Owner / Operator · Pacific Hospital of Long Beach
A California hospital owner built one of the largest healthcare kickback schemes on record by paying surgeons, chiropractors, and marketers for patient referrals — turning the patient referral network into a personal pipeline funded by the same facility that billed for their care.
The operator of a healthcare facility made personal payments to the physicians and practitioners who were supposed to be making independent referral decisions — converting independent clinical judgment into a paid service.
Michael Drobot owned and operated Pacific Hospital of Long Beach, California, a facility that specialized in spinal surgeries. According to his 2013 guilty plea, Drobot orchestrated a scheme in which he paid hundreds of thousands of dollars in kickbacks to referring physicians, chiropractors, attorneys, and marketers in exchange for sending patients to Pacific Hospital — in violation of federal anti-kickback laws. The hospital then billed workers' compensation insurers for the procedures. The scheme generated more than $500 million in fraudulent billings.
Drobot controlled the hospital that performed and billed for spinal surgeries, while simultaneously paying the referring physicians and other professionals who sent patients to that hospital.
Kickback payments were structured through management service agreements, leases, and other contractual arrangements that disguised the payments as legitimate business expenses.
Referring surgeons, chiropractors, and case managers received hundreds of thousands of dollars per year in exchange for channeling their patients exclusively to Pacific Hospital.
By controlling both the referral payment network and the billing facility, Drobot ensured a high volume of procedures that could be billed to workers' compensation — often at inflated rates.
The operator of a healthcare facility made personal payments to the physicians and practitioners who were supposed to be making independent referral decisions — converting independent clinical judgment into a paid service.
When a healthcare facility operator, insurance-side administrator, or any organization in a position to receive business establishes financial relationships with the parties responsible for sending that business, the independence of those referral decisions is compromised. These relationships are required to be disclosed in healthcare settings for exactly this reason.
ConflictCheck does not claim it would have definitively prevented any specific historical fraud. The purpose of this section is to illustrate the type of relationship conflict present in each case and how structured disclosure processes address that category of risk.
Drobot pleaded guilty in December 2013 to one count of conspiracy to pay healthcare kickbacks. He was sentenced to five years in federal prison. More than a dozen physicians and other participants also pleaded guilty to related charges.
Every case in this library began with a relationship that existed — undisclosed — before anyone was harmed. ConflictCheck helps map those relationships across your organization.