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Investigative Press Release
Issuing Office: Los Angeles CA
Category: Health Care Fraud

Surgeon Convicted for Accepting Over $300k in Illicit Payments to Perform Spinal Surgeries at Corrupt Hospital

LOS ANGELES – An orthopedic surgeon has been found guilty by a federal jury of accepting more than $315,000 in bribes and kickbacks for performing spinal surgeries at a now-defunct Long Beach hospital whose owner was imprisoned for committing a massive workers’ compensation insurance fraud, the Justice Department announced today.

Dr. David Hobart Payne, 65, of Irvine, was found guilty late Friday afternoon at the conclusion of a six-day trial. The jury found Payne guilty of one count of conspiracy, two counts of honest services wire fraud, and one count of use of an interstate facility in aid of bribery. 

According to court documents and evidence presented at trial, Michael Drobot –the owner of Pacific Hospital – conspired with doctors, chiropractors, and marketers to pay kickbacks and bribes in return for the referral of patients to Pacific Hospital for spinal surgeries and other medical services

Payne received bribes from Drobot of up to $15,000 for each spinal surgery that he performed at Pacific Hospital. The top bribe payment was for lumbar spinal surgeries Payne performed on patients at Pacific Hospital with implants from one of Drobot’s companies. Drobot and Payne covered up the bribes by disguising them as payments for marketing services and fees based on a sham contract. 

In total, Payne received more than $315,000 in illegal payments.

In April 2013, law enforcement searched Pacific Hospital, which was sold later that year, bringing the kickback scheme to an end.

The FBI, IRS Criminal Investigation, United States Postal Service Office of Inspector General, and the California Department of Insurance investigated this matter.