Menu Close

Category: Daily News

Woman Gets 11 Years For Second Comp Fraud Conviction

Alyce Leticia Biggs, 44, of Lake Arrowhead was sentenced last week to 11 years in state prison for committing workers’ compensation insurance fraud, tax fraud and grand theft.

In 2010, Biggs was convicted of workers’ compensation insurance fraud, tax fraud, and grand theft. At that time, she was placed on probation and ordered to serve a year in custody. After her custody time was completed and while on probation, Biggs, a bookkeeper, continued to steal from at least two of her clients.

“Biggs would take bank deposits from the victims that consisted of cash and checks, and, on the way to the bank would pocket the cash, and only deposit the checks,” said Deputy District Attorney Michael Chiriatti, Jr., who prosecuted the case.

According to Chiriatti, Biggs’ criminal activity continued for at least three years. As a result, she was rearrested, her probation was revoked, and a new criminal case was filed.

On Jan. 17, 2014, Biggs pleaded guilty to six new counts of grand theft, admitted a white collar crime enhancement, and admitted that she was in violation of her prior grant of probation. She also agreed at that time to serve 11 years in state prison, and pay back the victims all of the money she took from them. At the sentencing hearing, victim Vicki Center told the Court, “This whole event has been tragic to me.” When asked if she had anything she would like to tell the Court or the victims, Biggs stated she did not.

Court of Appeal Reinstates Malpractice Claim Against Applicant Attorneys

Appellant Chris Fopiano sued applicant attorneys Leonard Stern and Steven Barry for legal malpractice arising out of their representation of Fopiano in a workers’ compensation case. He claimed they improperly waived his right to seek reasonable disability accommodations from his employer. The trial court sustained the attorneys’ demurrer without leave to amend on the ground that the action was time-barred. Fopiano appealed, and the Court of Appeal reversed the dismissal and reinstated the case in the unpublished opinion of Fopiano v. Stern.

Fopiano suffered pulmonary injuries while working for his employer, Eastern Municipal Water District (EMWD). In July 2008, he hired attorneys Stern and Barry to represent him in a workers’ compensation case against EMWD. In January 2011, in the course of their representation of Fopiano, he alleges they waived his right to seek reasonable accommodations for his disability, although Fopiano had never discussed this with respondents, and did not know he possessed such a right. Additionally, Stern allegedly advised Fopiano that if he did not request early retirement, his employer could force him to retire. On March 14, 2011, Fopiano accepted an award of $69,813.62 for his permanent disability and voluntarily retired.

Soon thereafter, on March 25, 2011, Fopiano filed a pre-complaint questionnaire with California’s Department of Fair Employment and Housing (DFEH) to institute a disability discrimination complaint against EMWD. EMWD was afforded an opportunity to respond and denied Fopiano’s allegations of disability discrimination. EMWD asserted that Fopiano was not offered reasonable accommodations for his disability because respondents waived his right to seek reasonable accommodations and indicated to EMWD that Fopiano would instead retire.

Fopiano sued his comp attorneys on May 24, 2012, alleging they committed legal malpractice by waiving his right to seek reasonable accommodations from EMWD that would have allowed him to continue working. His attorneys demurred, arguing the allegations were insufficient to state a cause of action because they failed to allege when Fopiano learned of the attorneys’ wrongful conduct. The trial court sustained the demurrer to an amended complaint without leave to amend, finding Fopiano’s claim was time-barred because the fact that he filed a DFEH pre-complaint questionnaire demonstrated he knew of his attorneys’ malpractice at least by March 2011, which was more than one year before he filed his complaint. Fopiano timely appealed from the resulting judgment of dismissal.

The Court of Appeal reversed. The limitations period for legal malpractice is set forth in Code of Civil Procedure section 340.6, which states, in relevant part: “An action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first. . . .”

The allegations in the second amended complaint did not show Fopiano’s claim was time-barred. Fopiano’s complaint alleged Stern erroneously counseled Fopiano to retire and negligently waived his right to seek reasonable accommodations for his disability. DFEH allegedly informed Fopiano in October 2011 of correspondence between respondents and EMWD in which respondents effected this waiver. Fopiano filed his complaint less than a year later, in May 2012. Assuming these allegations are true,Fopiano discovered respondents’ wrongful conduct within the one-year limitations period.

CHSWC Annual Report Calls For Integrated Health Care and Medical-Legal Reform

The Commission on Health and Safety and Workers’ Compensation (CHSWC) examines the health and safety and workers’ compensation systems in California and makes recommendations to improve their operation. At the request of the Executive Branch, the Legislature and the Commission, CHSWC conducts research, releases public reports, presents findings, and provides information on the health and safety and workers’ compensation systems. Accordingly, CHSWC has now published its 352 page 2013 Annual Report.

CHSWC is again this year recommending the integration of workers’ compensation medical care with general medical care insurance. The Report notes that health costs have been rising more quickly than inflation and wages. These costs create financial challenges for employers, especially those in industries with already high workers’ compensation costs. Furthermore, group health care and workers’ compensation medical care are typically delivered through separate provider systems, resulting in unnecessary, duplicative and contraindicated treatment and inefficient administration.  Suggestions have been made to integrate workers’ compensation medical care with the general medical care provided to patients by group health insurers in order to improve the quality and coordination of care, lower overall medical expenditure, reduce administrative costs, and derive other efficiencies in care. Research also supports the contention that an integrated 24-hour care system could potentially provide medical cost savings, as well as shorten the duration of disability for workers.

Nonetheless, CHSWC determined that SB 863 has indeed resulted in some medical cost savings. In 2012, based on a California Workers’ Compensation Institute analysis, the WCIRB estimated an approximate $20,000 per claim reduction on claims involving spinal implant hardware due to the SB 863 provisions related to duplicate reimbursement for spinal implant hardware. Preliminary WCIRB data suggests savings of more than $15,000 per claim on affected spinal surgery claims in 2013. In 2012, the WCIRB estimated that the revised fee schedule for ambulatory surgery center (ASC) facility fees required by SB 863 would reduce those fees by approximately 25 percent. Preliminary WCIRB data for 2013 services suggest a 26 percent reduction in ASC fees.

The cost of the total medical benefit decreased by 23 percent from 2003 to 2007, and then increased by 35 percent from 2007 to 2012. Payments to physicians decreased by 42 percent from 2003 to 2009, and then increased 20.5 percent from 2009 to 2012. Pharmacy costs peaked in 2004, declined by 27 percent from 2004 to 2007, and then increased overall by 26 percent from 2007 to 2012. Hospital costs declined by 39 percent from 2003 to 2006, increased overall by 37 percent from 2006 to 2011, and then decreased by 18 percent from 2011 to 2012. Direct payments to patients averaged $226 million from 2003 to 2005, increased sharply 4 times from 2005 to 2006, and then more than doubled from 2006 to 2012. Expenditures on medical cost-containment programs in 2005 were less than a half of what they were in 2003, increased 4 times from 2005 to 2010, and then decreased by 29 percent from 2010 to 2012.

CHSWC complains about the high cost of medical legal examinations. Medical-legal evaluation costs peaked in 2008 at $289 million (an increase of 58 percent from 2003), decreased by 19 percent from 2008 to 2009, and then gradually went back to 2008 level from 2009 to 2012. The average number of psychiatric evaluations per claim in California increased by 19 percent from 0.062 in 2002 to 0.074 in 2010. Psychiatric evaluations are nearly always billed under the ML-104 code that is the most expensive. The average cost of a psychiatric evaluation more than doubled from $1,528 in 2002 to $3,719 in 2010. It was an increase of 13 percent from $3,302 in 2010. The Southern region produces over 60 percent of all psychiatric evaluations in California and has the biggest impact on both the frequency and cost of medical-legal evaluations statewide.The complexity of impairment rating under the AMA Guides, new rules for apportionment, and the criteria for medical treatment decisions under the Medical Treatment Utilization Schedule are among the reasons cited for rising costs per exam. Thus, the Report recommends that a study of the operation and potential improvements of the QME system.

WCAB Declares QME Rule 35.3(e) is Invalid

In 2009, Ismael Navarro filed an application and claim form alleging a cumulative injury from February 9, 2008 to February 9, 2009 to his back and ear and was evaluated by panel QME J. Yogaratnam, M.D., Then in 2010, applicant filed applications for adjudication with claim forms alleging a specific injury of June 1, 2010 to his back, lower extremities and legs and a specific injury of August 31, 2010 to his back and left leg.

In 2012, defendant petitioned to compel an evaluation of applicant’s two subsequent claims of injury by original panel QME Dr. Yogaratnam, but it did not seek to have applicant reevaluated regarding his previous claim of cumulative injury. Applicant objected. The WCJ found that applicant was entitled to a new panel QME in his specific injury cases and that QME Rule 35.5(e) that seems to require an applicant to return to the original QME did not apply.

Defendant filed a Petition for Removal contending that Rule 35.5(e) applies and because Rule 35.5(e) applies, applicant must return to original panel QME Dr. Yogaratnam. The WCAB in the En Banc decision of Ismael Navarro v.City of Montebello, administered by Corvel Corporation disagreed with defendant and affirmed the order for a new panel.

The WCAB reviewed the Labor Code provisions for the use of a QME and concluded “we see no provision in the Labor Code that requires an employee to return to the same evaluator for a subsequent claim of injury. And, we see no provision that distinguishes between procedures for evaluation of claims of injury based on the same or different body parts”.Thus the Labor Code does not require an employee to return to the same evaluator for a subsequent claim of injury.

“Rule 35.5(e) appears to impose an unwarranted limitation on the Labor Code, particularly sections 4060(a), (c), and (d), 4062.1, 4062.2, 4062.2(a), 4062.3(j), 4062.3(k), 4064(a), and 4067. Thus, Rule 35.5(e) appears to be invalid to the extent that it imposes an additional requirement that an employee return to the same evaluator when a new injury or illness is claimed that involves the same body parts and the same parties.” Applicant’s two claims of specific injury were reported after the original evaluation but before a subsequent evaluation by a new evaluator. Thus, under sections 4062.3(j) and section 4064(a), it appears that applicant is entitled to be evaluated by one new evaluator for his two subsequent claims of injury.

The WCAB therefore indicated its intent to rule that “The requirement in Rule 35.5(e) that an employee return to the same evaluator when a new injury or illness is claimed involving the same parties and the same type of body parts is inconsistent with the Labor Code and that this requirement is therefore invalid.” The Petition for Removal was granted, and the parties were given 20 days notice of this intended ruling and an opportunity to respond.

In the event that this case becomes a final ruling, this will be the second QME rule to be declared invalid. In 2010, the En Banc decision of Amelia Mendoza v. Huntington Hospital, Permissibly Self-Insured; and Sedwick Claims Management Services, Inc. declared rule 30 to be invalid. The Appeals Board held in that case that: (1) California Code of Regulations, title 8, section 30(d)(3) (Administrative Director Rule 30(d)(3)), which states that when a claim has been entirely denied by the defendant only the employee may request a panel of Qualified Medical Evaluators, is invalid because it conflicts with Labor Code sections 4060(c) and 4062.2 and exceeds the scope of section 5402(b); (2) the time limits of section 4062(a) for objecting to a treating physician’s medical determination do not apply when the injury has been entirely denied by the defendant; and (3) section 4062.2 does not establish timelines for initiating or completing the process for obtaining a medical-legal report on compensability.

WCAB (Not IMR) Must Decide Medical Necessity When UR Decision is “Invalid”

In 2003 and 2004, Jose Dubon sustained industrial injuries to his spine and other body parts while employed by World Restoration, Inc., Applicant’s primary treating physician for both injuries has been Mark W. Brown, M.D. His consulting orthopedic surgeon has been Albert Simpkins, Jr., M.D. The agreed medical evaluator (AME) in orthopedics has been Israel Rottermann, M.D.

In a report dated July 1, 2013, Dr. Simpkins requested authorization to perform an anterior and posterior fusion from L4 through S1 with decompression. On July 19, 2013, Bunch CareSolutions, SCIF’s UR agent, sent Dr. Simpkins a letter denying authorization for surgery as not medically necessary. The letter was based on the July 19, 2013 report of SCIF’s UR physician, Donald A. deGrange, M.D., a board certified orthopedic surgeon. Dr. Simpkins invoked Bunch CareSolutions’s internal UR appeal process. On August 2, 2013, a second UR denial was issued based on the report of board certified orthopedic surgeon Kevin Mark Deitel, M.D. In all significant respects, this report was identical to that of Dr. deGrange.

On August 12, 2013, applicant signed an application for IMR. On August 14, 2013, applicant filed a declaration of readiness (DOR) for an expedited hearing regarding his entitlement to spinal surgery. In the DOR, applicant contended that defendant’s UR denial was defective because, among other reasons, there was insufficient record review.

In her Opinion on Decision, the WCJ observed that: (1) Dr. deGrange did not identify the 18 pages of additional medical records he reviewed, in violation of section 4610(g)(4) and AD Rule 9792.9.1(e)(5)(D) (Cal. Code Regs., tit. 8, § 9792.9.1(e)(5)(D); see also § 9792.9(l)(3));5 and (2) there was ” wealth of medical records”that Dr. deGrange did not review, including all reports of Dr. Brown, the reports of Dr. Simpkins (other than the July 1, 2013 report), the AME report of Dr. Rottermann, and the discogram report of Dr. Lowenstein. The WCJ said that Dr. deGrange’s failure to review all of the relevant medical records “was a critical error” because “The determination [of medical necessity] is made in part based upon the severity of pain, duration of pain, radiculopathy as well as a review as to whether conservative care had been undertaken.” The WCJ added that a UR physician “is compelled by ACOEM to look at objective testing performed coupled with subjective complaints, history of radiculopathy, and history of conservative care” and that “a complete review of applicant’s medical condition and prior treatment “is especially important when utilizing ACOEM Guidelines in determining whether treatment should be authorized.” Despite the procedural defects with defendant’s UR that the WCJ identified, she concluded that any alleged procedural defects must be resolved through IMR. The WCJ further concluded that the WCAB cannot allow the surgery recommended by Dr. Simpkins because the issue of medical necessity must be determined by IMR.

The WCAB in the en banc decision of Jose Dubon v. World Restoration, Inc.; and State Compensation Insurance Fund agreed that the UR was inadequate but disagreed with the solution.

In reviewing the UR decision the sole focus of the IMR physician is the medical necessity of the proposed treatment. (Lab. Code, §§ 4610.5(c)(2), (c)(3), (k), 4610.6(a), (c), (e).) Because the role of an IMR physician is limited to assessing medical necessity, disputes over whether a UR decision is timely and/or procedurally proper must be resolved solely by the WCAB. (Lab. Code, § 4604 [“[c]ontroversies between employer and employee arising under this chapter shall be determined by the appeals board, upon the request of either party, except as otherwise provided by Section 4610.5″ (italics added)].) Judicial scrutiny of the procedural validity of a UR decision is of particular importance since SB 863 amended the Labor Code to bar an injured worker from renewing a treatment request for 12 months absent a documented material change in circumstances. (Lab. Code, § 4610(g)(6).) Furthermore, requiring strict compliance with mandatory time limits and other regulations governing UR will ensure the integrity of the UR process and the decisions rendered. This result will be beneficial to the workers’ compensation system as a whole.

But, not all procedural violations of section 4610 or the AD’s Rules render a UR decision invalid. Instead, a UR decision is invalid only if it suffers from material procedural defects that undermine the integrity of the UR decision. A UR decision is invalid if it suffers from material procedural defects that undermine the integrity of the UR decision. If, however, there are only minor technical or immaterial defects, a defendant’s UR determination remains fully subject to the IMR process.

If a UR decision is invalid because its integrity was undermined due to the defendant’s failure to provide the UR physician with adequate medical records or because the UR physician failed to consider them, there is no valid UR determination and no basis for the employee to invoke IMR. Although both the defendant and employee may submit medical records and reports to the IMR organization (Lab. Code, § 4610.5(l)(1), (f)(3); see also Cal. Code Regs., tit. 8, § 9792.10.5(a)(1), (f)(3), (h)(1)), a defendant may not use this as a vehicle to cure defects in its UR process if the UR decision has been found invalid. The need for a UR physician to be provided with and review sufficient medical records to determine the medical necessity of a treatment request and to disclose what those records are goes to the very core of a UR decision. Where there is no valid UR decision subject to IMR, the issue of medical necessity must be determined by the WCAB.

Federal OSHA Preempts DA From Pursuit of Civil Penalties in Workplace Fatality

Solus Industrial Innovations LLC makes plastics at an Orange County manufacturing facility. Solus had moved some production to Rancho Santa Margarita, Calif., from Aston, Pa., in 2007 and was in a hurry to begin production. The company purchased a water heater for $541.66 from a Lowe’s home improvement store to avoid the cost and permitting requirements of a proper installation. Use of an industrial water heater would have required permits and the installation of a natural gas line, and it would have delayed the start of the Rancho Santa Margarita extrusion of plastic components for conveyor chains and sprockets. In March 2009, that water heater exploded, killing two workers instantly in what district attorney refers to as an “untimely and horrific death.”

Solus former plant manager Carl E. Richardson and former maintenance supervisor Roy Faulkinbury were responsible for removal of an automatic safety shut-off protection and installation of a temperature control device to force the heater to operate above its capacity. The heater had leaked often and blown a safety valve but was kept in service. On March 19, 2009 the water heater exploded killing two an injuring a third employee. The tank pierced the 30-foot-high roof and landed about 25 feet from its original location. The blast hurled other equipment and materials against the concrete-block walls causing extensive damage and effectively destroying the facility, which never resumed operations.

The two pleaded guilty on Feb. 14 to two felony violations of California Labor Code section 6425, subdivision (a). They agreed to collectively pay $450,000 to families of the victims and individually do 250 hours of community service. (See People v. Faulkinbury, (Super. Ct. Orange County, 2012, No. 12CF0698).) No party challenged the district attorney’s standing to bring these or other appropriate criminal prosecutions.

The district attorney’s office also filed a civil lawsuit against Solus, Emerson and subsidiary Emerson Power Transmission Corp. The complaint contains four causes of action, all based on the same worker health and safety standards placed at issue in the administrative proceedings. The third cause of action alleges that Solus’s failure to comply with workplace safety standards amounts to an unlawful, unfair and fraudulent business practice under Business and Professions Code section 17200, and the district attorney requests imposition of civil penalties as a consequence of that practice, in the amount of up to $2,500 per day, per employee, for the period from November 29, 2007 through March 19, 2009. The fourth cause of action alleges Solus made numerous false and misleading representations concerning its commitment to workplace safety and its compliance with all applicable workplace safety standards, and as a result of those false and misleading statements, Solus was allegedly able to retain employees and customers in violation of Business and Professions Code section 17500. Again, the district attorney requests imposition of civil penalties as a consequence of this alleged misconduct, in the amount of up to $2,500 per day, per employee, for the period from November 29, 2007 through March 19, 2009.

Solus demurred to these two causes of action, contending they were preempted under Fed/OSHA, because a prosecutor’s pursuit of civil penalties under the UCL is not part of California’s workplace safety plan approved by the Secretary. The trial court disagreed, and overruled the demurrer to the district attorney’s two causes of action based on violations of the UCL. The Court of Appeal reversed in the published opinion of Solus Industrial Innovations LLC v The Superior Court of Orange County.

Under the supremacy clause of the United States Constitution (art. VI, cl. 2), Congress has the power to preempt state law concerning matters that lie within the authority of Congress. On the matter of workplace safety regulation, the federal government’s intent to preempt is clear: However, “Congress expressly saved two areas from federal pre-emption. . . . [T]he Act does not ‘supersede or in any manner affect any workmen’s compensation law [and] the Act does not ‘prevent any State agency or court from asserting jurisdiction under State law over any occupational safety or health issue with respect to which no [federal] standard is in effect.’” Moreover, Congress also gave states the option of side-stepping federal preemption entirely, by allowing any state which “desires to assume responsibility for development and enforcement therein of occupational safety and health standards relating to any occupational safety or health issue [to] submit a State plan for the development of such standards and their enforcement.”

After a review of the facts and law on preemption, the Court of Appeal concluded that state regulation of workplace safety standards is explicitly preempted by federal law under the OSH Act, and that consequently California is entitled to exercise its regulatory power only in accordance with the terms of its federally approved workplace safety plan. Thus the district attorney cannot presently rely on the UCL to provide an additional means of penalizing an employer for its violation of workplace safety standards.

S.B. 863 Reduces Ambulatory Surgery Center Charges by 28%

Average facility fee payments to ambulatory surgery centers (ASCs) have declined 26% per episode and 28% per procedure since fee schedule changes mandated by SB 863 were adopted last year according to a new study by the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) and the California Workers’ Compensation Institute (CWCI). The results of this study are consistent with the WCIRB’s initial projection of a 25% reduction in ASC costs that was part of the January 1, 2013 Pure Premium Rate Filing.

The CWCI/WCIRB joint study measured average amounts billed and paid for workers’ compensation outpatient surgery services rendered in the year preceding the adoption of the revised fee schedule (2012) and in the first 6 months after the revised fee schedule took effect (January through June of 2013). Payment results were measured both on a per procedure basis using CWCI data, and a per episode basis using WCIRB data. In addition, the authors looked for changes in a number of factors that can affect the total amounts paid to ASCs. Among the findings of the report are:

  • The average amount paid per ASC procedure following the implementation of the revised ASC fee schedule declined 28%.
  • The average amount paid for ASC services per episode declined 26%.
  • Although billings increased and negotiated discounts eroded, the net paid amounts for ASC services were not materially affected.
  • Both ASCs and hospital outpatient departments showed declines in the proportion of outpatient facility fees paying for additional services associated with the primary paid procedure.
  • The proportion of ASC payments attributable to services not subject to the fee schedule change increased, but remained relatively small.
  • The data indicate no change in the mix of services or the percentage of episodes occurring in outpatient hospital settings and ASCs.

The study authors note that their findings are preliminary, so the WCIRB and CWCI will continue to monitor ASC experience and plan to update the report later in 2014 to reflect all 2013 data. The joint study may be viewed, printed or downloaded from the Research section of the Institute’s website

DWC Will End IMR “Reminder Letters” on April 1

An injured worker, or someone she or he designates, may request independent medical review (IMR) if utilization review (UR) denies or modifies a requested medical treatment for an accepted claim. The claims administrator must send the injured worker a notice of the UR denial along with a partially completed IMR request form. To request IMR, the worker must submit the signed application for IMR and mail the original signed Application for Independent Medical Review and a copy of the utilization review denial of treatment within 30 days of receiving the utilization denial:

To date, when an IMR application is received without a copy of the UR denial, a reminder letter is sent to the worker requesting the UR denial and allowing an additional 15 days to comply with this requirement.

As of March 1, 2014, a revised IMR application must be sent by the claims administrator to the injured worker. The revised form now clearly advises that the copy of the UR denial must be included with the IMR application. Therefore, beginning April 1, 2014, DWC will cease issuing reminder letters if the UR denial is not included with the submittal of an IMR application and will instead advise the worker that the IMR application is ineligible.

Similarly, when a provider submits a request for independent bill review (IBR), the provider is required to include and index the following documents:

  • The original billing itemization and original supporting documentation
  • The explanation of review provided in response to the original billing
  • The request for second bill review and original documentation supporting second review
  • The explanation of review provided in response to the second bill request
  • If applicable, the relevant contract provisions for reimbursement rates.

To date, when a request for IBR is received without the required documentation, a reminder letter is sent to the provider requesting the documentation and allowing an additional 15 days to comply with this requirement. The final IBR regulations became effective on Feb. 13, 2014. For IBR requests that are received on or after Feb. 13, 2014, DWC will cease issuing reminder letters if the required documentation is not included with the submittal of an IBR application and will instead advise the provider that the IBR request is ineligible.

These changes are being made in an effort to better serve the public by streamlining the process and focusing efforts on issuing determinations in a timely manner.

Whilstleblowers Provide Details on Pacific Hospital Comp Fraud

On the heels of a massive corruption scheme involving state Sen. Ronald Calderon and a former hospital executive, two whistleblowers are speaking out to NBC4’s I-Team, for the first time, about what they said was insurance fraud, involving counterfeit medical hardware, which ran rampant under that hospital executive’s command. “The red flags started immediately,” said Mark Sersansie of Orange County, who was hired as a sales representative for a man he said worked for Michael Drobot, the former owner of Pacific Hospital of Long Beach.

Sersansie is one of two plaintiffs in a civil lawsuit, which was originally filed in Sacramento in May 2012, but was recently transferred to Los Angeles County. The suit alleges doctors were recruited to push workers comp patients to have spinal surgeries done at certain hospitals that overcharged for operations and medical devices, which in many cases were counterfeit, according to the suit. According to Sersansie, Drobot and his co-conspirators bullied their employees to keep quiet about their scheme. “These guys are absolute thugs,” said Sersansie. “They tried different ways to intimidate me and my family. We had instances where they actually came to my home, three of them and threatened me.”

According to the suit, the scheme involved an elaborate web of conspirators that included Pacific Hospital of Long Beach, which is now closed, Tri-City Medical Group, whose former CEO has since been investigated and removed and medical hardware distributors and doctor whom collected on illegal kick-backs. Justin Berger, Sersansie’s attorney, showed NBC4 an invoice — an exhibit in the suit — which totals $24,000. “These are bribes to get these surgeons to do surgeries at this hospital with this particular hardware,” said Berger. “Much of this hardware, if not all of it, we believe is counterfeit.”

Bill Reynolds, an insurance fraud investigator and the other whistleblower named in the suit, said this scheme bilked the state’s workers compensation system out of millions and put thousands at risk. “Initially, we were looking at 500 to a thousand (surgeries),” said Reynolds. “But we have obtained records now that could (show) 10-15,000 surgeries nationally.”

Drobot, who the suit alleges is a key player in the scheme, has entered a plea agreement in the sweeping corruption scandal involving state senator Ron Calderon. A statement sent to NBC4 by Drobot’s lawyer team said he has agreed to assist the government in its “expanding operations.” “We thought Drobot would be the last person to plead guilty,” said Sersansie. “We thought he would go down with a fight because he had the financing and resources to do it, because he was the big bully. When we found out he pled guilty for reasons that he pled guilty. It was a bit of vindication.”

Tri-City Medical Center is under new management. In a statement to NBC4, hospital officials stated the allegations are “without merit” and that they would “vigorously defend the false claims made in the lawsuit.” NBC4 learned late Tuesday, the U.S. Attorney’s office contacted Berger, inquiring about the lawsuit.

Calderon Political Machine Focus of Attention After Not Guilty Plea

Ron Calderon, a Democrat and a member of a California political dynasty that goes back several decades, turned himself in to federal authorities to face two dozen counts of bribery, fraud, money laundering and conspiracy involving workers compensation legislation. He appeared in court Monday, handcuffed and shackled in his street clothes at a brief hearing at the US District Court in Los Angeles, where he was ordered freed on $50,000 bond after surrendering his passport and agreeing not to leave the United States. The 56-year-old lawmaker was also ordered to return to court in March.

The Los Angeles Times reports that a Calderon political dynasty has spanned three decades, based upon a family infused into the blue-collar neighborhoods east of Los Angeles where the Calderon surname has appeared on local ballots for two generations. The Calderons have flourished in the sometimes ruthless environs of the California Assembly and Senate, where four family members have served in the carpeted chambers: brothers Charles, Ronald and Tom, and Charles’ son. They’ve cut reputations for raising campaign cash and reigning over the Legislature’s powerful “juice committees,” those overseeing banking, insurance and other industries that have the cash to bankroll political campaigns. They use their political muscle to help one another, squeezing political opponents, pushing legislation backed by supporters and even orchestrating a brazen leadership coup attempt.

Federal officials remain mum on the focus of the investigation, but the inquiry appears to be as far-reaching as the family’s influence, and may involve more than the current indictment. FBI agents questioned officials from cities served by the Central Basin Municipal Water District, a regional water wholesaler in Los Angeles County that has paid Tom Calderon more than $750,000 in consulting fees since 2004. A Los Angeles County grand jury subpoenaed several lawmakers as part of the probe, including a former aide to Ronald Calderon. The federal investigation has done little to dampen the Calderons’ political aspirations.

Ronald Calderon, who will be termed out of the Senate next year, has opened campaign accounts to raise money for possible runs for state controller and an Assembly seat in the future. Tom Calderon maintains a fund to run for his brother’s Senate post. Ian Calderon is running for reelection in the Assembly; and his father, Charles, is collecting donations for a campaign for secretary of state. Until May, Tom Calderon controlled a political action committee whose biggest contributions came from large insurance companies. It paid for outings at golf resorts and for private plane travel, campaign finance reports show. Calderon family members have opened 54 political accounts since 1986 and have taken in at least $15 million in contributions since 2000. Slightly more than half a million dollars of the money in the family members’ political accounts was passed from brother to brother, father to son, uncle to nephew. An additional $463,000 went to pay the Calderon brothers, wives and children as staff during that time; $110,000 went to Tom Calderon and his firm, Calderon Group.

A related story by the Los Angeles Times last December claims that the funds also paid more than $1 million to golf resorts in Las Vegas, Hawaii and other locations; $220,000 on steak dinners, $4,000 for cigars and $325 for false eyelashes. The last item was reported as an “appreciation” gift from Charles Calderon to his sister-in-law, serving as a campaign consultant. Ronald Calderon’s political bounty has paid for high-priced stogies, VIP tickets to Las Vegas boxing matches and Lakers playoff games, his campaign filings show. It has also financed rounds of golf at Pebble Beach, skybox tickets to a Britney Spears concert and a $1,320 spa bill during his “Birthday Bash” fundraiser at the Grand Pacific Palisades Resort near San Diego.

Diversity PAC has raised $1.2 million from interests that lobby the Legislature. Donors included AT & T, cigarette maker Philip Morris USA, Sempra Energy, the Assn. of California Life and Health Insurance Companies, the Pharmaceutical Research and Manufacturers of America (PhRMA), Eli Lilly and Co., Walgreens, Blue Shield and the payday loan firm Check Into Cash. Tom Calderon was the group’s founding principal officer, in 2005. He called it Latino PAC, and its mission was “to elect Latino candidates,” according to filings with the secretary of state. The fund later became Diversity PAC, and its purpose evolved into support for moderate Democrats, those involved said.

As part of its fundraising, the PAC took big donors by private jet and limousine to top-rated golf courses, including Pebble Beach, the Bandon Dunes Golf Resort in Oregon and the American Club Resort in Wisconsin. Diversity PAC has paid more than $100,000 to Bandon Dunes over the years for fundraisers, not counting the cost of the flights. The PAC has spent $43,000 on fundraising events at the La Quinta Resort and Club near Palm Springs, which boasts on its website of having 41 pools, 23 tennis courts, seven restaurants and five golf courses.