A Calderon connection: Ex-hospital chief Michael Drobot admits to bribery, conspiracy

February 21, 2014
89.3 KPCC Southern California Public Radio

A former Long Beach hospital executive has admitted to bribing State Sen. Ron Calderon (D-Montebello) in an effort to protect an insurance fraud scheme worth hundreds of millions of dollars - the biggest such fraud in California history, according to state officials. 

On Friday, the US Department of Justice announced that Michael Drobot, 69, had pleaded guilty to running a sophisticated operation centered around spinal fusion surgery. Federal and state officials say Drobot submitted more than $500 million in fraudulent workers compensation claims over a five-year period for surgeries performed at Pacific Hospital in Long Beach, which Drobot owned until late last year.  For a time Pacific Hospital performed more spinal surgeries than any other hospital in California.

As part of his plea deal, Drobot faces up to 10 years in federal prison. He also agreed to cooperate with ongoing federal, state and local investigations.

Prosecutors said Drobot is expected to surrender and be arraigned on March 31st in Santa Ana.

The scheme involved illegal kickbacks to doctors, chiropractors and others who referred patients to Pacific Hospital. The kickbacks added up to tens of millions of dollars, according to the US Attorney's office.

Drobot also admitted to inflating prices for medical devices, then billing workers comp insurers for the bogus amounts. A state law known as spinal "pass-through" legislation permitted hospitals to bill workers comp insurers for the full amount of devices implanted in spinal surgery patients.

It was Drobot's desire to kill legislation that would have done away with the "pass-through" law that led him to bribe Calderon, prosecutors said. 

According to the indictment, Drobot paid the Calderons through various means, such as Ron Calderon's son and daughter, to keep the spinal "pass-through" law intact, according to the plea agreement. Calderon did beat back efforts to undo the law, although it has since been repealed. 

Drobot, who lives in Corona Del Mar, is also the subject of at least two other civil lawsuits related to alleged fraud. 

Eric Weirich, deputy commissioner for the California Department of Insurance, called Drobot's scheme "the largest insurance fraud" in California history.

Drobot’s attorneys Jeffrey Rutherford and Janet Levine, of the L.A. firm Crowell & Moring,  issued a brief statement Friday: 

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

Drobot has a long history in Southern California’s healthcare industry.

A biography posted on a now defunct company’s website, where he was listed as a board member, described him as "an experienced veteran of healthcare industry and corporate finance."

In addition to being CEO of Pacific Hospital, the website said Drobot was President and CEO of HealthSmart Corporation, and Chairman of the Board of HealthSmart MSO. Healthsmart is described as a company that owns and operates medical surgical hospitals and ambulatory surgical centers. The site said Drobot earned a Masters in Business Administration from George Washington University and a Bachelor of Science degree from Wayne State.

In other news reports in the last decade he has been associated with

The two other ongoing civil cases are related to the same allegations of fraudulent workers compensation cases.

The federal indictment came as good news for attorneys who filed the first lawsuit nearly two years ago. They did so on behalf of two people  – one who had worked for Drobot's partner, and another who investigated Drobot for a workers compensation insurer – alleging fraud. The lawsuit also alleges that surgeons inserted counterfeit medical hardware into many patients during spinal surgery... (To read the entire article, please click HERE)