Nonprofit health system settles fraud lawsuit over unsafe spinal surgeries for $3.7M
The U.S. Department of Justice (DOJ) said a Washington-based nonprofit health system has agreed to pay over $3.7 million to resolve accusations that it knowingly put patient safety at risk by performing unnecessary spinal surgeries, which were then billed to government healthcare programs.
According to plaintiffs, these fraudulent surgeries were conducted between 2019 and 2021 by a former MultiCare neurosurgeon, Jason Dreyer, MD, who is no longer licensed to practice medicine.
The surgeries were performed at MultiCare Deaconess Hospital.
Per the terms of the settlement, the health system admitted in court to hiring, credentialing and supervising Dreyer while the fraud was taking place. Further, the DOJ said administrators confirmed that they ignored “red flags, warnings and specific evidence” that the neurosurgeon was committing fraud and putting patient health at risk.
Authorities added that MultiCare financially benefited from these medically inadvisable procedures, taking in revenue from Medicare, Medicaid and other programs funded by taxpayers.
The $3.728 million settlement includes $1.6 million in restitution as a result of the “egregious nature of MultiCare’s violations of federal and state law as shown by its own admissions and detailed court records,” the DOJ noted.
“As the voluminous court records of this case demonstrate, MultiCare had direct knowledge of the danger Dreyer posed to patients, including through reports made by its own medical staff, and later from explicit warnings from federal investigators,” Pete Serrano, the First Assistant U.S. Attorney for the Eastern District of Washington, said in a statement. “MultiCare nonetheless allowed Dreyer to operate on unsuspecting patients for nearly two years, generating thousands in additional revenue and putting profits before patient safety. “
“[Thanks] to years of comprehensive investigation and litigation, MultiCare has been held accountable for its role in defrauding the taxpayers and endangering some of the most vulnerable members of our community,” he added.
The case against Dreyer began in 2022 after one of his patients filed a formal complaint with the U.S. District Court for the Eastern District of Washington on behalf of the public. Under the terms of the False Claims Act, if the lawsuit results in a settlement or judgment, the whistleblower receives a portion of the payout.
In this case, Deannette Palmer, PhD, will receive $633,760—17% of the settlement amount. As the DOJ confirmed, Palmer’s legal fees will be reimbursed by MultiCare, as is customary with qui tam cases.
Paid incentives to continue
In its statement on the settlement, the DOJ provided additional details about the timeline of events. According to the agency, within two months of Dreyer performing surgeries at MultiCare, two physician assistants reported the concerns they observed to management—one who said they did so during surgery.
MultiCare allegedly continued to allow Dreyer to perform the dangerous spinal procedures, despite the warnings. Further, the DOJ said the health system tied his compensation to the procedures, as an incentive to do more of them, solidifying the mutual benefit.
Previous attempts to secure a settlement failed, and the case has been in ongoing litigation for years, attorneys with the government said. The case is now resolved.
HealthExec reached out to MultiCare for comment.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.