Unnecessary Spinal Fusion Hospital Fraud: Excess Fusion Levels and Ignored Warnings

Unnecessary spinal fusion hospital fraud is knowingly billing government health programs for surgery a patient did not need, including operations that extend to spinal levels the patient did not need treated. The hospital’s part comes into focus when colleagues question the surgery, the surgeon profits from the implants, and the claims keep going out. An insider may have seen the operation, the warning, or the decision to keep billing.

St. Joseph Tacoma Spinal Fusion Settlement

CHI Franciscan and St. Joseph Tacoma agreed to pay $745,654 over allegations that the hospital billed government health programs for unnecessary spinal fusions and surgery at more spinal levels than necessary. The surgeon separately agreed to pay $197,054. Both payments covered the amounts improperly billed to government health programs and additional penalties.

The allegations concerned one orthopedic surgeon’s operations at St. Joseph Medical Center between January 2013 and June 2018. The hospital billed Medicare, TRICARE and Veterans Affairs. A physician brought the qui tam case, and the government announced that the whistleblower would receive 22% of the payments to those programs.

An excess-level allegation concerns how much of the spine was operated on. It calls for an explanation of each level treated, alongside the reason for operating at all. The Tacoma settlement put both questions into the same hospital billing case: whether patients needed a fusion and whether surgery extended beyond the levels they needed treated.

That distinction matters to someone who watched the operation. A surgical assistant or scrub nurse can know how far the procedure went. A clinical colleague can address the need for that extent of surgery. Together with the bill, those accounts connect what happened in the operating room to what the government paid for. In the alleged scheme, patients faced the risks of surgery they did not need, and taxpayers paid for it.

Sanford’s Implant Profits and Ignored Warnings

Sanford Health agreed to pay $20.25 million in a case that joined unnecessary procedures, implant profits and the hospital’s response to warnings. In its October 28, 2019 announcement, the Justice Department alleged that colleagues and others repeatedly warned Sanford about a neurosurgeon performing unnecessary procedures involving devices in which he had a substantial financial interest. They also warned the hospital about the alleged kickback arrangement.

The Department of Justice described what the hospital allegedly did after receiving those warnings:

The whistleblowers’ complaint described an alleged management response that anyone who raised an internal concern would recognize: management, protecting the neurosurgeon’s profitable practice, told everyone who raised the issue to let it go and that nothing more would be said about it.

That alleged instruction puts the hospital’s handling of the warnings at the center of the story. The alleged sequence was simple: colleagues warned management, management told them to drop it, and the claims kept going out.

The two surgeons who brought the case shared a $3.4 million whistleblower reward. Sanford terminated the neurosurgeon’s employment and prohibited its physicians from profiting from devices they used at Sanford. Its agreement with the Inspector General also required independent review and compliance certifications from the medical center’s board and key executives.

How Implant Profits Reach the Operating Room

A physician-owned distributorship earns revenue from devices ordered by its physician owners for their own patients. The hospital buys the implant, while the surgeon who selects it can share in the seller’s returns. The Inspector General’s March 26, 2013 fraud alert explains why that arrangement matters in an operating room: physicians often choose, or strongly influence, the brand and type of implant the hospital buys.

The alert identified an incentive to perform more procedures, or more extensive procedures, and to choose the distributor’s devices over potentially more appropriate alternatives. It also identified arrangements in which surgeons threatened to move their operations elsewhere unless a hospital bought the devices. Hospital purchasing staff can therefore encounter the same financial pressure that clinical colleagues see in the choice and extent of surgery.

Reliance Medical Systems reached a $1 million settlement in 2022 over alleged spinal-device kickbacks. The Justice Department’s account described distributor payments tied to physician referrals and the removal of physicians who did not send enough business.

In the earlier allegations, the government said a surgeon began using Reliance implants only after acquiring a distributor ownership interest and receiving payments from implant sales. It alleged that those payments caused unnecessary or excessive operations on some patients.

Buying a surgeon’s referrals puts the payment arrangement in question. An unnecessary spinal surgery allegation puts the patient’s need for the operation, and its extent, in question. The device order, the ownership interest and the hospital’s purchasing decision can bring those questions together.

The Clinical Record Beside the Hospital Bill

The useful comparison connects the reason for the fusion, the levels treated, the operative note and the claim. In an excess-level case, the detail that matters may sit inside an operation that otherwise looks familiar. A colleague’s account of why an added level was unnecessary gives the billing record clinical meaning.

For most acute-care hospitals, Medicare prices an inpatient stay by its diagnosis group, using diagnoses and procedures recorded during the admission.

A 2023 study in the Journal of Forensic and Investigative Accounting, Types of Hospital Frauds: Nature and Methods of Prevention, examined hospital cases announced by the Justice Department. The paper judged that comparing billing records with medical records could have prevented 27 of the 42 fraudulent-billing cases in its sample. It also recommended comparing coding patterns across similar practices and providers.

Those findings give the insider’s account a practical role: the bill and the medical record need to be read together. The paper also makes a sharp point about the cases that become public:

Sanford shows why the hospital’s own warnings belong beside the clinical record: what colleagues said about the procedures, who heard them, and what happened to billing afterward.

What the Cardiac Cases Add

The cardiac cases turn on questions a spinal-fusion insider would recognize: why the procedure was needed, whether the written justification was true, and what the hospital billed.

At EMH Regional and North Ohio Heart, the whistleblower was the former cath lab manager. The government’s false claims allegations concerned unnecessary angioplasty and stents in patients with insufficient occlusion, meaning their vessels were not blocked enough to need those procedures.

At King’s Daughters Medical Center, the government alleged that physicians falsified medical records to justify unnecessary stents and diagnostic catheterizations. For a fusion insider, the parallel is the operative note used to justify the levels treated.

Blessing Hospital settled allegations over Medicare and Medicaid payments for the facility component of cardiac catheterizations involving unnecessary coronary stents. Desert Regional Medical Center and Tenet settled allegations involving unnecessary cardiac loop recorders.

The agreement at St. Joseph Medical Center in Towson required an independent cardiac catheterization review of the necessity and appropriateness of procedures.

What a Spinal-Surgery Insider Can Contribute

The insider’s vantage point determines which part of the story they can explain. Physicians brought the Tacoma and Sanford cases. Surgical staff may know the levels treated. Coders and documentation specialists can compare the operative account with the billed procedures. Purchasing staff may know why a distributor’s implants were bought, and compliance staff may know who received the warnings and how the hospital responded.

Those accounts can connect the operation, the financial interest and management’s decisions in a hospital False Claims Act case. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When the Hospital Heard the Warning

If you saw a fusion go beyond what a patient needed, an implant arrangement influence the surgery, or a warning reach management while billing continued, speak with our whistleblower experts about what happened. We connect your clinical and inside knowledge to the hospital’s claims and bring in hospital fraud whistleblower lawyers who understand unnecessary surgery and device profits. We stand with you from the first conversation through the case’s resolution.