A massive California scheme to commit health care fraud has resulted in the arrest of the chief financial officer of College Medical Center in Long Beach, formerly Pacific Hospital, along with four other doctors and marketers employed at the hospital. The defendants face hefty fines and prison terms.
Writes Reuters News on Nov. 25: “All five defendants have agreed to cooperate in a wide-ranging federal investigation into the fraud, dubbed ‘Operation Spinal Cap,’ U.S. Attorney’s spokesman Thom Mrozek said, and two have already pleaded guilty to federal charges.”
Indicted and being held are the hospital’s former chief financial officer James Canedo, chiropractor Alan Ivar, health care marketer Paul Richard Randall, and orthopedic surgeons Mitchell Cohen and Phillip Sobol. Canedo and Sobol have already pleaded guilty to conspiracy, fraud and other charges.
Last year, the hospital’s former owner, Michael Drobot, was arrested and charged in the health care scheme as well. He is assisting prosecutors in the current case.
The defendants all admitted to steering spinal surgery patients to Pacific Hospital in return for kickbacks and monthly retainers, even though other, better qualified hospitals were closer. In addition, hundreds of fraudulent billings were sent in for workers compensation insurance claims, prosecutors said. In all, the men netted an excess of $600 million dollars. The scheme went on for eight years, investigators said, and the illegal monies were not reported on the men’s taxes.
California Insurance Commissioner Dave Jones said, “Injured workers were treated like livestock by doctors and hospitals who paid or accepted kickbacks and bribes in exchange for referrals,” adding that it’s “one of the largest workers compensation insurance fraud cases we have ever seen.”
Drobot also implicated former Democrat state Senator Ron Calderon, according to Reuters. Calderon is set to face trial after allegedly accepting close to $100,000 in bribes in order to maintain state loopholes necessary for this insurance fraud scheme to operate. FBI agents, posing as Hollywood movie execs, met with Calderon and eventually indicted him on 24 felony charges.
“Health care fraud and kickback schemes burden our healthcare system, drive up insurance costs for everyone, and corrupt both the doctor-patient relationship and the medical profession itself,” says U.S. Attorney Eileen Decker of the Central District of California. “The members of this scheme treated injured workers and their spines as commodities, to be traded away to the highest bidder. This investigation should send a message to the entire industry: patients are not for sale.”