LOS ANGELES — State Sen. Ronald Calderon accepted bribes from a Southern California hospital executive who ran an alleged workers’ compensation scheme that brought the executive tens of millions of dollars, according to a sealed FBI affidavit obtained by Al Jazeera’s Investigative Unit.
In exchange for payments to family members, Calderon, a Democrat who represents a suburban district here, protected the interests in Sacramento of Michael Drobot, who ran a busy spinal surgery clinic in Long Beach, Calif., the affidavit says. The document says Calderon ensured that changes to state law would not injure Drobot’s lucrative business of providing spinal fusion surgery, which joins two or more vertebrae.
The California State Compensation Insurance Fund, a quasi-governmental organization that makes payments on workers’ compensation claims, filed racketeering charges against Drobot and his medical companies earlier this year. The complaint alleges that he received $161 million through inflated surgery room and spinal implant reimbursement fees in what the state calls “multiple fraudulent schemes.” The allegations are contained in a lawsuit filed in U.S. District Court, Santa Ana, Calif.
Until now, Calderon’s alleged behind-the-scenes role in the workers’ compensation payment controversy has never been revealed.
The hospital executive frequently invoked the Calderon name during these negotiations, said a state investigator interviewed by Al Jazeera who asked not to be named. According to the affidavit, Drobot walked away with $27.5 million in workers’ compensation payments after a settlement in 2004. He paid Thomas Calderon’s company $1 million for his assistance, the document says.
Drobot has been accused of creating a shell company to artificially inflate the price of spinal implants. Those operations were reimbursed separately under California law and allowed him to cheat state taxpayers for millions more, according to the lawsuit.
“Of course I’m milking the system,” Drobot allegedly told a state investigator, according to the FBI affidavit.
Drobot, in the interview, denied making such a statement.
The affidavit describes how Calderon’s influence in Sacramento was critical to ensuring that Drobot’s alleged reimbursement scam continued for years. During an undercover sting operation in which FBI agents posed as movie studio executives (see “Hollywood Sting”), Calderon purportedly boasted that he was keeping Drobot’s scheme alive.
“We’ve been keeping him in business now for the last four years, because the governor kept pushing these regs (sic) to cut the funding on these spinal surgeries for workers’ comp,” Calderon was quoted as telling an agent during a conversation on Nov. 2, 2012.
“All we’ve been trying to do is hold off that cut so they continue paying for that. The way it is now, they are leaving it up to the administrator at workers’ comp to decide how much they pay for these implants, and if they get cut out of that, they are out of business. So that’s what we’ve been working the last four or five years. You know, we’ve kept them going. We’ve pushed it off, pushed it off, pushed it off.”
Drobot said he couldn’t explain why the state senator would make such a statement.
“I’ve never asked Ron to do anything for me,” Drobot told Al Jazeera. “I have asked his brother to assist me. That’s for sure. I’ve never met with Ron Calderon to try to develop any strategy to change any of the legislation.”
If the California State Legislature had closed the loopholes by defining surgery room fees and not allowing for implants to be reimbursed separately, Drobot’s business would have suffered.
Year after year, Calderon allegedly protected Drobot’s interests. During a feverish legislative session in 2012, the state senator was responsible for modifying legislation that would have undermined Drobot’s implant reimbursement scheme, the affidavit says.
The wrangling went into full swing in March 2012, the FBI document says. State Sen. Ted W. Lieu, who represents Los Angeles, introduced a bill that would have eliminated separate reimbursement payments for spinal implants. Drobot needed Ronald Calderon and his brother Thomas to pressure Lieu to alter or drop his proposed bill, according to the affidavit.
In the interview with Al Jazeera, Drobot acknowledged that he and Thomas Calderon lobbied Sen. Lieu to abandon his bill. Asked if he or Calderon pressured Lieu, Drobot said they merely explained the problems the bill created for California’s medical industry. Lieu, who declined to comment to Al Jazeera dropped his sponsorship of the bill.
On Aug. 24, 2012, state Sen. Kevin de Leon, a Calderon ally who represents Los Angeles, took over Lieu’s bill. But de Leon, who declined to comment for this article, made a significant change. While Lieu’s bill eliminated separate reimbursements for spinal implants, de Leon’s allowed reimbursements to continue through 2013 — a big benefit to Drobot and others. Calderon was responsible for the language change, according to the affidavit. The new bill became law this past Jan. 1.
In early October, a few months after the FBI raided Calderon’s Sacramento office, Drobot sold Pacific Hospital of Long Beach to a Southern California healthcare management company. The state’s racketeering claims against him are pending.
“I will have my day in court soon,” Drobot told Al Jazeera.
Josh Bernstein and Katie Lannigan of Al Jazeera’s Investigative Unit contributed to this report.