WALLA WALLA, Wash. — Providence Health & Services Washington (Providence) has agreed to pay nearly $22.7 million to settle a lawsuit filed by the Department of Justice over unnecessary medical procedures.
According to a statement from U.S. Attorney Vanessa R. Waldref, the settlement was aimed to resolve allegations that Providence St. Mary’s Medical Center fraudulently billed Medicare, Medicaid and other federal health care programs for medically unnecessary neurosurgery procedures performed by two neurosurgeons.
One of the doctors is believed to be surgeon Jason A. Dryer who in 2021 was accused of pushing for extensive and unnecessary spine surgeries on patients for financial gain while he was a surgeon at the St. Mary's.
A Spokane patient, Dr. Deanette Palmer, filed a lawsuit in May 2021 against Dreyer and Multicare-Deaconess hospital in Spokane County for a September 2020 surgery. The suit claims the hospital stay was expected to last three days but she ended up staying for weeks.
"When I woke up from the surgery, I was in excruciating pain, I was unable to swallow, I wasn't able to move," Palmer said. "I was supposed to be in the hospital for two to three days. I ended up being there for two and a half weeks, went home with a feeding tube for six months. Pain is still extreme."
The settlement, which identified the two surgeons as Dr. A and Dr. B says the two surgeons performed complex spinal surgeries on patients at Providence St. Mary's, from which they received a financial incentive. They conducted more surgeries of greater complexity between 2013 and 2018.
According to the settlement, between 2014 and 2017, Providence paid Dr. A between $2.5 to $2.9 million per year. Providence was aware of the unsatisfactory surgeries both surgeons performed, they didn't report Dr. A and Dr. B the federal or state medical oversight bodies, according to Waldref.
Instead, Providence put them on administrative leave and allowed them to resign, which made them continue performing surgeries on other patients in different hospitals, the statement said.
"Providence’s failure to ensure that Dr. A and Dr. B were performing safe and medically appropriate surgery procedures, despite repeated warnings, put patients’ lives and safety at serious risk," Waldref said.
As part of the settlement, Providence entered into a Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services, requiring Providence to implement and maintain several quality-of-care and patient safety obligations.
Additionally, the CIA requires Providence to retain outside experts to perform annual claims and clinical quality systems reviews.
"This multi-million dollar settlement holds Providence and its former doctors accountable for dubious actions that endangered patient safety and defrauded various healthcare programs," Bryan D. Denny, Department of Defense Office of Inspector General special agent, said.
According to the settlement, the case began in January 2020, when a whistleblower, the former medical director of neurosurgery at Providence-St Mary’s, filed a qui tam complaint under seal in the U.S. District Court for the Eastern District of Washington.
When a whistleblower files a qui tam complaint, the False Claims Act requires the U.S. to investigate the allegations and elect whether to intervene and take over the action or to decline to intervene and allow the relator to go forward with the litigation on behalf of the U.S.
According to the settlement, the U.S. intervened in the action in January 2022 and reached the $22.7 settlement. Waldref said the whistleblower will receive more than $4 million of the total settlement amount following the agreement. She also said about $10 million will go to restitution for Medicare, Medicaid and other federal programs. Three percent of the settlement will help fund enforcement of healthcare fraud and the remainder of the money will go to the federal treasury.
The settlement is the largest health care fraud in the Eastern District of Washington.
"This case is so important because we had an instance where doctors were performing unnecessary surgeries for money. We can't allow that to happen and my office will stand up against healthcare fraud to make sure that our community is safe and our community is strong," Waldref said.
Providence released the following statement related to the settlement on Tuesday:
"After fully cooperating with an investigation into two former spine surgeons at St. Mary Medical Center in Walla Walla, Providence reached a settlement with the U.S. Attorney’s Office of the Eastern District of Washington. Providence placed the two surgeons on leave after questions about their practices arose, and they left Providence in 2017 and 2018, respectively.
Quality and safety are our top priorities at Providence, and we take any allegations relating to quality of care very seriously. Although the events in question occurred at one Providence hospital in the southeast region of Washington state, we initiated a broad and comprehensive internal review of our policies, practices and procedures to ensure robust compliance with government requirements and the delivery of high-quality care.
This unfortunate episode has reinforced our commitment to continuous quality improvement and highlighted the importance of our mission.
We are committed to taking specific, concrete actions to ensure this isolated incident in Walla Walla does not happen again. Providence has strong existing protocols and safeguards to ensure we deliver quality care and make continuous improvements that further enhance those protocols and safeguards. We have already taken swift action to implement the terms of the corporate integrity agreement that we have reached with the U.S. Department of Health’s Office of the Inspector General."