It has been well over two years since we reported on this story and Michael Drobot remains a free man. He still has not been sentenced for his role in a massive healthcare fraud that involves allegations of performing spinal surgeries using defective hardware. Victims have been waiting for justice for years and will now have to wait longer. Earlier this summer U.S. District Court Judge Josephine Staton again delayed Drobot’s sentencing, this time until February 10, 2017.
It has been so long since we first covered Drobot’s story that some quick history is helpful. Michael Drobot Sr. once owned Pacific Hospital of Long Beach. Some of his patients claimed that Drobot was involved in a scheme to steer workers’ compensation patients to the hospital. The patients would there undergo spinal fusion surgery. The patients claim that the screws and other hardware needed to perform the surgery were counterfeit thereby causing potential future pain and suffering.
Drobot’s had far bigger problems than the lawsuit claims. The Department of Justice stepped in and charged Drobot with orchestrating a multi-million dollar criminal healthcare fraud conspiracy. In early 2014 he pleaded guilty and now faces up 10 years in prison.
Prosecutors claim that between 1998 and when he was caught in 2013, Drobot “conspired with dozens of doctors, chiropractors, marketers and others to pay kickbacks in return for those people to refer thousands of patients to Pacific Hospital for spinal surgeries and other medical services.” Most of the treatment costs were paid through the Federal Employees Compensation Act or the California Workers Compensation System.
Kickbacks and Healthcare Fraud
Paying kickbacks is illegal. As regular readers of this blog already know, healthcare decisions should be based on the patients’ best needs and not who pays the biggest bribe or kickback.
If the scheme stopped there it would already be pretty bad. Prosecutors, however, claim that Drobot owned a medical device company called International Implants or “I2.”
Hospitals have strict limits on how much they can mark up hardware. The U.S. Attorney says that Drobot ignored those limits and overinflated the costs. That in turn allowed to have even more money in which to pay bribes and kickbacks.
If you are wondering about the amount of the kickbacks, they were huge. A doctor referring a patient to the hospital for lumbar fusion surgery could get $15,000. Cervical spinal fusion would pay $10,000.
The danger in such huge kickbacks is that many of patients probably didn’t need such drastic surgery. Pay a big enough kickback and suddenly some doctors will be motivated by the kickback instead of the patient’s health needs. Indeed, some have now claimed that some of the surgeries were medically unnecessary. We are not surprised. Unfortunately, spinal surgery is painful, involves a lengthy hospital stay and can lead to a lifetime of complications.
As word of the kickbacks spread, some patients were sent hundreds of miles to Drobot’s hospital even though there were much closer facilities that could treat the injured workers.
Prosecutors say that between 2008 and April 2013, Pacific Hospital billed workers’ compensation insurance carriers approximately $500 million for these spinal surgeries! That resulted in kickbacks of between $20 million and $50 million! According to Los Angeles Magazine, Drobot’s scheme was like “an ATM card to Fort Knox.”
To better protect his lucrative healthcare fraud scheme, Drobot allegedly recruited a state senator and paid the senator’s son tens of thousands of dollars to be a summer intern. The senator was also offered expensive meals, golf outings and flights on private planes. (Press reports say that California Sen. Ron Calderon was indicted for his role in the scheme.)
Can it get any worse? While the government has not claimed that the hardware and screws are defective, some patients say that the hardware is counterfeit. Those allegations caused Drobot to sue both the patients and their lawyers. An admitted felon sues former patients of his hospital for defamation! (Whether the counterfeit hardware allegations are true or not, we believe that Drobot sued the patients to keep them from testifying at his sentencing. If that was his motive, we doubt he will be successful.)
Drobot’s Plea Agreement
Drobot’s healthcare fraud resulted in him pleading guilty to two felony counts. After the plea, California Insurance Commissioner Dave Jones said, “Insurance fraud is a multi-billion drain on California’s economy, which results in higher insurance premiums for California’s businesses and consumers.”
Drobot’s sentence has been delayed so that he can cooperate. Part of his plea agreement requires that he help prosecutors. Doubtless the Justice Department is taking a hard look at the “dozens” of doctors who received tens of millions of dollars in kickbacks.
Healthcare Fraud and Whistleblower Awards
Under the federal False Claims Act, insiders who blow the whistle on healthcare fraud can receive up to 30% of whatever the government receives from the wrongdoer. To qualify, the healthcare fraud must be taxpayer funded.
What makes this case so unusual is that Drobot was targeting workers compensation patients. Normally there is no tax dollars involved there but in this case, whistleblower awards are still available because some of the injured workers were government employees and California’s own whistleblower laws extend to private insurance.
How to Earn Your Own Whistleblower Award
The whistleblower lawyers at MahanyLaw have helped clients receive tens of millions in awards. Over $100 million just in the last five years.
If you believe you have information about illegal healthcare fraud, kickbacks or illegal pricing schemes, give us a call. We can help you navigate the complex state and federal regulations governing healthcare and determine whether you have a claim. If you do, we will handle the preliminary investigation, file the necessary lawsuits, and help prosecute the claim. (Not ready to call? Visit our whistleblower – qui tam FAQ page.)
Worried about legal fees and costs? The process can be very expensive but we front all monies and you never have to pay us unless we are successful.
We can also help protect your identity and protect you from illegal retaliation.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are always kept confidential.
MahanyLaw – America’s Medicare Fraud Whistleblower Lawyers