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By JOHN CARREYROU
Federal agents are looking into fraud allegations at companies owned by Michael D. Drobot, a hospital executive who built a Southern California business empire centered on treating spine injuries suffered by workers' compensation patients.
Last week, Federal Bureau of Investigation and Internal Revenue Service agents conducted searches at the companies as part of a fraud investigation by the U.S. attorney for the Central District of California, said Laura Eimiller, a spokeswoman for the FBI's Los Angeles field office. She added that the affidavit supporting the searches was sealed, and declined to provide specifics about the investigation.
The agents served search warrants on Pacific Hospital of Long Beach, a 184-bed facility owned and run by Mr. Drobot, and on Industrial Pharmacy Management LLC, a Drobot company based in Newport Beach that dispenses medications to patients in doctors' offices.
"We look forward to working with the authorities to resolve the misunderstandings that led to" the searches, said Laura Salas Reyes, a spokeswoman at the hospital. A person at the drug-dispensing firm said no one was available to comment. Mr. Drobot and his attorney didn't respond to requests for comment.
Mr. Drobot, 68 years old, acquired Pacific Hospital of Long Beach in 1997 and shifted its focus to spine surgeries for workers' compensation patients. In a front-page article last year, The Wall Street Journal identified the hospital as one of the most prolific spine-surgery facilities in California. From 2001 to 2010, according to state data, it performed 5,138 spinal fusions on workers' compensation patients and billed $533 million for themthree times as much as any other hospital in the state.
For a time, Mr. Drobot was in business with Paul Randall, a hospital marketer who served time in federal prison in the 1990s for racketeering. Mr. Randall said he recruited spine surgeons to operate at Mr. Drobot's hospital, and the two said they operated a magnetic-resonance-imaging business together.
Documents reviewed by the Journal last year showed that Mr. Randall was under investigation by the U.S. attorney's office for allegedly inflating the cost of spinal implants and paying kickbacks to chiropractors and spine surgeons. Mr. Randall hasn't been charged and has denied engaging in any illegal activities. On Monday, he and his attorney both declined to comment.
Also participating in last week's searches were agents from the U.S. Postal Service Office of Inspector General, which investigates mail fraud; an arm of the Defense Department's Office of Inspector General; and California's labor and insurance departments.
Write to John Carreyrou at [email protected]
Federal agents are looking into fraud allegations at companies owned by Michael D. Drobot, a hospital executive who built a Southern California business empire centered on treating spine injuries suffered by workers' compensation patients.
Last week, Federal Bureau of Investigation and Internal Revenue Service agents conducted searches at the companies as part of a fraud investigation by the U.S. attorney for the Central District of California, said Laura Eimiller, a spokeswoman for the FBI's Los Angeles field office. She added that the affidavit supporting the searches was sealed, and declined to provide specifics about the investigation.
The agents served search warrants on Pacific Hospital of Long Beach, a 184-bed facility owned and run by Mr. Drobot, and on Industrial Pharmacy Management LLC, a Drobot company based in Newport Beach that dispenses medications to patients in doctors' offices.
"We look forward to working with the authorities to resolve the misunderstandings that led to" the searches, said Laura Salas Reyes, a spokeswoman at the hospital. A person at the drug-dispensing firm said no one was available to comment. Mr. Drobot and his attorney didn't respond to requests for comment.
Mr. Drobot, 68 years old, acquired Pacific Hospital of Long Beach in 1997 and shifted its focus to spine surgeries for workers' compensation patients. In a front-page article last year, The Wall Street Journal identified the hospital as one of the most prolific spine-surgery facilities in California. From 2001 to 2010, according to state data, it performed 5,138 spinal fusions on workers' compensation patients and billed $533 million for themthree times as much as any other hospital in the state.
For a time, Mr. Drobot was in business with Paul Randall, a hospital marketer who served time in federal prison in the 1990s for racketeering. Mr. Randall said he recruited spine surgeons to operate at Mr. Drobot's hospital, and the two said they operated a magnetic-resonance-imaging business together.
Documents reviewed by the Journal last year showed that Mr. Randall was under investigation by the U.S. attorney's office for allegedly inflating the cost of spinal implants and paying kickbacks to chiropractors and spine surgeons. Mr. Randall hasn't been charged and has denied engaging in any illegal activities. On Monday, he and his attorney both declined to comment.
Also participating in last week's searches were agents from the U.S. Postal Service Office of Inspector General, which investigates mail fraud; an arm of the Defense Department's Office of Inspector General; and California's labor and insurance departments.
Write to John Carreyrou at [email protected]
