Five people, including a former Long Beach hospital executive, have been charged by the Justice Department in related, long-running alleged kickback schemes involving almost $600 million in fraudulent billings by L.A. County hospitals.
The alleged schemes involved paying tens of millions of dollars in illegal kickbacks to dozens of doctors, chiropractors and others in exchange for referring thousands of patients to Pacific Hospital in Long Beach for spinal surgeries. That, according to prosecutors, led to the fraudulent submission of more than $580 million in bills during the last eight years of the scheme. Many of those claims were paid by the California worker’s compensation system and the federal government.
In a second similar plot, according the Justice Department, doctors received illegal kickbacks for referrals to Tri-City Regional Medical Center in Hawaiian Gardens.
Federal prosecutors filed two cases related to the schemes on Tuesday and unsealed three others on Monday. Two of the defendants have previously pleaded guilty, and three others have agreed to do so shortly, according to the Justice Department. It noted that all defendants have agreed to cooperate in the government’s ongoing investigation into kickbacks for spinal surgery referrals, dubbed “Operation Spinal Cap.”
The defendants included former Pacific Hospital of Long Beach chief financial officer James L. Canedo, 63, of San Pedro; orthopedic surgeon Philip Sobol, 61, of Studio City and Paul Richard Randall, 56, of Orange, a health care marketer previously affiliated with both hospitals.
Canedo pleaded guilty in September to charges such as participating in a conspiracy that engaged in mail fraud, money laundering and paying or receiving kickbacks in connection with a federal health care program. Canedo’s case was unsealed Monday, and he is scheduled to be sentenced in June.
Sobol has agreed to plead guilty to charges including conspiracy to commit mail fraud, honest services fraud and others, according to the government. He is expected to be arraigned next month.
Randall pleaded guilty in April to conspiracy to commit mail fraud and admitted recruiting chiropractors and doctors to refer patients to Tri-City in exchange for kickbacks. He is scheduled to be sentenced in April.
Sobol faces a federal prison term of up to 10 years, and Canedo and Randall could be sentenced to up to five years each. All defendants will be required to pay restitution, which in Canedo’s case will be at least $20 million, according the government.
Canedo, Sobol and Randall could not be immediately reached for comment.
Former Pacific Hospital of Long Beach Chief Executive and owner of Michael D. Drobot pleaded guilty last year to participating in the plot and is also cooperating with the investigation.
“The members of this scheme treated injured workers and their spines as commodities, to be traded away to the highest bidder,” said United States Attorney Eileen M. Decker in a statement. “This investigation should send a message to the entire industry: patients are not for sale.”
The ongoing investigation is being conducted by the Federal Bureau of Investigation; the United States Postal Service, Office of Inspector General; IRS Criminal Investigation and the California Department of Insurance.