The US DOJ release indicates the surgeries were facilitated by a now-repealed state law -- and Drobot states in a plea agreement in the case filed against him -- that he allegedly paid Sen. Calderon bribes to keep the law alive. The spinal "pass-through" legislation permitted hospitals to pass on to workers' comp insurers the full cost of medical devices implanted in spinal surgery patients, and the US DOJ alleges that Drobot used shell companies to inflate the costs of those devices and then billed the insurers at the inflated rates.

"The spinal pass-through, the provision of California law that allowed Pacific Hospital to fraudulently inflate the cost of the medical hardware used during spinal surgeries, was a vital component of defendant Drobot's ability to pay kickbacks to the doctors, chiropractors, marketers, and others who had referred patients to Pacific Hospital for surgeries and other medical services," says US DOJ in its charging document filed today.

A US DOJ release says the referrals to the hospital allegedly led to more than $500 million in bills being fraudulently submitted during last five years of the scheme, much of which was paid by the CA's Workers Compensation system...and the US DOJ indicates that the release that the accused, Michael D. Drobot, 69, of Corona Del Mar, has accepted a plea agreement in which he indicates that he [allegedly] paid State Senator Ronald Calderon in exchange for Calderon performing official acts to keep the spinal pass-through law on the books.

In the release, the U.S. DOJ indicates that Sen. Calderon was indicted yesterday (Feb. 20), along with his brother Tom, on federal charges for allegedly accepting bribes from Drobot, as well as undercover FBI agents seeking official acts in relation to other matters. The corruption indictment doesn't implicate Sen. Calderon in the health care fraud scheme; it charges Ron Calderon with taking bribes from Drobot to preserve the spinal pass-through law. The indictment specifically alleges that Drobot bribed Ron Calderon by hiring Calderon's college-age son to work as a file clerk at his company and paying him approximately $30,000 over the course of three summers."

The US DOJ says that as part of his plea agreement, Drobot agreed to cooperate in the government's invesigation...which the release described as "ongoing," and Drobot also agreed to cooperate in the government's prosecution of Ronald Calderon and his brother.

US DOJ says State Senator Calderon "agreed to surrendered to federal authorities on Monday after being named in a federal grand jury indictment that accuses him of taking tens of thousands of dollars in bribes from a businessman and from people who were associated with a Hollywood film studio, but who were in actuality undercover FBI agents.

[US DOJ release text] Ronald S. Calderon, 56, of Montebello, is charged in a 24-count indictment that was returned late yesterday by a federal grand jury with mail fraud, wire fraud, honest services fraud, bribery, conspiracy to commit money laundering, money laundering and aiding in the filing of false tax returns.

The indictment also charges Thomas M. Calderon, 59, also of Montebello, who is Ronald’s brother and a former member of the California State Assembly. Along with his brother, Thomas Calderon is charged in the money laundering conspiracy and with seven substantive counts of money laundering.

In previous statements, the Calderon brothers denied any wrongdoing.

Regarding Mr. Drobat, the former owner of Pacific Hospital:

[US DOJ release text allegations] The former owner of Pacific Hospital in Long Beach was charged today in a long-running health care fraud scheme that involved tens of millions of dollars in illegal kickbacks in exchange for referrals of thousands of patients who received spinal surgeries. The referrals to the hospital led to more than $500 million in bills being fraudulently submitted during last five years of the scheme, much of which was paid by the California worker's compensation system.

Michael D. Drobot, 69, of Corona Del Mar, was charged this morning in a criminal information with orchestrating a wide-ranging conspiracy and with paying illegal kickbacks.

In a plea agreement also filed this morning, Drobot agreed to plead guilty to the two counts which could send him to federal prison for as long as 10 years.

From 1997 to 2013, Drobot, who owned Pacific Hospital until late last year, ran a scheme in which he billed workers' compensation insurers hundreds of millions of dollars for spinal surgeries performed on patients who had been referred by dozens of doctors, chiropractors and others who were paid illegal kickbacks. For referrals for spinal surgeries, Drobot typically paid a kickback of $15,000 per lumbar fusion surgery and $10,000 per cervical fusion surgery. Some of the patients lived as much as hundreds of miles away from Pacific Hospital, and closer to other qualified medical facilities.

The patients were not informed that the medical professionals had been offered kickbacks to induce them to refer the surgeries to Pacific Hospital.

Drobot and his co-conspirators concealed the kickback payments by entering into bogus contracts with the doctors, chiropractors, and others who received kickbacks. In reality, the contracts merely provided a cover story for the kickback payments.

The kickbacks were financed largely by money generated from inflated prices for medical devices implanted into state workers' comp patients during spinal surgeries. Drobot set up a scheme that exploited a now-repealed California law known as the spinal "pass-through" legislation, which permitted hospitals to pass on to workers' comp insurers the full cost of medical devices implanted in spinal surgery patients. Specifically, Drobot used shell companies to inflate the costs of those devices and then billed the insurers at the inflated rates.

"The spinal pass-through, the provision of California law that allowed Pacific Hospital to fraudulently inflate the cost of the medical hardware used during spinal surgeries, was a vital component of defendant Drobot's ability to pay kickbacks to the doctors, chiropractors, marketers, and others who had referred patients to Pacific Hospital for surgeries and other medical services," according to the charging document filed today.

As part of the health care fraud scheme, Drobot admitted in his plea agreement that he paid bribes to California State Senator Ronald Calderon in exchange for Calderon performing official acts to keep the spinal pass-through law on the books. Calderon was indicted on federal charges yesterday for allegedly accepting bribes from Drobot, as well as undercover FBI agents seeking official acts in relation to other matters.

As part of his plea agreement, Drobot has agreed to cooperate in the government's ongoing investigation of the health care fraud scheme, which has been dubbed Operation "Spinal Cap." Drobot has also agreed to cooperate in the government's prosecution of Ronald Calderon and his brother, who was also indicted yesterday.

"Drobot has agreed to plead guilty in the health care fraud scheme, and as part of this agreement, he admits paying bribes to Ron Calderon in exchange for the senator's help in keeping alive a law that brought massive profits to Drobot's companies," said United States Attorney André Birotte Jr. "Drobot also paid kickbacks, which are illegal under both California and federal law because they corrupt the doctor-patient relationship and may encourage medical professionals to recommend procedures that are not necessary, not in the patients' best interest or actually harmful to the patient."

Drobot has agreed to surrender and be arraigned in this case in United States District Court in Santa Ana on March 31.

"The charges allege that the defendant used kickbacks and other tactics to ensure the system worked to his advantage," said Bill Lewis, the Assistant Director in Charge of the FBI's Los Angeles Field Office. "The insurance scheme victimized multiple sectors of society, including insurance companies, the taxpayers and spinal patients."

California Insurance Commissioner Dave Jones said: "Insurance fraud is a multi-billion dollar drain on California's economy, which results in higher insurance premiums for California businesses and consumers. The co-conspirators lined their pockets by ripping off insurance companies to the tune of hundreds of millions of dollars. This is one of the largest workers' compensation fraud cases in the history of the Department of Insurance -- our successful investigation of this complex criminal scheme underscores our commitment to bring law breakers to justice regardless of who they are."

Tom Frost, Special Agent in Charge with the Postal Service Office of Inspector General, stated: "We are committed to preserving Postal Service resources by vigorously investigating allegations of fraud and corruption. We are grateful for the efforts of the U.S. Attorney's Office and our State and Federal partners in this investigation."

The ongoing investigation into abuses involving the spinal pass-through law and kickbacks paid for spinal surgery patients is being conducted by the Federal Bureau of Investigation; IRS -- Criminal Investigation; the California Department of Insurance; and the United States Postal Service, Office of Inspector General.

In the case against Sen. Calderon, US DOJ in a release:

Ronald Calderon, a member of the California State State Senate, has agreed to surrender to federal authorities on Monday after being named in a federal grand jury indictment that accuses him of taking tens of thousands of dollars in bribes from a businessman and from people who were associated with a Hollywood film studio, but who were in actuality undercover FBI agents.

Ronald S. Calderon, 56, of Montebello, is charged in a 24-count indictment that was returned late yesterday by a federal grand jury with mail fraud, wire fraud, honest services fraud, bribery, conspiracy to commit money laundering, money laundering and aiding in the filing of false tax returns.

The indictment also charges Thomas M. Calderon, 59, also of Montebello, who is Ronald’s brother and a former member of the California State Assembly. Along with his brother, Thomas Calderon is charged in the money laundering conspiracy and with seven substantive counts of money laundering.

Tom Calderon self-surrendered this morning after being informed of the indictment and is expected to be arraigned this afternoon in United States District Court.

Ron Calderon is travelling and has agreed to surrender Monday morning. Ron Calderon’s arraignment will be Monday afternoon.

The indictment describes a scheme in which Ron Calderon allegedly solicited and accepted approximately $100,000 in cash bribes -- as well as plane trips, gourmet dinners and trips to golf resorts -- in exchange for official acts, such as supporting legislation that would be favorable to those who paid the bribes and opposing legislation that would be harmful to them. The indictment further alleges that Ron Calderon attempted to convince other public officials to support and oppose legislation.

"Public corruption is a betrayal of the public trust that threatens the integrity of our democratic institutions," said United States Attorney André Birotte Jr. "Senator Calderon is accused of accepting tens of thousands of dollars in bribes and using the powers of his elected office to enrich himself and his brother Tom, rather than for the benefit of the public he was sworn to serve."

Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office, stated: "Corruption victimizes each and every one of us. The indictment alleges Mr. Calderon traded influence for cash in the 30th District and beyond. In addition to robbing us of taxpayer money, corrupt practices rob us of trust in government."

In the first part of the bribery scheme, Ron Calderon allegedly took bribes from Michael Drobot, the former owner of Pacific Hospital in Long Beach, a major provider of spinal surgeries that were often paid by workers’ compensation programs. California law allowed the hospital to pass on to insurance companies the full cost it had paid for medical hardware it used during spinal surgeries. In another case filed this morning, Drobot admitted that his hospital exploited this law, which was often called the "spinal pass-through," by using hardware that had been purchased at highly inflated prices from companies that Drobot controlled and passing this cost along to insurance providers. Drobot allegedly bribed Ron Calderon so that he would use his public office to preserve this law that helped Drobot maintain a long-running and lucrative health care fraud scheme.

While the corruption indictment does not implicate Ron Calderon in the health care fraud scheme, Ron Calderon is charged with taking bribes from Drobot to preserve the spinal pass-through law. The indictment specifically alleges that Drobot bribed Ron Calderon by hiring Calderon’s college-age son to work as a file clerk at his company and paying him approximately $30,000 over the course of three summers. Ron Calderon’s son showed up for only about 15 days of work each summer, according to the indictment, which also accused Ron Calderon of accepting plane trips, golf outings and expensive dinners from Drobot. Ron Calderon allegedly arranged meetings between Drobot and other public officials and helped Drobot attempt to persuade the other legislators to keep the spinal pass-through law in effect.

In another case filed this morning in United States District Court, Drobot has agreed to plead guilty to charges of conspiracy and paying illegal kickbacks. In his plea agreement, Drobot admits paying bribes to Ron Calderon.

In another part of the bribery scheme, Ron Calderon allegedly solicited and accepted bribes from people he thought were associated with an independent film studio, but who were in fact undercover FBI agents. Ron Calderon solicited and accepted bribes in exchange for supporting an expansion of a state law that gave tax credits to studios that produced independent films in California. The Film Tax Credit applied to productions of at least $1 million, but, in exchange for bribes, Ron Calderon agreed to support new legislation to reduce this threshold to $750,000, according to the indictment. The indictment specifically alleges that Ron Calderon agreed to support the new Film Tax Credit legislation in exchange for his daughter being paid $3,000 a month for a job he knew she simply did not perform.

According to the indictment, Ron Calderon took several official actions with respect to reducing the threshold for the Film Tax Credit. Ron Calderon signed an official letter indicating that he supported a lower threshold, he met with other state senators to discuss the benefits of lowering the threshold, and he "caused legislation to be introduced in the Senate, which he intended to use as a vehicle to create a separate tax credit," according to the indictment.

In addition to the nearly $40,000 paid to his daughter, Ron Calderon allegedly solicited from the undercover FBI agents payments that included $5,000 for his son’s college tuition and $25,000 to Californians for Diversity, a non-profit political organization operated by Tom Calderon.

Both Calderons face money laundering charges for allegedly funneling bribe money through Californians for Diversity and Tom Calderon’s consulting firm, some of which went to Ron Calderon and his daughter.

Ron Calderon faces two tax fraud charges for allegedly helping in the preparation of false tax returns that fraudulently claimed business expense deductions in relation to the money his son received from Drobot.

Joel P. Garland, the Acting Special Agent in Charge for IRS Criminal Investigation’s Los Angeles Field Office, commented: "Ronald and Thomas Calderon were granted the privilege of political office to better the lives of the citizens they represented, but instead Ronald Calderon used his office to commit bribery, tax and other crimes for their own selfish benefit. Today's actions reaffirm our commitment to this joint agency task force and our pursuit of justice. Public officials hold a position of trust and those who commit bribery, tax fraud and other crimes, take note."

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.

If Ron Calderon were to be convicted of the 24 charges in the indictment, he would face a statutory maximum sentence of 396 years in federal prison.

If Tom Calderon is convicted of the money laundering charges alleged in the indictment, he would face a statutory maximum sentence of 160 years in prison.

The investigation into the Calderons was conducted by the Federal Bureau of Investigation and IRS-Criminal Investigation.