Federal prosecutors announced charges last week against a former hospital chief financial officer, two surgeons and two other defendants in a kickback scheme involving nearly $600 million in fraudulent claims for spinal surgeries in Southern California.
According to the U.S. attorney's office for the Central District of California, doctors and chiropractors were paid kickbacks to funnel patients to Pacific Hospital in Long Beach, where Joseph Canedo was CFO. Canedo pleaded guilty Sept. 4 to participating in a conspiracy, including kickbacks and mail fraud.
Michael Drobot, the former CEO of Pacific Hospital, pleaded guilty in 2014 to a role in the scheme and is cooperating with investigators. Drobot and his colleagues, according to the U.S. attorney's office, paid doctors' kickbacks of $15,000 for each lumbar fusion surgery and $10,000 for each cervical fusion surgery and then billed workers' compensation insurers and the federal government for the procedures.
Canedo was allegedly responsible for tracking the payments to the clinicians and tallying the number of patients and payments yielded by their referrals.
Prosecutors also unsealed conspiracy charges against orthopedic surgeon Dr. Philip Sobol and chiropractor Alan Ivar, who both agreed to plead guilty, officials said. Ivar said he received a monthly retainer for a decade to send patients to Pacific. Another orthopedic surgeon, Dr. Mitchell Cohen, agreed last week to plead guilty to filing a false tax return.
Paul Richard Randall, described by prosecutors as a healthcare marketer, also pleaded guilty to charges related to the scheme. He admitted to recruiting doctors and chiropractors to refer patients to Pacific and another hospital, Tri-City Medical Center in Hawaiian Gardens, Calif. Officials said all five defendants have agreed to cooperate with the investigation, which prosecutors have dubbed Operation Spinal Cap.