Mastermind of $1 billion spinal surgery fraud hid millions from government, DOJ says

Mastermind of $1 billion spinal surgery fraud hid millions from government, DOJ says

by Teri Sforza

The imprisoned mastermind of a $1 billion spinal surgery scam faces new federal charges that he violated a court order to forfeit his classic car collection, including an iconic 1965 Aston Martin made famous by fictional British spy James Bond.

Michael Drobot, who operated Pacific Hospital Long Beach, has agreed to plead guilty to charges of wire fraud, engaging in monetary transactions in property derived from unlawful activity and criminal contempt of court.

Drobot, 74, formerly of Corona del Mar, is serving a five-year sentence at Taft Correctional Institution in Kern County. He faces a maximum sentence of 50 years in federal prison on the new charges, and will be arraigned in coming weeks in U.S. District Court in Santa Ana, according to the Department of Justice.

Drobot’s attorney did not immediately respond to requests for comment.

Drobot, 74, pleaded guilty in 2014 to orchestrating a scheme authorities dubbed Operation Spinal Cap, which paid more than $50 million in bribes to doctors and other health professionals in exchange for steering spinal surgeries and other procedures to his hospital. Former state Sen. Ron Calderon also was convicted of taking bribes from Drobot.

As part of his plea, Drobot was ordered by the court to forfeit $10 million to the United States government. So the Aston Martin on the auction block in August 2018 — along with his 1958 Porsche and his 1971 Mercedes-Benz — was a penance of sorts, helping to fulfill that obligation and provide restitution to victims.

The Aston alone was valued by RM Sotheby’s auctioneers at $1.2 million to $1.4 million, and ultimately sold for $1.5 million.

But rather than forwarding sale proceeds to the government, as promised, Drobot disobeyed the court order and illegally kept the proceeds for himself, the U.S. Department of Justice said in court filings this week. (Drobot No. 1, Drobot No. 2).

Drobot conveyed an interest in the Aston Martin to the classic car auction company in exchange for a $1 million advance on the sale proceeds on June 22, 2018, the DOJ said. That $1 million was wired to Drobot’s bank account and used “for personal expenses and not to satisfy the court’s forfeiture order. Drobot further admitted to laundering the money via transfers to third parties,” the DOJ said.

In February, the DOJ seized Drobot’s interest in his Newport Beach home and Perris business property to help satisfy the order, said spokesman Ciaran McEvoy.

Prosecutors have charged 17 people, and won 10 convictions, as part of Operation Spinal Cap, the $1 billion health care fraud scheme Drobot spearheaded. The accused hail from Manhattan Beach, Newport Beach, Redondo Beach, Palos Verdes Estates, Santa Ana, San Clemente and many other cities.

Patients wait

Thousands of patients received surgeries at Pacific Hospital not knowing that Drobot had bribed their physician to perform their surgery at Pacific Hospital, prosecutors said in court documents.

“The patients believed that they were receiving conflict-free medical advice when, in fact, (Drobot) illegally incentivized their physician to perform the surgery at Pacific Hospital,” they wrote.

Waiting not so patiently in the wings now, as the government’s mammoth probe proceeds, are those patients, who seek redress.

In an avalanche of lawsuits, more than 160 patients contend that cheap, nonsurgical-grade hardware may have been drilled into their bones during operations that might not have been necessary to begin with, leaving them in excruciating pain.

Their suits, in civil court, target doctors and hospitals allegedly involved in the scheme — but those suits are in a deep freeze so as not to interfere with the DOJ’s criminal probe.

Doctors and hospitals targeted by those lawsuits — who have not been charged in the federal criminal probe — deny wrongdoing, including knowingly using inferior product in surgeries. Drobot has said his companies never bought or used any knock-off screws or parts for spinal surgeries.

How much of that $10 million might patients see?

Drobot’s forfeited money goes into a government forfeiture fund, and there’s a process called remission where victims can request their share, said DOJ spokesman McEvoy.

“It would be fair and just  — and seems to me the only right answer — for the bulk of whatever’s recovered from Drobot and his co-defendants to go to the actual patients who are suffering,” said attorney Justin Berger, who represents whistleblowers in the case.

Attorneys have asked the court to allow some of the patients’ civil lawsuits to move forward, and that will be considered on Tuesday, July 30.

“We’re hopeful that — given the passage of time, that patients continue to live in pain and that patients continue to die — some or all of these suits will be set for trial soon,” Berger said. “There are doctors still walking around as free men without any indictments — I hope this means there will be continued cooperation and the government will go after all the wrongdoers.”

All credit goes to Teri Sforza
Originally published on https://www.dailynews.com