Pacific Hospital owner sentenced over $600 million workers' comp kickback scheme
For at least 15 years, from 1997 to 2013, Michael Drobot used his ownership of Pacific Hospital of Long Beach, California, to run a kickback scheme built around the state's workers' compensation system. Drobot paid more than $40 million to dozens of doctors, chiropractors and other medical professionals who referred thousands of patients, some living hundreds of miles away, to his hospital for spinal surgeries. California law at the time let a hospital pass the full, unverified cost of an implanted spinal device on to the workers' comp insurer; Drobot used shell companies he controlled to inflate those device prices, and the markup helped fund the kickbacks. Over the scheme's final five years alone, the hospital submitted more than $500 million in fraudulent bills; the total across the full scheme is put at roughly $600 million. Drobot also admitted bribing then-state senator Ron Calderon, including paying Calderon's college-age son around $30,000 over three summers as a file clerk and providing plane trips and golf outings, to help keep the implant pass-through law on the books. Drobot pleaded guilty in 2014 to conspiracy and paying illegal kickbacks. US District Judge Josephine Staton sentenced him in January 2018 to 63 months in federal prison, a $500,000 fine, and $10 million in forfeiture, including real estate and three classic cars. More than 20 doctors, chiropractors and marketers have since been convicted in the broader scheme, and Calderon separately served a federal sentence for the bribery.
- Year
- 2018
- Where
- United States
- Outcome
- Sentenced
- Reported loss
- $600.0 million
- Victims
- Not stated in the sources
- Schemes
- Workers' comp kickback fraud
- Last reviewed
- 2026-10-26
The facts, as recorded
- Michael Drobot owned Pacific Hospital of Long Beach and ran a kickback scheme tied to it from 1997 to 2013, at least 15 years.
- Drobot paid more than $40 million to dozens of doctors, chiropractors and other medical professionals who referred thousands of patients, some from hundreds of miles away, for spinal surgeries.
- Kickbacks were paid at roughly $15,000 per lumbar fusion surgery and $10,000 per cervical fusion surgery.
- California's spinal implant pass-through law let the hospital bill workers' comp insurers the full, unverified cost of implanted hardware; Drobot used shell companies he controlled to inflate those device prices and fund the kickbacks.
- Over the scheme's final five years, more than $500 million in fraudulent bills were submitted; the scheme's full total is put at roughly $600 million.
- Drobot admitted bribing then-state senator Ron Calderon, including paying Calderon's son about $30,000 over three summers as a file clerk and providing plane trips and golf outings, to help protect the pass-through law; Calderon was separately convicted and sentenced to a federal prison term.
- Drobot pleaded guilty in 2014 to conspiracy and paying illegal kickbacks.
- In January 2018, US District Judge Josephine Staton sentenced Drobot, 73 at the time, to 63 months in federal prison, a $500,000 fine, and ordered him to forfeit $10 million, including real estate and three classic cars: a 1965 Aston Martin, a 1958 Porsche and a 1971 Mercedes-Benz.
- Judge Staton told Drobot at sentencing that he 'introduced greed into the doctor-patient relationship.'
- More than 20 doctors, chiropractors and marketers have been convicted in the broader scheme centered on Pacific Hospital.
Why this case matters
This is the largest and longest-running scheme documented on this page, 15 years, roughly $600 million in fraudulent bills, and the one that reaches furthest outside health care: Drobot didn’t just buy referrals from doctors, he bought a state senator’s help keeping the billing loophole that funded those referrals open.
A loophole turned into a funding source
California’s spinal implant pass-through law was meant to let hospitals recover what they actually paid for the hardware they implanted. Drobot inverted that purpose: by routing the devices through shell companies he controlled, he set the “real” price himself, and the markup became the pool of money that paid for referrals.
The bribery underneath the fraud
Keeping a profitable loophole open took its own corruption. Prosecutors said Drobot paid then-state senator Ron Calderon’s son as a file clerk and provided travel and golf outings, in exchange for official acts protecting the pass-through law, a separate federal case from the medical fraud itself, but one that shows how far the money from a referral scheme can reach.
The caveat
Michael Drobot pleaded guilty in 2014 to conspiracy and paying illegal kickbacks and was sentenced in January 2018. Ron Calderon was convicted and sentenced separately for the bribery allegations connected to this case. More than 20 other doctors, chiropractors and marketers named in the broader scheme have also been convicted. The facts above come from the Justice Department’s own account of the guilty pleas and the sentence imposed, not from an unproven accusation.
People named in the public record
- Michael Drobot · convicted
Sources
- Ex-Long Beach Hospital Owner Sentenced For $600M Fraud. CBS News Los Angeles (Associated Press). Accessed 2026-10-26. Supports: Drobot's age, the 63-month sentence, the $10 million forfeiture, the roughly $600 million billed to workers' compensation insurers, the $40 million in kickbacks, and Ron Calderon's separate federal sentence.
- Former California Hospital Owner Sentenced in $600M Workers' Comp Scheme. Insurance Journal. Accessed 2026-10-26. Supports: The $500,000 fine, the forfeiture of real estate and three named classic cars, the 15-year scheme length, the implant pass-through law, Judge Josephine Staton's 'introduced greed into the doctor-patient relationship' remark, and the fact that Drobot's son also pleaded guilty separately.
- Operation Spinal Cap uncovers half-billion-dollar workers' comp fraud. Risk & Insurance. Accessed 2026-10-26. Supports: The 1997 to 2013 scheme period, the more than $500 million in fraudulent bills over the final five years, the $15,000-per-lumbar-fusion and $10,000-per-cervical-fusion kickback amounts, the use of shell companies to inflate implant prices, the Ron and Tom Calderon bribery charges, and California Insurance Commissioner Dave Jones's quote calling the case one of the largest workers' compensation fraud cases in the department's history.
- South Bay Chiropractor Sentenced to 14 Months in Federal Prison for Receiving Kickbacks for Referring Patients for Spinal Surgeries. IRS Criminal Investigation. Accessed 2026-10-26. Supports: The fact that more than 20 doctors, chiropractors and marketers have been convicted in the broader Pacific Hospital scheme, and that it produced more than $500 million in fraudulent medical bills over its final five years.