Friday, November 1, 2013

Business As Usual, Unfortunately

Some of the biggest news in workers' compensation occurred yesterday when it was released that the Federal Bureau of Investigation had filed an affidavit in federal court seeking a search warrant of California Senator Ron Calderon's office.

The affidavit implicates several of the who's who politicians active in workers' compensation law: the senator’s brother, former Assemblyman Thomas Calderon; Senate President Pro Tem Darrell Steinberg, D-Sacramento; Sen. Kevin De Leon, D-Los Angeles; Sen. Ted Lieu, D-Torrance, and Sen. Ricardo Lara, D-Bell Gardens.

According to the affidavit, each played some part in Calderon's alleged schemes, although there is no indication from the affidavit that they were aware of any alleged bribes.

The affidavit says that Calderon, D-Montebello, accepted $28,000 in bribes from Michael D. Drobot, who was the owner of Pacific Hospital of Long Beach (now owned by College Health Enterprises Inc. as of October).

Drobot has been accused of illegally abusing a provision of California workers' compensation law to pass through the cost of spinal hardware.

Calderon then allegedly used his political influence to kill bills that would have eliminated the pass-through and to water down the pass-through language in Senate Bill 863, according to the affidavit.

Thomas Calderon had been getting $10,000 a month from Drobot to act as his “consultant” on spinal surgery legislation the affidavit says.

Ron Calderon and Tom Calderon have not been charged with any crime.

Though the affidavit does not specifically name the bills which may have been unduly influenced by the scheme, WorkcompCentral reporter Greg Jones' research indicates SB 896 from 2011, and SB 959 and SB 863 from 2012, each having to do with spinal hardware pass through, were the targeted bills.

Sen. Kevin De Leon, D-Los Angeles, introduced SB 896 on Feb. 18, 2011. He pulled the bill in May 2011. The affidavit alleges that De Leon was looking for some "help."

In March 2012, Sen. Ted Lieu, D-Torrance, introduced SB 959, which would have repealed Labor Code Section 5318 and eliminated the pass-through. Allegedly the Calderon brothers and Drobot put pressure on Lieu to drop sponsorship of the bill. Lieu denies "dropping" the bill.

Lieu said in a statement he has been contacted by federal officials who informed him that he is not a target of the investigation.

Tom Calderon's relationship with Drobot dates back to 2002 according to the filing, and he allegedly still plays some role in Drobot's business.

There are many, many more details in the stories breaking about the affidavit, the implication of prominent California politicians and workers' compensation, and I need not go into them for this opinion.

Because, frankly, none of this is shocking.

Workers' compensation is a political construct that uses the law to obfuscate medical science in the reallocation of money.

That bribery, favors, political wrangling and phony schemes are a part of the process is old news - we have all known that politics is dirty, that politicians covet powerful positions for something "more" than the salaries that come with them.

The real issue is the byzantine mess that these guys make of a process that should otherwise be a rather simple system.

Workers' compensation fraud news makes good headlines - employers get busted for misreporting payroll; workers see court time for inflating or making false claims; carriers and their executives get implicated for redirecting reserve money.

But what the FBI alleges is that the dishonesty starts at the top, in the legislature, where deals are made to ensure the flow of money to those who have paid for the favor.

1 comment:

  1. I am shocked, SHOCKED, the FBI would allege workers comp dishonesty starts at the top, in the legislature, where deals are made to ensure the flow of money to those of have paid for the favor ... in California!!

    Why, here in Illinois, we thought that market was cornered by the sheer number of Governors who move straight from the State House to the Governor's Mansion and then to the Big House ~ not to be confused with the Blues Brothers House of Blues ...