Spinal Cap Politician Gets 42 Months in Prison

Former California state senator Ron Calderon is going to prison for 42 months for his role in the never-ending California Spinal Cap saga.

Calderon plead guilty on back in June 2016 to a federal corruption charge and admitting to accepting tens of thousands of dollars in bribes from Michael Drobot, the former owner and CEO of Pacific Hospital in Long Beach, in exchange for performing “official acts as a legislator.”

Drobot bribed Calderon to keep a law in effect so he could continue to reap tens of millions of dollars in illicit profits from a health care fraud scheme. Calderon also admitted taking bribes from undercover FBI agents who were posing as independent filmmakers who wanted changes to California’s Film Tax Credit program.

Calderon’s brother, Thomas Calderon, a former member of the California State Assembly who became a political consultant, was sentenced September 2016 to 10 months in custody for his conviction on a money laundering charge for allowing bribe money earmarked for his brother to be funneled through his company.

Workers’ Comp Scam

Drobot’s hospital was a major provider of spinal surgeries that were often paid by workers’ compensation programs. The spinal surgeries were at the heart of the fraud scheme that Drobot orchestrated and to which he previously pleaded guilty. Calderon was not charged in the healthcare fraud scheme that led to well over $500 million in fraudulent billings. Drobot, who was described in court papers filed by prosecutors as “a greedy fraudster robbing taxpayer-funded federal programs, ” was a client of Tom Calderon’s political consulting firm.

California law known as the “spinal pass-through” legislation allowed Drobot to pass on to insurance companies the full cost it had paid for medical hardware used during spinal surgeries. As Drobot admitted in court, his hospital exploited this law, typically by using hardware not cleared by the FDA and purchased at highly-inflated prices from companies that Drobot controlled and passing this cost along to insurance providers.

Illegal Kickbacks

From 1997 to 2013, according to the FBI, 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.

For referrals for spinal surgeries, Drobot typically paid a kickback of $15, 000 per lumbar fusion surgery and $10, 000 per cervical fusion surgery. Patients came from hundreds of miles away from Pacific Hospital and were not informed that their medical professionals had been offered kickbacks to induce them to refer the surgeries to the hospital.

Guilty Spine Surgeons

Five others were charged at the end of November 2015, when the Department of Justice announced that two California spine surgeons (Philip Sobol, M.D. and Mitchell Cohen, M.D.), a former hospital administrator (James L. Canedo), a chiropractor (Alan Ivar) and a marketing consultant (Paul Richard Randall) were charged with generating almost $600 million in fraudulent spine surgery billings over an eight-year period.

Sobol pleaded guilty to conspiracy to commit mail fraud, honest services fraud and violations of the Travel Act; as well as a separate, substantive Travel Act violation.

Cohen was charged in mid-November 2015 with filing a false tax return. Cohen admits in a plea agreement that he failed to report income received from kickback payments.

Ivar of Las Vegas was charged with one count of conspiracy to commit mail fraud, honest services fraud, money laundering and violations of the Travel Act. In a plea agreement also filed in November 2015, Ivar admitted that for well over a decade, he had an agreement with Drobot to refer patients in exchange for a monthly retainer.

Then this past March 2016, Michael Barri, a San Clemente chiropractor, who owned and operated the Santa Ana companies Tri-Star Medical Group and Jojaso Management Company, pleaded guilty to a conspiracy count and admitted that he received illegal kickbacks for referrals to Pacific Hospital from 2009 through October 2013.