Years before the feds roiled the Capitol by indicting the Calderon brothers on charges of accepting bribes, Bill Reynolds was onto the scheme.
Reynolds had battled killers and cartels during 20 years as an Oakland cop and federal drug enforcement agent. He saw more than his share of fraud while working as a private insurance company investigator for 20 years after that.
But he is particularly appalled by the political corruption that opened the way for crooked surgery centers to perform needless back operations on thousands of laborers and bilk hundreds of millions from the workers' compensation system.
"I'm floored it went as far as it did," Reynolds said. "It shakes your confidence that politicians can be paid for and bought."
Reynolds, 63, who flies the American flag outside his home in suburban Contra Costa County, is a plaintiff in a private whistle-blower lawsuit filed in May 2012 against surgery centers and others. It presaged the indictment of state Sen. Ron Calderon and his brother, former Assemblyman Tom Calderon.
As Reynolds discovered — and detailed in debriefings with the FBI — Michael Drobot was at the center of it all, employing Ron Calderon's son and retaining Tom Calderon.
Drobot, 69, bought Pacific Hospital of Long Beach in 1997. By 2001, he was in Sacramento seeking legislation that would crack open the workers' comp vault for his hospital's specialty, spinal-fusion surgery.
Drobot's raid of the workers' comp system reflects the corrosive impact of money on politics. Politicians carried legislation that helped enrich a crook who, by owning a hospital, purported to be a healer. Drobot used his riches to buy vintage autos and resort property and lavish donations on politicians. It was lucrative for Drobot but a vicious circle for the rest of us.
In charging Drobot, federal authorities in Los Angeles said his hospital submitted more than $500 million in fraudulent bills during the past five years, much of it charged to the California workers' compensation system, paid for by you and me and our employers.
Drobot has relinquished control of Pacific Hospital and pleaded guilty two weeks ago to federal charges that include paying kickbacks to doctors and chiropractors who referred laborers from as far away as Northern California for the unnecessary surgery.
"People like Drobot seek out the weak link. In terms of ethical compasses, the Calderons were clearly the weak link in Sacramento," said Niall McCarthy, the Burlingame lawyer who represents Reynolds.
If the whistle-blower suit succeeds, the state would receive 70 percent to 75 percent of any recovery from the defendants. Reynolds and his co-plaintiff, Mark Sersansie, would collect the remainder.
Through his investigation, Reynolds found numerous examples of hyperinflated costs charged by Drobot and other surgery centers. In January 2012, for example, a company called International Implants provided spinal-fusion hardware to Pacific Hospital at a cost of $32,465.
"Only a few days later and without having actually paid for the surgical hardware yet, Pacific Hospital bills the workers' compensation carrier $64,930," the suit said.
Drobot was exploiting a now-repealed California provision of law that essentially permitted hospitals to double bill the workers' comp system for the spinal surgery. Spinal fusion was the only operation that received the special exemption.
To grease his way, Drobot and his minions donated at least $240,650 to the Calderon clan's campaigns over the years, including $179,000 to Tom, and $45,850 to Ron. But many politicians, most of them Democrats, gathered at Drobot's trough. By my count, Drobot's network donated $1.9 million to political campaigns since 2000, including $540,000 to the California Democratic Party.