The former owner of Pacific Hospital in Long Beach was sentenced Friday to more than five years in federal prison for engineering a kickback scheme that issued more than $500 million in bills for spinal surgeries and other services.
Michael D. Drobot, 73, was also ordered to pay a $500,000 fine with restitution to his victims to be determined at a hearing in May.
The defendant pleaded guilty in February 2014 and was given credit for cooperating with authorities in rooting out participants in the scheme he concocted in 1997 and ran through October 2013, according to federal prosecutors.
Drobot’s attorney, Jeffrey Rutherford, said his client volunteered for the U.S. Navy when he finished his residency and ran hospitals for 46 years. U.S. District Judge Josephine L. Staton, who sentenced Drobot to prison, noted the defendant served in the Navy in Oakland during the Vietnam War.
Drobot told the judge he owned eight hospitals during his career with Pacific Hospital being the last when he sold it in a “fire sale” due to the federal investigation.
Drobot said he was an “excellent hospital administrator,” but he acknowledged that he created the kickback scheme with him doling out about $40 million over 15 years to enrich himself.
“When I bought the hospital we had 200 employees and when I sold it there were 1,000,” Drobot said, adding later that the company he sold it to laid off 400.
Drobot choked up and took a long pause as he told Staton he regretted so many lost their jobs due to his scheme.
“I feel so bad about that,” he said.
He noted his own son, Michael R. Drobot, 46, of Newport Beach, got caught up in the conspiracy and pleaded guilty in March of 2016. The defendant’s daughter lost a job running a hospital in Eugene, Oregon, when news of the investigation of Pacific Hospital surfaced, Drobot said.
The defendant said he poured $20 million into the hospital to pay bills so it wouldn’t lapse into bankruptcy. He is still facing more than 40 civil lawsuits, some related to allegations that counterfeit “screws” were implanted in some of his patients, Drobot said. Drobot denied having anything to do with the alleged counterfeit spinal surgery equipment.
Drobot requested some sort of community service at the Veterans Administration hospital, arguing he could “still be of use.”
Assistant U.S. Attorney Joseph McNally said Drobot violated “the sanctity of the doctor-patient relationship’” and “corrupted” the healthcare system to “epic proportions.”
Drobot’s scheme was “top to bottom” as he used surgeons, attorneys and chiropractors and many others in the healthcare chain to make it work, McNally said.
The prosecutor asked Staton to “send a message” to others in the healthcare system that this sort of corruption won’t be tolerated.
McNally, however, said Drobot has been a substantial help to investigators and continues to aid them in rooting out participants in the scheme.
Mary Cavalieri told Staton that she agreed to risky and invasive spinal surgery against the advice of doctors offering a second opinion because she trusted her physician at Pacific Hospital, who was part of the scheme. The material used in her spinal surgery, she said, contains toxic chemicals that have “leached” into her bloodstream and may shorten her life, she said.
Cavalieri told the judge she continues to struggle with chronic pain, migraines, nausea and other ailments as a result of the surgeries.
Attorney Lynne Geminder, who represents Liberty Mutual insurance company, said Drobot continues to push for reimbursement for surgeries the insurer believes were fraudulent.
Attorney Linda Platisha of the State Compensation Insurance Fund, pushed back on Drobot’s assertion that he has settled all the claims with that agency. Platisha said of the participants in the fraud Drobot is one of two who have not paid what they owe.
Former Deputy Los Angeles County sheriff’s deputy Josh Lash told Staton that he got hurt on the job and that the two spinal surgeries he received at the hospital left him still struggling with ailments such as an inability to hang on to objects with his hands, a symptom, he argued, was owed to the counterfeit equipment used in the surgery.
Lash said he had to opt for “disability retirement” that prematurely ended his law enforcement career.
Staton said the defendant doled out “at least $43 million” in kickbacks and even “bribed” a state lawmaker to get a law beneficial to his business passed.
“The defendant introduced greed into the physician-patient relationship,” Staton said.
The scheme enriched Drobot on a “grand scale,” Staton said, adding that he had seven vintage vehicles worth $2 million.
There was also evidence, however, that Drobot has been capable of notable “generosity” over the years and that he came from “humble beginnings.”
Drobot was ordered to report to prison by June 4.