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In 2014, Michael D. Drobot, former chief executive officer and owner of Pacific Hospital of Long Beach, pleaded guilty to charges connected to a workers compensation fraud scheme that collected hundreds of millions.
The scheme illegally referred thousands of patients for spinal surgeries and generated $580 million in fraudulent billings over a 15-year period, according to the California Department of Insurance.
Mr. Drobot and others billed workers comp insurers and the U.S. Department of Labor for hundreds of spinal surgeries and other procedures performed on patients. The medical professionals who referred them were paid illegal kickbacks of $15,000 for each lumbar fusion surgery and $10,000 for each cervical fusion surgery, the department said.
In 2015, Studio City, California-based orthopedic surgeon Philip Sobol, Las Vegas-based chiropractor Alan Ivar, Orange, California-based health care marketer Paul Richard Randall, and Irvine, California-based orthopedic surgeon Mitchell Cohen were charged in connection with the scheme.
“Health care fraud and kickback schemes burden our healthcare system, drive up insurance costs for everyone, and corrupt both the doctor-patient relationship and the medical profession itself,” said United States attorney Eileen M. Decker in a statement last year. “The members of this scheme treated injured workers and their spines as commodities, to be traded away to the highest bidder.”
After passing reforms aimed at reducing workers compensation costs in 2012, California legislators and workers comp professionals are implementing more changes to the system, but this time they are targeting provider fraud.