Former Hospital CEO, Calif. Senator Charged in Insurance Fraud Case
On Friday, Michael Drobot -- former CEO of Pacific Hospital of Long Beach -- said he would plead guilty to charges of giving $500 million in illegal kickbacks over 16 years to physicians that referred patients to the hospital for spinal surgery, AP/U-T San Diego reports.
In addition, Drobot said he would testify on the alleged involvement of state Sen. Ronald Calderon (D-Montebello) and Calderon's brother (Deutsch, AP/U-T San Diego, 2/21).
The California Department of Insurance said the case is the largest insurance fraud case in its history.
Details of Indictment
Drobot allegedly paid physicians between $10,000 and $15,000 for each spinal patient referred to Pacific Hospital. According to the Wall Street Journal, spinal surgeries are among the most lucrative services offered at hospitals.
In addition, Drobot owned a spinal-implant distributorship and said he required physicians who referred patients to use implants supplied by his company and then charged insurers inflated rates when seeking reimbursement (Carreyrou, Wall Street Journal, 2/21).
According to court documents, "In some cases, the patients [who were referred] lived dozens or hundreds of miles from Pacific Hospital, and closer to other qualified medical facilities" (U-T San Diego, 2/21).
Drobot could receive a sentence of up to 10 years in prison if he is convicted (Wall Street Journal, 2/21).
Details of Alleged Calderon Involvement
On Friday, Calderon was charged with 24 counts of corruption, including bribery, for his alleged involvement in the case ("The California Report," KQED, 2/21).
In a plea deal for a reduced sentence, Drobot said he gave Calderon tens of thousands of dollars so he would support legislation that would allow hospitals to charge workers' compensation carriers for the cost of medical tools.
According to the Sacramento Bee's "Capitol Alert," Drobot allegedly offered Calderon a "stream of financial benefits" for his support, such as:
- Payments to Calderon's children;
- Travel accommodations; and
- Expensive meals (Siders, "Capitol Alert," Sacramento Bee, 2/21).