“It’s hard to fathom that any medical professional would put profit over patient care.  Investigators and prosecutors have pressed forward with this case for many years, having conducted an investigative search of the hospital in 2013.  It takes dedicated investigators in pursuit of truth and criminal justice to see these types of cases through.” – CSLEA President Alan Barcelona

LOS ANGELES – On March 3, 2023, Dr. David Hobart Payne, 65, of Irvine, an orthopedic surgeon was 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 workers’ compensation insurance fraud.

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. These services and surgeries were paid for primarily through the California workers’ compensation system. During its final five years, the scheme resulted in the submission of more than $500 million in medical bills for spinal surgeries involving kickbacks.

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.

To date, 24 defendants, among them doctors and surgeons, have been convicted for participating in the kickback scheme.

United States District Judge Josephine L. Staton scheduled a June 2 sentencing hearing, at which time Payne will face a statutory maximum sentence of 50 years in federal prison.

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