Five charged in alleged spinal surgery kickback scheme

Five people, including two surgeons and a former Long Beach hospital executive, have been charged in a series of kickback schemes in which thousands of patients were illegally referred for spinal surgeries, federal officials announced Tuesday.

The long-running schemes involved tens of millions of dollars in illegal kickbacks to dozens of doctors, chiropractors and other medical professionals, the U.S. attorney’s office said.

As a result of the alleged kickbacks, more than 4,400 patients were referred to the now-defunct Pacific Hospital in Long Beach, where they underwent spinal surgeries that generated more than $580 million in claims fraudulently submitted from 2005-13, officials said.Many of them were paid by California’s workers’ compensation system and the federal government.

Prosecutors said patients were unaware their doctors had been offered kickbacks to refer their surgeries to Pacific Hospital. Some of the patients, officials said, lived hundreds of miles away from the facility and closer to other qualified hospitals.


In a second conspiracy, doctors received kickbacks for spinal surgery referrals to Tri-City Regional Medical Center in Hawaiian Gardens, prosecutors said.

“Injured workers were treated like livestock by doctors and hospitals who paid or accepted kickbacks and bribes in exchange for referrals,” California Insurance Commissioner Dave Jones said in a statement.

Two of the defendants announced Tuesday had previously pleaded guilty, and the others have agreed to do so in the coming weeks, court documents show. All have agreed to cooperate in the government’s continuing investigation, dubbed Operation Spinal Cap.

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James L. Canedo, the former chief financial officer of Pacific Hospital, pleaded guilty in September to participating in a conspiracy that engaged in money laundering, paying or receiving kickbacks in connection with a federal healthcare program and other charges, prosecutors said. His case was unsealed Monday by U.S. District Judge Josephine L. Staton, who is scheduled to sentence Canedo in June.

Canedo, 63, of San Pedro, was responsible for tracking payments to doctors by the hospital, the number of patients each doctor referred to the hospital and the amounts the hospital collected for the patients’ procedures, prosecutors said. He sometimes settled disputes between different doctors who claimed credit for the same referrals.

Paul Richard Randall, a healthcare marketer formerly affiliated with Pacific Hospital and Tri-City Regional Medical Center, pleaded guilty in April 2012 to conspiracy to commit mail fraud after admitting to recruiting doctors to refer patients to Tri-City in exchange for kickbacks. Randall, 56, of Orange, is expected to be sentenced in April, officials said. His case was also unsealed Monday.

Orthopedic surgeon Philip Sobol, 61, of Studio City, and chiropractor Alan Ivar, 55, of Las Vegas, agreed to plead guilty to charges filed Tuesday. Prosecutors said that Sobol received $5.2 million in kickbacks for patient referrals and that Ivar for more than a decade had an agreement with the owner of Pacific Hospital to refer patients in exchange for a monthly retainer. He received $1.2 million in kickbacks, officials said.

Orthopedic surgeon Mitchell Cohen, 55, of Irvine, was charged last week with filing a false tax return and has admitted to failing to report income from $1.64 million in kickbacks, prosecutors said.

Additionally, the former owner of Pacific Hospital, Michael D. Drobot, pleaded guilty in April 2014 to running a 15-year kickback scheme. He is cooperating in the investigation, prosecutors say.

Twitter: @haileybranson



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