to get spinal surgery cases referred to his facility, the Associated Press reported. Altogether, the fraudulent charges connected to the scheme may top $500 million.
Michael D. Drobot, who was the one-time owner of Pacific Hospital in Long Beach, Calif., admitted to paying State Sen. Ronald S. Calderon, a Democrat who represents a district in Montebello, a city east of Los Angeles, $28,000 in bribes, luxury items and jobs to his children in exchange for closing loopholes in state law that would cut the reimbursement for spinal fusion surgeries.
Additionally, Drobot paid kickbacks of $15,000 per lumbar fusion surgery and $10,000 per cervical fusion surgery for patient referrals from physicians, chiropractors and others to refer patients. Patients were sometimes referred to Pacific Hospital from locals hundreds of miles away, even though there may have been other facilities much closer qualified to perform the fusion procedures, according to the Long Beach Press-Telegram.
Drobot financed the kickbacks by inflating the pass-through costs of devices that were implanted during the surgeries. California's hospitals doubled-billed workers compensation insurers by $67.5 million in 2010 in part because of such pass-through charges.
Drobot's scheme operated from 2008 to last year, according to federal prosecutors, with the California's workers' compensation system and as many as 150 different insurance companies paying for the charges. Pacific Hospital has since been sold to another entity.
Spinal fusion surgeries have generated controversy in recent years, with many doctors performing hundreds of the procedures a year, some collecting millions of dollars in device royalties, with physician lobbies fighting fiercely to keep their claims data connected to Medicare and other federal programs anonymous.
In exchange for pleading guilty to two lesser federal charges of conspiracy and paying kickbacks in connection to a healthcare program, Drobot will testify against Calderon and his brother in future legal proceedings.