February 19, 2018
On January 12, 2018, a former Southern California hospital owner was sentenced for to more than five years in prison for filing fraudulent workers’ compensation claims. The former Pacific Hospital owner was also fined $500,000 for masterminding a $600 million workers’ compensation scheme. He pled guilty to charges of paying illegal kickbacks and conspiracy in 2014.
Many of the claims were paid by the state and the federal government. A few days prior to sentencing, he was also ordered to liquidate assets, including at least three, high-end vintage cars and property, so that he could pay $10 million to the government.
Michael Drobot reportedly ran the scheme out of the Long Beach hospital for at least 15 years. He paid out more than $40 million to dozens of medical professionals, including chiropractors and doctors, as compensation for referrals for spinal surgeries. The involved parties were paid $10,000 for each cervical fusion surgery and $15,000 for each lumbar fusion surgery. Thousands of patients were operated on over the course of the fraudulent activity. Tallies for the last eight years of the scheme ran upwards of $600 million for that period alone. Insurance companies paid the medical facility more than $226 million for the operations due to the kickbacks.
Drobot also owned a company that sold medical hardware that was a necessary part of the surgery, and costs included this medical equipment. As such, he took advantage of a law that has since been repealed that allowed medical facilities to bill this medical hardware to workers’ compensation insurers at full-price rates.
Drobot’s son and six other individuals have also entered guilty pleas in related cases. Ronald Calderon, a former state senator, was previously sentenced to prison for accepting brides, including money from Drobot. A U.S. district judge called his actions greedy during sentencing.
Workers’ compensation funds help employees recover funds after an on-the-job injury. Fraud by businesses drains these monies, robbing workers of needed money that is rightfully theirs. If you have questions about an on-the-job accident and workers’ compensation, we can help.