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Drobot Challenges Suspension as DWC Schedules Lien Consolidation Hearing

By Greg Jones (Deputy Editor)

Monday, August 7, 2017 | 3669 | 0 | 5 min read

Former Pacific Hospital of Long Beach owner Michael D. Drobot is challenging an administrative order suspending him from participating in California’s workers’ compensation system, saying lawmakers would have drafted AB 1244 to explicitly say the suspension provisions apply to executives, if that is what they intended.

Michael D. Drobot

Michael D. Drobot

There’s no question state lawmakers were aware of Drobot and the Pacific Hospital kickback scheme. Former state Sen. Ron Calderon, D-Montebello, is sitting in a federal prison in Oregon for accepting bribes from Drobot.

Even if lawmakers were not aware of a colleague who was dragged out of office as a result of the scandal, analyses of AB 1244 prepared for both the Assembly and the Senate cite Pacific Hospital as the type of fraud the bill would address by requiring the Division of Workers’ Compensation to suspend accused providers, Drobot says in court filings.

But the bill itself was not drafted so that it would apply to a hospital owner, Drobot says in a petition asking the Los Angeles County Superior Court to issue writs of mandate ordering the DWC to vacate his suspension order and vacate an order consolidating all liens filed by Pacific Hospital of Long Beach for a special hearing to determine whether they should be disallowed as fraudulent.

The petition was filed Tuesday, two days before the DWC posted to a new Special Adjudication Unit web page a schedule of lien consolidation hearings showing the initial hearing to review Pacific Hospital liens is Aug. 23 in Van Nuys.

Drobot pleaded guilty in February 2014 to one count of conspiracy to defraud a federal health care program and one count of paying kickbacks to doctors who referred patients to Pacific Hospital of Long Beach. A sentencing hearing is scheduled for Sept. 8.

He was suspended from participating in California’s workers’ compensation system, effective April 28.

On July 14, Chief Judge Paige S. Levy signed an order consolidating more than 2,600 liens filed under the name of Pacific Hospital of Long Beach. The consolidation order is required by another provision in AB 1244 that mandates a special hearing during which convicted providers must rebut a presumption that all liens filed in their name or by companies within which they have an ownership interest are fraudulent, or their liens will be disallowed.

Drobot argues in court filings that he is not a “provider” as that word is used in AB 1244.

He says the statutory language “strongly indicates” that a medical provider “means in plain parlance an individual, typically licensed, who personally provides some sort of medical service or treatment to an injured worker.” The Legislature did not define providers to include hospital owners or others who did not personally provide treatment or services, despite the fact that the legislative history of the bill makes clear that Pacific Hospital was “a major motivation and justification” behind AB 1244.

“In finding that Mr. Drobot was a ‘provider’ within the meaning of Labor Code Section 139.21(a), respondents have misread and distorted the most reasonable, if not the plain meaning of, the statutory language, thereby exceeding their power,” the petition says.

Drobot and Pacific Hospital further argue that the lien stay and consolidation provisions, like the suspension, are also limited to providers. Instead, they say the statutory language suggests that the lien provisions extend “from an individual who is a service provider to entities in which the provider has an ownership interest, not from an individual who does not provide medical services or treatment, and then to entities such as hospitals in which the individual may have an ownership interest.”

What’s more, Drobot argues that he wasn’t afforded the opportunity to argue that he is not a provider as defined by AB 1244.

The petition alleges that DWC Acting Administrative Director George Parisotto on March 28 mailed to Drobot’s home in Newport Beach a notice of suspension. The notice said Drobot had until April 7 to file in Oakland a written request for a hearing to challenge the suspension.

Drobot says the letter was not accompanied by proof of service, so he does not know the date it was actually sent. But he says he did not see the letter until the weekend of April 8, after the deadline to request a hearing had passed.

“Affording Mr. Drobot 10 days to file a written request for a hearing in Oakland did not afford him procedural due process, because he had insufficient time to make such a request,” the petition says.

He says the DWC, in drafting rules for suspension proceedings, could have allowed five extra days to account for the time it takes to mail a letter. Alternatively, it could have arranged for personal delivery of the suspension notice, or sent it overnight.

In addition to denying him the opportunity to argue he was not a provider, Drobot claims the alleged due process violation deprived him of the opportunity to present evidence that he did not own Pacific Hospital between Aug. 31, 2005, and Oct. 12, 2010, and that liens arising from services provided during that period should not be consolidated.

“As a result of the foregoing, insurance carriers and employers will now not negotiate or pay Pacific Hospital’s bills and liens even if they do not implicate Mr. Drobot’s unlawful conduct, thereby choking off petitioner’s cash flow,” the filing says. “Consolidation proceedings at the WCAB historically have taken years to run their course. This effectively puts Pacific Hospital in the position of becoming unable to retain legal counsel to prove in the WCAB consolidation that it has valid, untainted liens that should be paid.”

Finally, Drobot argues that his plea agreement requires him to make restitution to victims and forfeit “substantial assets” to the federal government. He says depriving Pacific Hospital of the right to pursue payment on its legitimate liens will substantially interfere with his ability to satisfy those obligations.

The Los Angeles Superior Court has not set a hearing date for Drobot’s petition.

Meanwhile, the DWC also announced it will hold consolidation hearings to review liens filed by Dr. Philip Sobol and Drobot’s son, Michael R. Drobot, this month.

Sobol, an orthopedic surgeon in Los Angeles, pleaded guilty in November 2015 to a single federal conspiracy charge and admitted to accepting kickbacks for referring patients to Pacific Hospital. He was suspended from participating in California’s workers’ compensation system in May.

At the same time, the DWC says it stayed more than 6,000 liens related to Sobol with a total claimed value of more than $42.7 million. The first hearing to review Sobol’s consolidated liens is Aug. 16 in Van Nuys.

The younger Drobot was also suspended in May based on his pleading guilty in 2016 to federal conspiracy and kickback charges. He was accused of helping solicit doctors and chiropractors to accept kickbacks for referring patients to Pacific Hospital. He was also accused of operating California Pharmacy Management and Industrial Pharmacy Management, which dispensed drugs from doctors’ offices and paid the doctors a cut of the reimbursement from insurance companies.

The DWC stayed more than 4,700 liens filed under names of the companies affiliated with the younger Drobot. The consolidation hearing for those liens is Aug. 17 in Van Nuys.


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