An orthopedic surgeon is set to be sentenced on Friday for accepting over $315,000 in bribes and kickbacks in exchange for performing spinal surgeries at a now-defunct Long Beach hospital. The hospital’s owner, who was imprisoned for committing workers’ compensation insurance fraud, orchestrated this scheme.
David Payne, a 65-year-old resident of Irvine, was found guilty in March after a six-day trial in downtown Los Angeles. The jury convicted Payne of conspiracy, honest services wire fraud, and use of an interstate facility in aid of bribery.
According to court documents and trial evidence, Pacific Hospital’s owner, Michael Drobot, conspired with doctors, chiropractors, and marketers to offer kickbacks and bribes in return for patient referrals for spinal surgeries and other medical services.
The bribes and kickbacks were primarily funded through the California workers’ compensation system. Over five years, the scheme amassed over $500 million in medical bills for spinal surgeries involving kickbacks.
Payne received bribes of up to $15,000 from Drobot for each spinal surgery he performed at Pacific Hospital. The largest bribe was for lumbar spinal surgeries that Payne conducted on patients using implants from one of Drobot’s companies. Payne and Drobot masked these bribes as payments for marketing services and fees under a fraudulent contract.
In total, the Justice Department has determined that Payne received more than $315,000 in illegal payments.
In April 2013, law enforcement raided Pacific Hospital, which was subsequently sold later that year, effectively putting an end to the kickback scheme.
Federal prosecutors have so far convicted two dozen defendants, including doctors and surgeons, for their involvement in this scheme.
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