California Hospital Executive Charged in a $500 Million Healthcare Fraud Scheme; State Senator Tied to Corruption By Tod Aronovitz | 03/05/14 | 0 Comment

On our ARONOVITZ LAW Blog, we consistently report on healthcare fraud occurring in the Miami area and around Florida. However, fraudulent practices—such as inflated and false billings and kickbacks to people who help perpetuate an illegal scheme—can happen anywhere in the country, and can even occur at the highest levels within an organization.

Take, for example, what is happening in California involving charges against three central figures—a hospital executive, a state senator and the senator’s brother—in what has been called one of the largest insurance fraud cases in the history of California’s Department of Insurance.

According to U-T San Diego, Michael Drobot, former CEO of Pacific Hospital of Long Beach, agreed to plead guilty to $500 million in healthcare fraud charges in return for a reduced sentence. Drobot is linked to paying millions of dollars in illegal kickbacks over 16 years to physicians and chiropractors who referred patients to his hospital, in addition to submitting inflated claims to workers’ compensation insurance carriers for spinal surgeries involved in the alleged scheme. Drobot also agreed to testify in the case.

The second player in the alleged scheme, Sen. Ronald S. Calderon, is charged with 24 counts of corruption, including accepting bribes and lavish perks from Drobot to affect legislation, the article reported. Drobot said that, with Calderon’s help, he was able to put forth his legislative agenda before other senators and advocate for bills that would financially be advantageous to his hospital.

Federal prosecutors also filed seven counts of money laundering against Calderon’s brother, Thomas Calderon, for allegedly helping his brother cover up the bribes.

According to court documents, some of “the patients lived dozens or hundreds of miles from Pacific Hospital, and closer to other qualified medical facilities.” The patients were not notified that their medical professionals were getting financial compensation for referring them to Drobot’s hospital. Drobot’s bribery payment scale was based on specific surgeries, court documents reveal, remunerating $15,000 per lumbar fusion surgery and $10,000 per cervical fusion surgery.

Dubbing their investigation “Operation Spinal Cap,” prosecutors used an undercover FBI agent in their investigation to expose the corruption.

Drobot is scheduled to be arraigned on March 31 in federal court in Santa Ana, California, where he could enter a plea. However, his sentence will be deferred until the Calderon case is completed. Drobot’s plea agreement could send him to prison for as long as 10 years, according to the U.S. Attorney’s Office.

Although no other doctors or legislators have been named in the indictment, the U.S. attorney alleged that “dozens” participated in the scheme and said its investigation was continuing, a Wall Street Journal article reported.

Drobot’s attorneys issued a brief statement following the announcement, according to the Sacramento Bee:

“As his plea agreement reflects, Mr. Drobot has acknowledged and accepts responsibility for his actions,” the lawyers said. “He is providing information to assist the government in its expanding investigations.”

This case serves as a reminder that inflated or false billings to a government agency such as Medicare or Medicaid may qualify for whistleblower actions. Insiders privy to false billings or kickback schemes should speak with an attorney to discuss their options.

How to Report Miami Medicare Fraud

Healthcare or medical billing employees who have inside knowledge of questionable Medicare billing practices can file a confidential legal claim under the False Claims Act. By acting as a “whistleblower” in what is known as a “qui tam” lawsuit, a private party may collect between 10 to 30 percent of the amount recovered, depending on how the case is prosecuted.

ARONOVITZ LAW: Miami Whistleblower / Qui Tam Law Firm

The Miami Qui Tam law firm of ARONOVITZ LAW routinely works with Miami whistleblowers to document Medicare fraud and other forms of fraud against the government. Contact Miami Whistleblower / Qui Tam lawyer Tod Aronovitz to discuss a case.