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Fraud, huge profits, and long jail terms

Are all described in detail in Greg Jones’ terrific piece in this am’s WorkCompCentral.  The 1,000 + word piece lays out the fraud perpetrated on California’s employers by the owner of Pacific Hospital, the complicity of two California legislators, and the cost – a whopping $500 million.

Michael Drobot has pled guilty, and is looking at up to 10 years in prison for allegedly paying kickbacks to get docs to use his hospital for spinal fusions, while also allegedly bribing a state Senator, Ron Calderon.

Calderon is also facing charges; a 24-count indictment was filed last week charging bribery, money laundering, and conspiracy.  He and his brother are each looking at possible sentences of over 100 years.

Drobot paid “a kickback of $15,000 for each lumbar fusion procedure that was referred to his hospital and $10,000 for each cervical fusion procedure.”

Folks who have followed California work comp long puzzled over why the state allowed providers to double bill for the cost of implants (see research report dated 6/6/12); this was finally addressed a couple years back, but only after Drobot and his cronies sucked $500 million out of employers’ and taxpayers’ pockets.

There are two things to take away from Jones’ piece –

  • Investigative journalism lives on – although only at niche pubs, the very largest mass media outlets (NPR, Rolling Stone, NYTimes), and independents (ProPublica).

  • Employers and taxpayers are losing hundreds of millions of dollars to sleazeballs who’ve figured out work comp is a very soft target. And this continues with physician dispensing

8 thoughts on “Fraud, huge profits, and long jail terms”

  1. Joe, I did not buy the story. Does it discuss Michael Drobot’s connection to Physician Dispensing (Industrial Pharmacy Management)?

      1. This may be best not to publish on the site. Michael was/is the President of Industrial Pharmacy Management (
        They are an in-house dispensing firm, which, as you have pointed out, in essence is in the practice of legally bilking millions of dollars from the Workers Comp system through inflated drug prices – kind of fits the MO established. Per the website: Industrial Pharmacy Management is the nation’s largest physician office dispensing organization, providing seamless in-house dispensing solutions that simplify administration and enhance revenue. Physicians can dispense medication to their workers’ compensation and personal injury patients regardless of claim status. This promotes increased patient satisfaction and safety, fewer calls from outside pharmacies, and increased revenue. These guys appear to take on collections of the A/R so atleast they are at risk for something. They also own a mail order pharmacy as well. I did business with them years ago.

  2. Hi Joe!

    Very much enjoy all of your postings as they are always so insightful.

    Wondering if the scenario above would any different than a diagnostic network paying treating providers and medical facilities a fee for referral? Seems to me it would be no different. Dollar amounts per referral would obviously be minimal in comparison but the volume would be much more significant I would think?

    1. Thanks for the comment Eileen, and glad MCM is helpful.

      Agree that the scenario you lay out would be similar, however my sense is there were a lot more issues w the Drobot situation than in a run-of-the-mill pay-for-referral operation.

      that doesn’t make it any more ethical…

      1. Agree Joe. Non ethical (not to be punishable by law in this case) and actual “illegal” activity are two very separate things. I understand this is already under investigation in CA so we will see. Thanks!

  3. Will the worker’s comp physicians that received kickbacks be part of the investigation or do they get off free! I know several physicians that receivd thousands of dollars in kickbacks. Their names should be listed on the hospital’s surgery schedule all those years. That would be easy to discover their names. I thought physicians took an oath to practice “to do no harm!”

    I am an injured worker who has been maimed and battered by the medical provider(s) in the workers compensation insurance carrier’s “network of medical providers”. After filing a workers comp claim, injured workers seek treatment. Unfortunately, some injured workers are maimed and battered by the very medical provider(s) that they are sent to. Deliberate harm to a patient is called medical battery and is happening to injured workers. Some of the medical providers offices are “workers comp insurance mills”, wherein most of their patients are injured workers. In order for the Doctors to keep their place in the network, they must comply with the insurance carriers and/or employers “needs” so to speak.
    I was forced under anesthesia for simple lumbar epidurals. At the 2nd epidural procedure, after objecting to anesthesia, I was told I had no choice, that it was the policy of the surgery center that all patients must undergo anesthesia. I awakened from that with severe neck pain and slight left arm pain. My Doctor had injected my neck, left side of my spine, left leg with some sort of chemical that tingled and popped like Alka Seltzer. In fact, the tingling went from my lower left lumbar down my left leg all the way up my back and felt like a popping sensation in my head. I was there to receive a lumbar steroid epidural injection and “trigger point shots” in the left side lumbar area.
    The next epidural procedure, I made it clear I that I did not want to be placed under anesthesia not only on the phone (a day prior to the procedure) but also before the procedure in pre-op and I re-stated the same in the operating room for everyone to hear. I restated that I was to get a local pain blocker (just as I had during the first lumbar epidural). Instead, my Doctor abruptly shoved the needle into my back without any pain blocker whatsoever. I could feel the needle going through the textures of my back (not precisely or with care into the spinal area where the disk is). My head flew up as I screamed “Wait!” or “Stop!”. He would not relent! As my head hit the operating room table (where a towel and prop to lay my head was), he moved the needle inside me to the nerve in my back next to my spine and held it against the nerve! The pain was so excruciating that I bit into the towel that was for my head to rest on and screamed with the towel in my mouth. Pure agony! He would not stop! I had no choice once again but to give into anesthesia. When I awakened, I thought to myself, Oh my God, they didn’t! I had injuries now throughout my back, neck, shoulders and arm. I could feel the nerves firing all over my back and next to both sides of my spine from the injections of some sort of chemical (the Alka Seltzer feeling again) that over the coming months, burned and corroded the ligaments in my spine, tendons and muscles in my back. It felt as though I was being burned from the inside out. PAIN from burning, PAIN from damage and maiming! I can now and then could feel that some of the tissue/muscles were pushed away from my spine creating the feeling of divots or holes on both sides of my spine. I could feel what seemed to be a muscle pushed away and hanging down on to the right mid side of my person. The ligaments that are in my neck and run up into my skull feel damaged, sore. My spine felt “chiseled” in specific areas most prominently in the top of my back and neck and the bottom near the lumbar sacrum area. I now have instability in my spinal column. I can feel the vertebrae in my spinal column moving not in sync with the other vertebrae. There is much more damage that I could continue to describe but will refrain.
    In order to get treatment, I had to see the AME designated for my WC case. I demanded to see him. Efforts to delay that ensued. Eventually, I was able to see him on August 12, 2013, more than 2 months after the procedure described above after my insistent efforts to move the date up from what I was originally informed was the earliest available date of September 9, 2013. Incidentally, I contacted the AME’s office and spoke to the appointment desk myself, I was told that there were dates available in July and August however, the insurance carrier and MY attorney agreed that I wasn’t to see the AME any sooner than August 26, 2013. Odd? After seeing the AME on 2 occasions and describing to him and his historian what happened to me verbally and via color sketches and in written description, his report indicates, Yes, somehow my neck was damaged during the procedure(s) however, the pain, the holes etc, that I describe in my back and spine is “medically improbable”! Above, is just a little of the battery that has occurred.
    COOPERATION OF MEDICAL PROVIDERS: Not only was the Ortho Surgeon involved. It was also the surgery centers and the anesthesiologists and others that have been involved. After informing my then attorney via e-mail and several conversations, the attorney who runs the WC division in that law office, called me on the phone and begged me not to file a grievance with the California Medical Board and allow him and the AME to handle this! Then, later he called me again and told me to file for permanent disability right away! My attempts to get help through other means have been stalled. What has been done to me and the continued efforts to interfere as I try to seek treatment even outside of the WC system, has been a well-orchestrated effort on the part of more than just the medical providers. Through injured workers associations, I have come to find out that what has happened to me has happened to many other patients through the years but is being ignored due to the outrageous and maliciousness of the crime. To think that a field of medical professionals would participate in the maiming and battery of patients is something out of a movie, but it does exist!
    HELP STOP MEDICAL BATTERY: Now, I’m trying to prevent what has happened to me from happening to others. 1. Please support a medical battery disclosure and law in all workers comp cases! Only a few states have a medical battery law or disclosures. I wish that I had been presented with a disclosure indicating something to the effect of: “Some injured workers have reported having been harmed, maimed or battered while receiving treatment for their injury. The injured worker is advised to educate themselves regarding the prescribed treatment and the results of said treatment.” 2. Please support a law that provides the option for an injured worker to require a patient advocate to be present (NOT AN ADVOCATE FROM THE INSURANCE CARRIER’S MEDICAL PROVIDER NETWORK) should the need for anesthesia arise. I wish I had known that I had the right to remain awake during the 2nd epidural. The third epidural wherein I was forced brutally to accept anesthesia, I don’t know what I could have done differently. I couldn’t scream loud enough that he (the Doctor) would stop pressing the needle against the nerve in my back! I couldn’t get off the table with the needle in my back either. My back is ruined.

    I have gone to law enforcement 5 times wanting to file a complaint against the Doctor, Anesthesiologist, surgery centers etc. I have contacted the FBI several times. The OC DAs response to the maiming and battery, falsified surgery reports, documents changed over and above my signature and much more was “Unfortunately, your case is not unique”.

    I attend Saddleback Church occasionally and have spoken to the Pastor of the Day and the Pastor who handles conflict within the church. The Pastor of the day was surprised to hear that my case is still in denial but I have had treatment 3 epidurals. I said “Exactly!” Clearly a fraud on the part of the defense has occurred by “creating the look of a condition(s).” Since my 3rd epidural, the AME’s has said that I now have Degenerative Disk Disease! I didn’t have it before the 3rd epidural or the 2nd epidural! I had demanded to see the AME because I had been forced under anesthesia, maimed and battered! The AME knew this so out of concern for himself, he had his “office manager” present during the 2 office visits after the 3rd epidural! I brought a family member with me to act as my “patient advocate”, the Doctor objected and said that he would not proceed with the office visit unless my family member / patient advocate left.

    The partner in the law firm that represented me back then (September 2013) told me to file for permanent disability right away. So, he knows what they have done to me. I recently e-mailed him to find out if he reported the wrongdoing in my case. He very formally said that he wasn’t present during my epidurals so he didn’t have to report the maiming and battery!

    I have tried to get help outside of WC. I have been met with bizarre situations and the Doctors through Medi-cal “doctoring” my medical record.

    I am amazed at the power that the insurance carrier and the attorney’s have over medical staff. But I’ve been told that this has been going on for years. If you are an injured worker over 40 with a back injury, you (as I am) may be a target of maiming and battery to create the look of a condition, so that later the case can be litigated and the “condition” can be added and considered as apportionment.

    I would rather that there not be the tool of WC. I certainly wouldn’t be as bad off as I am now physically!

    Corrupt attorneys, Doctors, medical staff, surgery centers, insurance carriers abound in the WC system.

Comments are closed.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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