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Federal Prosecutors in LA Filed 16 Cases in Health Care Fraud Alleging $660 Million against 33 Defendants

ByGeorge Bao

Jun 28, 2018

LOS ANGELES – In another massive law enforcement action targeting health care fraud, federal authorities here announced Thursday criminal cases naming a total of 33 defendants – including doctors, pharmacists and an attorney – who have been charged in a wide-range of schemes that collectively attempted to bilk public and private insurance programs out of more than $660 million.

The U.S. Attorney’s Office announced that the defendants charged locally are among hundreds of people charged across the United States in cases that cumulatively allege approximately $2 billion in false billings. The nationwide sweep includes charges against 165 doctors, nurses and other licensed medical professionals who allegedly participated in health care fraud schemes

In the Central District of California, most of the defendants were charged for their roles in schemes to defraud health insurance programs such as Medicare. The cases allege health care fraud and kickback schemes involving surgeries, compounded drugs, home health services, Medicare Part D prescription drugs and hospice care.

“Health care fraud schemes cost Americans billions of dollars every year through higher premiums and tax money stolen from public programs, such as Medicare,” said First Assistant United States Attorney Tracy L. Wilkison.

“There is an incredible array of scams, some of which involve services that are simply never provided, and some of which use complicated and sophisticated ruses to conceal illegal acts, such as bribes. Today’s announcement of the far-reaching law enforcement actions targeting a wide range of schemes and a large number of defendants demonstrates the excellent work by our law enforcement partners. Together, we will continue the hard work necessary to identify and hold accountable corrupt health care professionals and fraudsters seeking to line their pockets with your hard-earned money.”

This week, prosecutors unsealed charges against nine new defendants being charged as part of Operation “Spinal Cap,” which targets a long-running health care fraud scheme that generated nearly $1 billion in fraudulent claims to federal government, California state, and private insurers. The scheme – which was spearheaded by Michael Drobot, the former owner of Pacific Hospital in Long Beach – involved more than $40 million in illegal kickbacks paid to doctors and other medical professionals in exchange for referring thousands of patients who received surgeries and other services at Pacific Hospital.

The investigation into the spinal surgery kickback scheme is being conducted by the Federal Bureau of Investigation; IRS Criminal Investigation; the California Department of Insurance; and the United States Postal Service, Office of Inspector General.

“Public health insurance programs – whether a workers’ compensation program or Medicare – are not a personal pocketbook for criminals seeking to exploit government programs designed to help those who need these plans the most,” stated R. Damon Rowe, Special Agent in Charge of IRS Criminal Investigation’s Los Angeles Field Office.

“Taxpayers rightly expect individuals working in the healthcare industry that receive payments from taxpayer-funded programs to scrupulously follow the rules. IRS Criminal Investigation will continue to protect the integrity of public health insurance programs and ensure that doctors, pharmacists and medical service providers who profit from these illicit schemes are held accountable.”

The new cases were filed by Assistant United States Attorney Ashwin Janakiram of the Major Frauds Section, and will be prosecuted by AUSA Janakiram and Assistant United States Attorneys Joseph T. McNally and Scott D. Tenley of the Santa Ana Branch Office.

The nine new defendants charged in this investigation will be summoned to appear for arraignments in United States District Court in Santa Ana next month.


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