Providence Health & Services agreed to pay $22.7 million to settle allegations that two of its neurosurgeons falsely billed federal healthcare programs for medically unnecessary spine surgeries, in the largest-ever healthcare fraud settlement in the Eastern District of Washington, according to the Department of Justice (DOJ).
The health system, the U.S. federal government, and the state of Washington reached a joint settlement Tuesday following a whistleblower complaint, which alleged that two spine surgeons employed at Providence St. Mary’s Medical Center in Walla Walla provided poor care and committed billing fraud from 2013 to 2018.
Providence, a large health system that has 51 hospitals in seven states, paid neurosurgeons based on a productivity metric, which gave them a financial incentive to perform more surgeries of greater complexity, the DOJ alleged. From 2014 to 2017, one of the surgeons in question earned between $2.5 and $2.9 million a year based on this metric, according to the settlement agreement.
The health system admitted that during the time period that the spine surgeons were employed, other medical staff expressed concerns that they endangered patients, performed surgeries that resulted in complications, conducted surgeries on patients when they were not appropriate, and did not adequately document their procedures.
Providence also acknowledged that while it did eventually place both of these surgeons on administrative leave, it allowed both doctors to resign while on leave, and did not take any action to report them to the National Practitioner Data Bank or the Washington State Department of Health.
“Ensuring that surgical procedures are medically appropriate and properly performed is critical to building safe and strong communities here in the Eastern District of Washington,” said U.S. Attorney Vanessa Waldref in a press release.
“Patients with back pain and spinal injury deserve top-notch care from a provider who puts the patient first and is not improperly influenced by how much he can bill for the procedure,” Waldref said. She added that Providence’s failure to ensure that its physicians were performing safe and necessary procedures, despite repeated warnings, “put patients’ lives and safety at serious risk.”
In a statement to MedPage Today, a spokesperson from Providence said that the events in question have prompted an internal investigation of policies, practices, and procedures to ensure the delivery of high-quality care.
“We are committed to taking specific, concrete actions to ensure this isolated incident in Walla Walla does not happen again,” the spokesperson stated. “Providence has strong existing protocols and safeguards to ensure we deliver quality care and make continuous improvements that further enhance those protocols and safeguards.”
In January 2020, a whistleblower had filed a complaint stating that two spine surgeons at Providence St. Mary’s Medical Center — Dan Elskens, MD, and Jason Dreyer, DO — provided substandard care from 2013 to 2018. Elskens and Dreyer were not named in the settlement agreement.
The whistleblower, also a neurosurgeon, had found that Elskens committed several surgical errors upon an internal review, the complaint stated, including operating on incorrect spinal sections requiring emergency remedial surgery.
The whistleblower allegedly reported these concerns to Providence’s chief medical officer, recommending that Elskens be terminated. However, Providence rejected that initial recommendation. The whistleblower then discovered that Elskens allegedly botched an additional surgery — nearly paralyzing the patient — before Providence placed Elskens on a suspension.
During this time, the whistleblower also began to review the work of Dreyer, who studied under Elskens. His review found that Providence billed the federal government for procedures that Dreyer never performed. In addition, he complained that Dreyer was “fabricating patient diagnoses and treatments to justify complex operations and to increase the reimbursement of both himself and Providence.”
Some of the incidents caused the federal government to pay amounts exceeding $150,000 for unnecessary and underperformed procedures, the complaint stated. The whistleblower reported these concerns in November 2017 and again in May 2018 before Providence suspended Dreyer, they alleged.
Both Elskens and Dreyer resigned during their suspensions, according to the complaint. Elskens’ medical license has been restricted in Washington and Michigan, but remains active in Indiana and Ohio. Dreyer’s medical license remains active in Washington and Michigan, and no actions have been taken by state medical boards.
The whistleblower will receive approximately $4 million as a result of the settlement.