Investigation into Washington medical center results in $22.7 million settlement


Shane Ersland


An investigation into patient care at a Walla Walla medical center has led to the largest health care fraud settlement in Eastern Washington’s history.


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U.S. Attorney for the Eastern District of Washington Vanessa Waldref discussed the investigation Tuesday in front of Spokane’s Thomas Foley Federal Courthouse Building. Between 2013-18, two neurosurgeons at Providence St. Mary Medical Center performed medically-unnecessary neurosurgery procedures, and falsely billed Medicaid, Medicare, and other federal health programs, she said.

“Two neurosurgeons failed to provide adequate care for these patients, and exposed them to serious danger, and even serious bodily harm,” Waldref said.

Providence officials admitted to paying the neurosurgeons in a manner that incentivized them to perform too many overly-complex surgeries too quickly, despite being warned the practice was endangering patient lives and safety, Waldref said. Through this pay structure, one of the neurosurgeons received between $2.5-2.9 million per year between 2014-17. 

When Providence officials performed independent reviews of the neurosurgeons, they allowed both of them to resign–rather than terminating them–and did not report either to appropriate state or federal regulatory bodies responsible for safeguarding patient safety, Waldref said. That meant the physicians were able to continue operating elsewhere.

“As we see in the case we’re highlighting today, when doctors, hospitals, and health care providers make care decisions based on how much they can bill, instead of what is best for the patient, the lives and health of patients are put in danger,” Waldref said. “Health care fraud increases the premiums, co-pays, and deductibles that patients have to pay for care.”

Waldref’s office learned of the fraud because a whistleblower–the former medical director at the neurosurgery department at Providence St. Mary–came forward with information about it, she said. The case was filed under the False Claims Act in February 2020.

The Providence investigation resulted in a $22.7 million settlement that was agreed upon in January. The whistleblower will collect over $4 million as part of the settlement, while $10 million is designated as restitution, and will return to Medicaid, Medicare, and other programs that were affected by the fraud. The remaining funds will go to the Federal Treasury.

Larissa Payne, the Director of Medicaid’s Fraud Division, said Medicaid dollars are a precious resource used to care for society’s most vulnerable.

“All too often, fraudsters see it as a way to line their own pockets,” Payne said. “This case came about as a result of a whistleblower coming forward. Because one person decided to do the right thing, millions of Medicaid dollars will be protected.”

As part of the settlement, Providence accepted responsibility for the two neurosurgeons harming patients and endangering patient safety by performing unnecessary surgeries. Providence was required to enter into a five-year corporate integrity and quality of care agreement, which requires it to implement and maintain a number of quality care and patient safety obligations, Waldref said. Phone calls seeking comment were not immediately returned by Providence.

For the next five years, Providence will be required to retain independent experts to perform annual reviews of its billing and quality systems. It will be required to establish and implement robust compliance and training procedures to ensure patient safety. Waldref noted that Providence cooperated with her office during the investigation, however.

“Providence has a sincere desire to address its past conduct, and prevent something like this from ever happening again,” she said. “I want to commend Providence for taking responsibility and confronting hard truths to try and make things right.”

Waldref said her office will continue to focus on human safety and ensuring health care fraud is not tolerated in Washington. 

“Having affordable, quality health care is so critical to building and maintaining safe and strong communities here in Eastern Washington,” she said. “Each one of us has had times when we have depended on health care professionals to deliver affordable, quality, and medically appropriate care. Health care fraud hurts the community. It diverts critical resources away from those who need them the most; the elderly, individuals with disabilities, and the underserved.”