This con likely is one for the record books — a half-billion in fraudulent claims, kickbacks, bribery, money laundering and political intrigue.
The case involving Pacific Hospital in Long Beach, Calif. will take months and maybe years to unwind. Former hospital owner Michael Drobot devised a scheme where more than $500 million in unnecessary surgeries were performed, mostly on workers-comp claimants. He offered kickbacks to doctors to recommend the surgery and the hospital.
He also allegedly bribed state senator Ron Calderon $100,000 to keep a law on the books that allowed the hospital to overbill insurers. The FBI has charged Calderon with taking the bribe. His brother Tom, a former state assemblyman, is charged with money laundering and conspiracy in helping to receive and hide the bribes.
Calderon took a leave of absence this week. That upsets the political landscape in California because his departure now denies Democrats a super majority in the legislature.
Drobot now has pleaded guilty and is cooperating with investigators, so more details soon will surface. This is the largest such insurance scheme in California history, prosecutors say.
Questions involving the impact on victims — the injured workers and their employers — unfortunately, may never be answered:
• How many of these spinal surgeries were necessary?
• How many patients were injured further by needless surgeries?
• How much more in workers comp premiums do businesses have to pay because of huge scam like these?
• How many new businesses were never created because the high cost of worker comp in California got even higher thanks to such scams?
This insurance scandal begs for a deep dive to understand how it could’ve happened, why it went on for so long (1997 to 2013) and how it could’ve been prevented — or at least detected much earlier. I hope fraud fighters, legislators and the medical community have an opportunity to discover the truth. The exercise would be a good case study that prevents honest businesses and workers from being so flagrantly abused in the future.
About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.