Dr. David Payne Healthcare Fraud Conviction - What Happened?
Dr. David Payne faced numerous criminal fraud charges. This blog explains what he was charged with, what he was convicted of and the effect on DWC reimbursement and his medical license.
The Medical Fraud Charges & Conviction
On July 14, 2023, Dr. David Payne was sentenced to 33 months in federal prison for accepting more than $315,000 in bribes and kickbacks. Dr. Payne, a surgeon, went to trial over six days and was convicted of two counts of honest services wire fraud and one count of using an interstate facility in aid of bribery.
The government claimed that Dr. Payne performed spinal surgeries at a Long Beach hospital owned by Michael Drobot, who used kickbacks and bribes to attract business to his hospital. Most of the patients were workers’ compensation injury patients. According to the government, Dr. Payne received bribes from Drobot of up to $15,000 for each spinal surgery. These payments were disguised as fees for marketing services and other contractual payments, which the government argued were a sham to cover the illegal payments.
The case, which began in 2013, has resulted in the conviction of 24 defendants, including doctors, for their involvement in this scheme. Michael Drobot was sentenced to 63 months in federal prison. As part of his plea agreement, Drobot was ordered to forfeit $10 million to the United States government and to partially satisfy the forfeiture by selling his 1965 Aston Martin, 1958 Porsche, and 1971 Mercedes-Benz automobiles.
Once convicted the government opposed Dr. Payne's release on bail. He was eventually released only long enough to self surrender for jail in January 2024. (See Self Surrender Order)
What has the Medical Board Done?
How Has the Medical Board of California Handled Dr. Payne’s Situation?
On February 16, 2024, the Medical Board of California issued an automatic suspension for Dr. David Payne. The suspension notice began with the following statement:
YOU ARE HEREBY NOTIFIED that the Medical Board of California, Department of Consumer Affairs (Board), has automatically suspended Physician’s and Surgeon’s Certificate No. G 62826 by operation of law after having received and reviewed a certified copy of the record of conviction described below:
- On or about March 3, 2023, in a criminal proceeding entitled, United States of America v. David Hobart Payne, in United States District Court, Central District, Case No. SA CR No. 17-53(A)-JLS, Respondent was found guilty by way of jury verdict …
The notice concluded with:
WHEREFORE, THE MEDICAL BOARD OF CALIFORNIA, DEPARTMENT OF CONSUMER AFFAIRS, HEREBY NOTIFIES YOU THAT, by virtue of said conviction and incarceration, Physician’s and Surgeon’s Certificate No. G 62826 issued to David Hobart Payne, M.D., was automatically suspended by operation of law pursuant to Business and Professions Code section 2236.1, subdivision (a).
Said suspension shall remain in effect while you are incarcerated, and shall continue thereafter until a hearing may be held pursuant to Business and Professions Code section 2236.1, subdivision (d), or until further order of the Board.
YOU ARE FURTHER NOTIFIED THAT you have a right to a hearing on the issue of penalty, as provided by Business and Professions Code section 2236.1, subdivision (d). A request for a penalty hearing may be made by delivering or mailing such a request to: Nicole Noonan-Miller, Deputy Attorney General, Department of Justice, Office of the Attorney General, 600 W Broadway, 18th Floor, San Diego, California 92102
On February 23, 2024 a formal Accusation was filed on the same grounds.
Read the Accusation against Dr David Payne Here.
In many ways this is like a summary suspension on peer review pending the hearing.
How Has the Division of Workers’ Compensation Handled Dr. Payne’s Situation?
Meanwhile, in April of 2023, the Division of Workers’ Compensation (DWC) suspended Dr. Payne from participation in the California Workers’ Compensation system. The letter giving notice started like this:
Dear David H. Payne, M.D., Inc.:
The Administrative Director of the Division of Workers’ Compensation (DWC) is required by Labor Code section 139.21(a)(1)(D) to suspend you from participation in the California workers’ compensation system because you are controlled by an individual [David H. Payne] who has been convicted of a felony or misdemeanor described in subparagraph (A) of Labor Code section 139.21. Per Labor Code section 139.21(a)(3), an entity is controlled by an individual if: (1) the individual is or was an officer or director of the entity; (2) is or was a shareholder with a 10 percent or greater interest in the entity; or (3) held de facto ownership of the entity or de facto control consistent with the rights and duties of an officer or director of the entity (see Villanueva v. Teva Foods (2019) WCAB Case No. ADJ9332041, 84 Cal. Comp. Cases 198 [significant panel decision]). Enclosed are copies of the documents relied upon by the Administrative Director as the basis for taking this action.
Now, Dr. Payne may win on appeal, but the conviction and even the accusation is (to most) financially devastating. The takeaway is that before conviction, you can lose your right to participate in reimbursement programs. In California, upon accusation, your license can be suspended or restricted. After conviction, the suspension is summary and swift.
Expert Medical Defense Lawyer
Daniel Horowitz is a criminal defense specialist (State Bar of California, Board of Legal Specialization). He focuses on complex cases involving physicians and healthcare issues. If you are facing criminal charges, Daniel Horowitz can assist you in obtaining the best possible defense and protecting your business and your license.