Calderon Indictment Linked to Massive Health Care Scam

In addition to announcing the indictment of State Senator Ron Calderon and his brother, former Assembly member Tom Calderon, federal prosecutors revealed on Friday that Michael Drobot, the former owner of Pacific Hospital in Long Beach, had pleaded guilty to one of the largest workers compensation fraud cases in California history.  The cases are related: Drobot admitted to bribing Ron Calderon in order to preserve a law that Drobot had exploited for over a decade to defraud Medi-Cal.

Drobot admitted to running a scheme that billed hundreds of millions of dollars to workers’ compensation insurers.  A law, known as the “spinal pass-through” allowed hospitals to pass onto the insurers the cost of spinal implant devices.  Through shell companies and other maneuvers, Drobot inflated the price of these devices and ripped off insurers.  Some of the profits were used to pay illegal kickbacks to doctors who referred patients to Pacific Hospital for spinal surgery.  Preserving the spinal pass-through law was critical to the scheme’s continued success, and this is where Ron Calderon allegedly came in. Drobot has admitted to bribing Calderon in exchange for him working to preserve the pass-through law.  As part of his plea agreement, Drobot agreed to cooperate against Calderon.

(A separate civil  whistleblower case alleges that Drobot used counterfeit pedicle screws for the surgeries, putting the health of patients at risk, in order to reap further profits from insurers.)

Drobot’s bribes are only part of the story described in the Calderon indictment, which encapsulates virtually every conceivable federal bribery charge that might be brought against a state politician:  Mail and Wire Fraud, Honest Services Fraud, Bribery Concerning Programs Receiving Federal Funds, Money Laundering and Conspiracy to commit it, and criminal tax charges.    The indictment charges that, in exchange for his efforts to persuade other Senators to support the spinal pass-through, Ron Calderon accepted numerous bribes from Drobot, ranging from summer employment for his son (about $30,000 for 15 days of work), trips on private planes, golf at exclusive resorts and meals at pricey restaurants.

As previously detailed a leaked search warrant affidavit, Ron Calderon also, in a separate scheme, allegedly took bribes from an FBI undercover agent posing as a film studio executive, in exchange for undertaking efforts to lower the eligibility threshold for the film tax credit, from $1,000,000 to $750,000.  Again, Calderon allegedly secured “employment” for one of his kids: his daughter, who was paid approximately $39,000 by the “executive” in exchange for doing no work on behalf of the studio.

Brother Tom Calderon is charged with money laundering and related crimes:  knowingly taking bribe money paid to Ron Calderon and depositing it into the accounts of two entities he controlled:  Californians for Diversity and the Calderon Group.  This ordinarily would be difficult for the government to prove, since Tom would deny knowing that the source of the funds was tainted.  However, it looks like the FBI may have had a wiretap in place and intercepted several conversations between the brothers that, if they happened, will be difficult to explain away.  In one, Ron allegedly told Tom that he had “closed the deal” with a film executive, who had agreed to make payments to Ron through the Calderon Group.  

Another fascinating revelation: in papers filed in Federal court in Sacramento, the government confirmed that on May 4, 2013 it had confronted Tom Calderon with the evidence against him and gave him the opportunity to cooperate against others.  Calderon initially was agreeable, met with the FBI five more times in May, and offered to wear a body recorder to meetings.  But he refused to cooperate against any family members, and ultimately stopped cooperating.  Calderon’s attorney has previously argued that the FBI subsequently retaliated against Calderon by leaking of the search warrant affidavit to the press in November.





Leave a Reply

Post Navigation