Providence to pay $22.7M to settle unnecessary spine surgery allegations


Renton-based Providence Health & Services Washington has agreed to pay $22.7 million to resolve allegations that it defrauded federal healthcare programs with medically unnecessary neurosurgery procedures.

Between 2013 and 2018, Providence St. Mary's in Walla Walla, Wash., employed two neurosurgeons identified as Dr. A and Dr. B in the settlement agreement. The hospital paid the surgeons based on a productivity metric that provided them a financial incentive to perform more complex surgeries, the Justice Department said in an April 12 news release.  

Dr. A was among the highest-producing neurosurgeons across Providence, which operates 51 hospitals in seven states. Over a four-year period, Providence paid Dr. A between $2.5 million and $2.9 million a year based on the productivity metric, according to prosecutors.

Providence admitted medical staff raised concerns about the practices of Dr. A and Dr. B while they were employed at Providence St. Mary's. Prosecutors said those concerns included endangering the safety of patients; creating an excessive level of complications and negative outcomes; performing surgery on candidates who were not appropriate for surgery; and improperly documenting their procedures and outcomes.

The health system also admitted Dr. A exaggerated diagnoses to get reimbursement from insurers; performed surgeries that did not meet the requirements set by Medicare and other insurance programs; performed surgeries of greater complexity and scope than were medically appropriate; and jeopardized patient safety by performing an excessive number of complex cases.

Although Dr. A and Dr. B were placed on administrative leave in February 2017 and May 2018, respectively, they were allowed to resign while on leave and Providence did not report the surgeons to the National Practitioner Data Bank or the Washington State Department of Health, according to prosecutors.

The Justice Department learned about the allegations when a whistleblower — later identified as Providence St. Mary's former neurosurgery director — filed a False Claims Act complaint against the health system in January 2020. The whistleblower will receive $4.2 million of the settlement amount.

"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," said Vanessa Waldref, the U.S. attorney for the Eastern District of Washington. "I am also gravely concerned that Providence's decision not to report Dr. A or Dr. B to federal or state medical oversight bodies allowed both surgeons to simply resign from Providence and then continue to endanger patients at other hospitals."

The system has entered into a corporate integrity agreement with HHS that requires it to implement and maintain several quality and patient safety obligations. The agreement also requires that Providence retain outside experts to perform annual claims and clinical quality systems reviews.

"We are committed to taking specific, concrete actions to ensure this isolated incident in Walla Walla does not happen again," Providence said in a statement emailed to Becker's. "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."

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