Spinal Cap III: The Taming of the Pedicle Screw – Part I

The Shakespearean spine drama of private greed and public corruption in California termed “Spinal Cap” by the FBI has entered Act III. At the end of October the sealed whistleblower lawsuit that started it all was made public and patients began to sue surgeons, hospitals and others for allegedly putting counterfeit pedicle screws and rods into their backs.

Let’s recap the first two acts of this drama.

Act I: Drobot’s Fall

In Act I, Michael Drobot, the former owner and operator of Pacific Hospital of Long Beach, admitted to compensating physicians to refer patients to his hospital and bribing a state senator to keep a favorable workers’ comp law on the books.

Drobot is waiting to be sentenced this coming December.

Act II: Crooked Doctors and Fake Screws

Then came Act II, as Arthur Golia, a spine patient, filed suit on June 13, 2014, accusing, Jack Akmakjian, M.D., a spine surgeon, a spine distributor and a mom-and-pop machine shop of putting seven non-FDA approved devices into his spine.

Act III: Taming of the Pedicle Screw

Act III begins as Drobot and his alleged accomplices are accused by the whistleblowers of building a web of interlocking companies to hide their ill-gotten gains and paying surgeons and chiropractors referral fees to send patients to their hospitals.

The plot thickens as Drobot and two of his alleged accomplices, Paul Randall and Roger Williams, are accused of establishing spinal hardware distributorships and manufacturing companies and paying unlawful kickbacks to surgeons to use their implants. They then sold the hardware to collaborating hospitals at grossly inflated prices.

The whistleblowers say the group of defendants overinflated the price of the “counterfeited” devices to hospitals, which in turn falsely billed the state workers comp program. A group of surgeons is also accused of knowingly utilizing the counterfeit screws and rods sold to the hospitals, with the hospital’s knowledge and collaboration.

Like a Shakespearean drama this play requires a playbill of the list of actors.

The Whistleblowers

Mark Sersansie and William Reynold—Sersansie is a former employee of Platinum Medical Group. Reynolds is a former employer of two workers’ comp carriers in California.

The Accused

Michael Drobot—Former owner of Pacifica Hospital, West Coast Surgery Center Management and International Implants, LLC.

Paul Randall and Christine Hernandez—Owners of Summit Medical Equipment, Inc. and Platinum Medical Group. Located in same complex as Tri-City Regional Medical Center. Randall, a central character in this alleged conspiracy, was allegedly paid $100, 000 per month by Drobot for marketing services.

Michael “Mic” McGrath—Owner of Comprehensive Intra-Operative Services (C.I.O.S). A spine device marketing company. Had contracts with Tri-City Regional Medical Center, Pacific Hospital, Riverside Hospital, Michael Drobot and Roger Williams.

Roger and Mary Williams—Owners of Spinal Solutions, LLC. Manufacturers and distributors of alleged counterfeit spine devices. The company had marketing arrangement with Randall and “Mic” McGrath.

William Crowder—Owner of Crowder Machine & Tool Shop, hired by Williams to make alleged counterfeit pedicle screws and rods.

Beryl Weiner and Arthur Gerrick—Weiner is Tri-City’s former attorney and Gerrick is the hospital’s former CEO. They established Willshire Boulevard-based South Bay Hospital Management Company LLC as a “management company” for Tri-City. According to the whistleblowers, the real purpose was to funnel and siphon-off unlawful profits from Tri-City arising from unlawful billings for spinal fusion surgeries and hardware.

The Defendant Hospitals

Tri-City Regional Medical Center—Managed by South Bay Hospital Management.

Pacific Hospital of Long Beach—Purchased by Drobot in 1997 and managed by West Coast Surgery Center Management, Inc., also owned by Drobot. Between 2001 and 2010, the hospital performed 5, 138 fusion surgeries and billed $533 million, three times as much as any other California hospital over the same time period.

Riverside Community Hospital and St. Bernardine Medical Center—Other hospitals accused of participating in the billing scheme.

The Accused Doctors

Jack Akmakjian, M.D., G. Sunny Uppal, M.D., Joseph Vanderlinden, M.D., and Edward C. Kolpin, M.D.—All performed spine surgeries at defendant hospitals. They are accused of taking illegal kickbacks to perform surgeries at those hospitals and knowingly implanting the alleged counterfeit screws and rods into patients. They are also accused of taking kick-backs for using those implants.

Ismael Silva, M.D. and Jeffrey S. Catanzarite, D.C.—Were allegedly paid $1.8 million and $1.7 million, respectively, by Drobot and International Implants in exchange for referral of patients.

Drobot and Randall Go Into Business

According to the whistleblower suit, Paul Randall went into business with Drobot after getting out of federal prison following a 21-month term stemming from a 1993 conviction for buying wooden shipping pallets on credit and reselling them without paying the original vendors. He began steering spinal patients and surgeons to Drobot’s Pacific Hospital.

Randall introduced surgeons to Drobot for which he was allegedly paid $25, 000 a month. The two also co-owned a weekend retreat in Bullhead City, Arizona, along with a doctor.

After a business dispute with Drobot in 2008, Randall and his partner, Christine Hernandez, formed the Platinum Medical Group, a spinal distributorship that employed one of the whistleblowers, Mark Sersansie. They shifted their marketing business to Tri-City Regional Medical Center and began recruiting the same surgeons Randall had brought to Pacific Hospital. Randall allegedly paid the accused surgeons $15, 000 and $20, 000 for each referral.

Tri-City is a non-profit 107-bed facility near Long Beach. The hospital had marketing agreements with Randall and McGrath and others and allegedly paid them as much as $100, 000 per month to steer patients to the hospital. They paid Randall, according to the whistleblowers, more than $3.2 million between 2008 and 2011.

In 2007, Tri-City billed $3 million to workers’ comp for spinal fusions. In 2010 that jumped to $65 million.

Sersansie claims that Randall, through Summit Medical Equipment, purchased alleged counterfeit implants and resold them to the defendant hospitals.

Drobot and Randall got back together in August 2011 with another marketing contract that allegedly paid Randall $100, 000 per month.

The Whistleblower Charges

Specifically the defendants are accused of violating the California Insurance frauds Prevention and False Claims Acts. Those violations include:

1. Employing, or as acting as, runners, cappers, steerers or other persons for the purpose of procuring patients;
2. Paying illegal kickbacks to chiropractors, doctors, lawyers and other persons for referring patients to Defendant Hospitals;
3. Inflating the cost of spinal implant hardware above that which is allowable under California law;
4. Paying illegal kickbacks to doctors and surgeons for choosing particular spinal implant hardware;
5. Manufacturing counterfeit, non-FDA approved spinal implant hardware and billing insurers as if they were approved; and
6. Performing non-medically necessary surgeries.

Spinal Solutions, McGrath and the Surgeons

Roger and Mary Williams, the owners of Spinal Solutions had marketing agreements with Randall and Michael “Mic” McGrath. They are accused of hiring Crowder Machine Shop to make the alleged counterfeit implants and selling them through Spinal Solutions. The whistleblowers say Williams flew surgeons who used their implants on his private plane to foreign countries and other vacation destinations. Two of those surgeons, Akmakjian and G. Sunny Uppal, along with McGrath, attended a conference in Montreal.

McGrath and his spine device marketing company, Comprehensive Intra-Operative Services [C.I.O.S.], had contracts with various hospitals, Drobot and Williams.

Sham “Consulting Agreements”

McGrath is accused of entering into sham “consulting agreements” with Drs. Uppal and Akmakjian to use his clients’ hospitals and choose Spinal Solutions’ implants. In November 2002, McGrath allegedly paid Akmakjian $25, 000 in three checks of $8, 333 each.

In a note to Williams and Spinal Solutions, McGrath allegedly discussed the illegal kickback scheme. Attached to the note were two checks for $750, one for Uppal and one for Akmakjian. In the note, McGrath informs Williams: “Rog, these checks are….for Sunny and [j]ack. I had to pay to stop their crying. I’ll take it out of Spine-Line at the end of the month.”

According to the whistleblower complaint, on January 20, 2010, McGrath issued an invoice to Spinal Solutions seeking money for kickbacks to surgeons using Spinal Solutions’ implants. The invoice indicates that Uppal and Akmakjian were paid $1, 500 per spinal fusion surgery. The invoice even indicates the name of the patients and the hospital where the surgeries were performed.

The whistleblowers say they also have checks issued to Joseph Vanderlinden, M.D. and are signed by McGrath. Over a period of three months, McGrath allegedly paid Vanderlinden $24, 000 in kickbacks for using his and Spinal Implants’ implants.

There are apparently more surgeons involved and the whistleblowers say they will name them as they are “ascertained.”

The Reckoning

In addition to the kickback charges and setting up the web of management companies and distributorships to hide their profits, the accused are also charged with manufacturing cheap counterfeit screws and rods to make even more money.

And that caught the attention of patients and lawyers.

On October 17, 2014, 28 former patients filed a lawsuit against most the group for placing non-FDA-cleared devices into their bodies. There are now 32 civil cases from patients pending in state courts.

In the last scene of Act III of this drama, Drobot claims his innocence of the counterfeiting charges and countersues the attorneys representing the patients. We’ll take a look at the evidence and bring you the conclusion in next week’s installment of the “Taming of the Pedicle Screw.”