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Providence reaches $22.7 million settlement with state, federal authorities in case involving two Walla Walla surgeons

U.S. Attorney for Eastern Washington Vanessa Waldref announces the settlement with Providence during a Tuesday press conference.

The company admits the doctors performed unnecessary surgeries at its Providence St. Mary's Hospital.

Federal authorities in eastern Washington on Tuesday announced a $22.7 million health care fraud settlement with Providence in a case that involves two former neurosurgeons at Providence St. Mary’s Hospital in Walla Walla.

Vanessa Waldref, the U.S. attorney for the Eastern District of Washington, says the doctors, referred to as Dr. A and Dr. B in the settlement papers, performed unnecessary spinal surgeries and then billed government health programs. She says the practices covered the period between 2013 and 2018 and were so lucrative that one surgeon made nearly $3 million each year between 2014 and 2017.

As part of the settlement, Waldref says Providence admits to the facts of the case, though it doesn’t admit actual wrongdoing. Those facts include that the doctors, through their actions, endangered the welfare of hundreds of patients by performing unnecessary and/or sometimes overly-complicated procedures. It also admitted many of the patients were not appropriate candidates for surgery and that many cases were not properly documented.

“The settlement also resolves allegations that Providence paid the neurosurgeons in a manner that incentivized them to perform too many overly complex surgeries, too quickly, despite being warned that it was endangering patient lives and safety,” Waldref told reporters during a press conference in Spokane on Tuesday.

The U.S. Attorney’s office says Providence placed Dr. B on administrative leave in February 2017 and Dr. A in May 2018. Both doctors eventually resigned, but Waldref says neither were reported to the state Department of Health or to the National Practitioner Data Bank, the federal reporting agency for health care professionals.

“I am 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,” she said in a separate statement.

Waldref says the legal case began in January 2020 after a whistleblower, the hospital’s former medical director for neurosurgery, filed a complaint. She says her office joined the case in January 2022 and helped to negotiate the settlement. As part of the agreement, the unnamed whistleblower will receive about 20% of the settlement, $4.2 million, through provisions of the federal False Claims Act. Waldref says about $10 million will reimburse the government programs, including Medicare and Medicaid, that paid out money for the illegally-filed claims. She says the rest will go to the federal government.

In addition to paying the settlement money, Waldref says Providence has agreed to enact several patient safety and quality-of-care provisions. In a statement, the company says it has initiated a full review of its policies and practices to ensure it complies with government regulations.

“We are committed to taking specific, concrete actions to ensure this isolated incident in Walla Walla does not happen again,” reads the company’s statement. “Providence has strong existing protocols and safeguards to ensure we deliver quality care and make continuous improvements that further enhance those protocols and safeguards.”

According to the Providence website, the company operates 52 hospitals in seven states, including several in eastern Washington.

Waldref wouldn’t comment about other legal action related to this case, including the possibility of criminal or civil charges against the two doctors. Assistant U.S. Attorney Dan Fruchter says one of the doctors is still in Washington, but has had his licensed suspended and is no longer practicing. The other has left the state. He says his office has contacted authorities there to notify them of the settlement agreement.

One of the Northwest's most seasoned reporters is returning to his SPR roots. Doug Nadvornick will be heard frequently on KPBX and KSFC reporting on local news.