Providence Washington: Surgical Productivity and Warnings About Unnecessary Procedures

In the Providence unnecessary neurosurgery settlement, Providence Health & Services Washington agreed to pay $22,690,458 to resolve allegations that it falsely billed government health care programs for medically unnecessary surgery. The hospital rewarded surgical productivity while its own medical personnel raised concerns about patient safety, unnecessary procedures and false diagnoses. Providence admitted that its personnel raised those concerns. For an insider who saw the gap between a surgeon’s production numbers and the concerns inside the operating room, that is the heart of this case.

The Justice Department announced the civil settlement on April 12, 2022. It concerned procedures at Providence St. Mary’s Medical Center in Walla Walla, Washington, and alleged false billing to Medicare, Washington Medicaid, TRICARE and other federal health care programs. The government described the procedures as deficient and medically unnecessary. A former medical director of neurosurgery brought the qui tam case, and the United States joined it.

Surgical Productivity Paid for Volume and Complexity

Providence St. Mary’s paid its neurosurgeons under a productivity metric that rewarded more surgical procedures of greater complexity. The two surgeons whose work was covered by the settlement were employed there between 2013 and 2018.

The financial incentive was substantial. Providence paid one of them between $2.5 million and $2.9 million a year from 2014 through 2017. The Justice Department described that surgeon as one of the highest producers in the entire Providence system between 2014 and 2018.

That is the tension the case puts in front of a hospital insider. The compensation system rewarded volume and complexity. Staff were raising concerns about excessive numbers of overly complex surgeries. The same work could look like exceptional production in a compensation report and a patient-safety problem to the people watching it happen.

A June 2011 Senate Finance Committee minority-staff report describes device representatives supplying instruments and assisting surgeons in the operating room. That puts a device insider close to the work at issue in an unnecessary-surgery case: what the surgeon did during the operation.

What Providence Admitted Staff Had Warned About

Providence admitted that its medical personnel raised concerns about patient safety, outcomes, selection of surgical candidates and documentation involving both surgeons.

According to the Justice Department’s account of the settlement admissions, personnel reported that the surgeons endangered patients and produced excessive complications and negative outcomes. They also questioned whether patients were appropriate candidates for surgery and whether the surgeons properly documented procedures and outcomes.

For one surgeon, the admitted warning history went further. Personnel raised concerns that medical documentation contained falsified and exaggerated diagnoses intended to obtain insurance reimbursement. They also questioned whether procedures met Medicare’s and other insurers’ medical-necessity requirements.

The additional concerns included over-operating: performing surgery of greater complexity and scope than was medically appropriate. Staff also raised concerns that attempting an excessive number of overly complex operations jeopardized patient safety. The concern reached both how much surgery a patient received and how much surgery the physician tried to perform.

These details matter because they connect the clinical objection to the payment. A diagnosis can help justify a procedure in the medical record. Providence admitted that staff had questioned the truth of those diagnoses and the necessity of the procedures. The government alleged that the resulting bills sought payment for deficient and medically unnecessary neurosurgery.

Leave, Resignation and Outside Review

Providence admitted that it placed the surgeons on administrative leave, allowed them to resign while on leave and did not report either surgeon to the National Practitioner Data Bank or the Washington State Department of Health. One went on leave in February 2017, the other in May 2018.

The settlement also required Providence to enter a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General. The agreement required quality-of-care and patient-safety obligations, together with outside experts performing annual claims and clinical quality systems reviews.

The Surgeon’s Separate Civil Settlement

The surgeon later identified in the government’s account of the Providence matter agreed to a separate $1,174,849 civil settlement, announced on April 24, 2023. That resolution concerned allegations that he caused false claims for medically unnecessary procedures while employed by MultiCare from May 2019 through November 2021.

The surgeon had moved between institutions, and the government’s civil allegations followed the work at each.

The physician also agreed to a voluntary exclusion lasting at least nine years before he could request reinstatement.

MultiCare Allegedly Knew About the Providence Concerns

The United States and Washington’s January 2024 complaint alleged that MultiCare Health System knew about the surgeon’s earlier leave and resignation from Providence over concerns about unnecessary surgery and over-operating.

What Evidence Is Needed to Prove Fraud?

In an unnecessary-surgery case, the evidence connects the procedure and its medical justification to the claim for payment and what the institution knew. Providence’s case shows where those connections can appear: compensation records, clinical concerns, diagnoses, procedure documentation and the hospital’s response.

The 2020 paper A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud, published in the Journal of Forensic and Investigative Accounting, explains why that connection matters. Its discussion of False Claims Act cases ties the claim to knowledge, falsity and the government’s payment. The same paper identifies inside information as an important reason whistleblower cases can uncover complex financial wrongdoing:

A compensation employee may understand what the productivity metric rewarded. A clinician may understand the objection to the operation and know who heard it. A device representative who supplied the instruments and assisted in the operating room may know what happened during the procedure. Someone working with claims may see what was submitted for reimbursement. We work with the insider to connect those views of the same conduct.

The value of a warning is also in the response it received. Providence’s admissions put the staff concerns beside the later leave, resignation and reporting decisions. In the MultiCare complaint, the government alleged that warnings and specific evidence reached the system while it hired, credentialed and supervised the surgeon. Both accounts make institutional knowledge a concrete part of the story.

How Much Is a Whistleblower Claim Worth?

The Providence settlement allocated approximately $4.2 million to the former medical director who brought the case. The Justice Department’s announcement identifies that payment as the whistleblower’s share of the hospital settlement.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When the Warnings Reached the Hospital

If you worked in the hospital or supplied its surgical instruments and saw concerns about unnecessary procedures go unanswered, speak with our whistleblower experts about the surgeries you saw. We build your strongest hospital whistleblower case with you around the clinical facts, the billing and the institution’s decisions, and bring in healthcare fraud whistleblower lawyers who understand medical-necessity cases. We stay beside you as partners throughout the case.