Hospital Owner Gets 5 Years for Kickbacks & Fraud

SAN DIEGO (CN) — The former owner of Pacific Hospital in Long Beach was sentenced Friday to five years and three months in federal prison for a 15-year, $500 million health care fraud.

Michael D. Drobot, 73, of Corona Del Mar, pleaded guilty in 2014 to conspiracy and paying illegal kickbacks.

“Thousands of patients received surgeries at Pacific Hospital not knowing that [Drobot] bribed their physician to perform their surgery at Pacific Hospital,” the Justice Department said in a statement on the sentencing. They said Drobot “was motivated by greed and ultimately profited [by] millions of dollars through the scheme.”

The conspiracy ran from 1997 through 2013, during which time Drobot “billed workers’ compensation insurers hundreds of millions of dollars for spinal surgeries performed on patients who had been referred by dozens of doctors, chiropractors and others who were paid illegal kickbacks,"the U.S. Attorney’s Office said.

Much of the illegal money came through medical implants obtained by Drobot’s medical hardware company, International Implants, or I2, of Newport Beach. Through a state “pass-through” law, which has been repealed, Drobot added $250 per device his company sold to his hospital, knowing the state would pick up the tab.

“Through the operation of I2, [Drobot] generated substantial profits that he used to pay at least $40 million in kickbacks,” prosecutors said. “According to the former CFO of Pacific Hospital, his income, bonuses, and other compensation at the hospital was in excess of $20,000,000.”

Drobot typically paid a kickback of $15,000 per lumbar-fusion surgery and $10,000 per cervical-fusion surgery.

Among his crimes, Drobot bribed state Sen. Ronald Calderon to keep the spinal pass-through law on the books. Calderon is serving 3½ years in federal prison for taking bribes from Drobot and undercover FBI agents.

U.S. District Judge Josephine Staton also fined Drobot $500,000 and ordered him to forfeit $10 million to the government and assets, including real estate, a 1965 Aston Martin, a 1958 Porsche and a 1971 Mercedes Benz.

Seven others have been charged and pleaded guilty in the scheme, including Drobot’s son, Michael R. Drobot.

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