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The Department of Justice charged five individuals, including two medical doctors and a
chiropractor, for their participation and profit in a scheme which provided illegal kickbacks to dozens of doctors, chiropractors, and other individuals in exchange for the referral of patients to
Pacific Hospital in Long Beach, California.
From 2005 through 2013, the DOJ estimates that insurers were billed over $580 million for spinal
surgeries performed on more than 4,400 patients who were referred to the hospital. The participating
doctors, chiropractors, and others referred patients in exchange for illegal payments which included
up to $15,000 for a lumbar fusion and $10,000 for a cervical fusion. The hospital, its owner, and its
executives made the payments using a combination of nefarious means, including making rental
payments to the referring doctors for use of their offices (the hospital never used the offices), making
$100,000 per month “option payments” to the referring doctors for the right to purchase medical
practices (a right that was never exercised), and paying the doctors to help the hospital collect on
surgical bills (the doctors did not participate in the collection efforts).
The individuals recently charged in the scheme were: James L. Canedo, former CFO of the hospital;
Philip Sobol, an orthopedic surgeon; Alan Ivar, a chiropractor; Paul Richard Ragnall, a health care
marketer; and Mitchell Cohen, an orthopedic surgeon. In April 2014, the former CEO and owner
of the hospital, Michael Drobot, pleaded guilty to participating in the scheme. Each of these
individuals is reportedly cooperating with the DOJ in its investigation.
“Operation Spinal Cap” is ongoing. Stay tuned.