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More doctors indicted in 15-year-long $580 million kickback scheme at Pacific Hospital of Long Beach

Surgeons allegedly were paid millions in exchange for referring spinal surgeries to the California hospitals.

Beth Jones Sanborn, Managing Editor

The site of the former Pacific Hospital of Long Beach (now College Medical Center). Credit: Google Street View

Three Southern California doctors have been charged for their alleged roles in a 15-year-long healthcare kickback and referral scheme that involved more than $40 million in illegal kickbacks paid to doctors and other medical professionals in exchange for referring patients who underwent spinal surgeries, the Department of Justice announced. 

Orthopedic surgeon David Hobart Payne has been charged with conspiracy, honest services fraud, and using an interstate facility to aid in unlawful activity related to allegations he was bribed approximately $450,000 to direct more than $10 million in "kickback-tainted surgeries" to Pacific Hospital of Long Beach.

Jeffrey David Gross, also an orthopedic surgeon, is charged with conspiracy, honest services mail fraud and honest services wire fraud and was ordered to stand trial on August 7. According to the DOJ who cited the indictment, it is alleged that Gross was paid at least $622,000 for performing and/or referring more than $19 million in "kickback-tainted surgeries" to Pacific Hospital.

Finally, Lokesh Tantuwaya has been charged with conspiracy, honest services fraud, and using an interstate facility to aid in unlawful activity. Tantuwaya was ordered to stand trial on November 6 in relation to allegations he made roughly $3.2 million in kickbacks for referring or performing $38 million in surgeries to Pacific Hospital.

According to the DOJ, the kickback scheme revolved around Pacific Hospital of Long Beach, which specialized in spinal and orthopedic surgeries, and its owner Michael Drobot. Drobot pleaded guilty to charges of conspiracy and paying illegal kickbacks and was sentenced to more than 5 years in prison in January. Drobot conspired with doctors, chiropractors and marketers to pay kickbacks in return for those parties referring thousands of patients to Pacific Hospital for spinal surgeries and other services, which were paid for primarily through the California workers' compensation system. 

During its final five years alone, the scheme spawned more than $500 million in fraudulent medical bills. So far, nine defendants have been convicted in connection to the kickback scheme. If convicted, the defendants face decades in prison, the DOJ said.

The FBI, IRS Criminal Investigation, California Department of Insurance and the United States Postal Service, Office of Inspector General are conducting the investigation.

Kickbacks schemes are a popular fraud mechanism with a number of them breaking in late 2017 and 2018. Dallas-based EmCare and Physicians' Alliance Ltd. were ordered to pay more than $33 million to settle allegations they accepted kickbacks from hospitals owned by the now-defunct Health Management Associates in exchange for patient referrals, the Department of Justice said.

EmCare provides physicians to staff hospital Emergency Departments. The settlement stipulates that the physician group will pay $29.6 million in connection to an alleged kickback scheme that ran from 2008 through 2012, wherein the group allegedly took kickbacks from HMA in exchange for recommending that patients be unnecessarily admitted to their hospitals on an inpatient basis when they should have been treated on an outpatient basis. 

Meadows Regional Medical Center in Savannah, Georgia, and some other affiliated parties, were hit with a $12.8 million settlement in relation to a suit filed alleging the organization paid physicians to refer patients to the hospital for healthcare services, according to the DOJ.

The United States and State of Georgia argued that Meadows Regional Medical Center, a part of Meadows Healthcare Alliance, had inappropriate payment arrangements with certain affiliated physicians, and violated the False Claims Act by submitting claims referred by those physicians.

DaVita Rx, the Coppell, Texas-based pharma giant that serves patients with severe kidney disease, agreed in December to pay $63.7 million to resolve allegations relating of improper billing practices and kickbacks to federal healthcare program beneficiaries. The agreement settles allegations that DaVita Rx billed federal healthcare programs for prescription medications that were never shipped, were shipped but subsequently returned, and that did not comply with proof of delivery documentation requirements, refill requests, or patient consent, the DOJ said.

Twitter: @BethJSanborn
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