MultiCare Faces Fraud Allegations in DOJ, Washington State Complaint

The allegations stem from a whistleblower lawsuit filed against a former neurosurgeon at Deaconness Hospital in Spokane.

Tacoma-based MultiCare Health System faces state and federal allegations that it "knowingly endangered patient safety" when it billed Medicare, Medicaid and other government health plans for unneeded spinal surgeries performed by a surgeon with a checkered clinical history.

The allegations stem from a whistleblower lawsuit filed against neurosurgeon Jason Dreyer, MD, a former staff physician who worked at MultiCare Deaconess Hospital and MultiCare Rockwood Clinic in Spokane from 2019 to 2021.

MultiCare said Monday it is "aware of the Department of Justice's allegations, and we believe them to be unfounded and without merit. We plan to vigorously defend MultiCare in this matter."

The Backstory

Before MultiCare hired Dreyer, he practiced for six years at Providence St. Mary's Medical Center in Walla Walla, a hospital owned and operated by Providence Health & Services, but resigned "amidst allegations that he was performing medically-unnecessary surgeries, harming patients, and falsifying diagnoses," Vanessa R. Waldref, U.S. Attorney for the Eastern District of Washington, said in a media release.

Eventually, Providence paid $22.7 million in 2022 to resolve False Claims Act allegations related to Dreyer's conduct, while Dreyer paid $1.2 million in 2023 for his role at Providence and was barred from billing government-sponsored health plans for nine years.   

Disregarding well-documented "red flags," MultiCare's Deaconess hired Dreyer in July 2019. Three months later, Dreyer's high volumes were generating "significant revenue for MultiCare" and the health system put him on an incentive plan that paid the surgeon more money for greater volumes and complex surgeries, the complaint alleges.

Despite warnings in February 2020 that federal prosecutors were "investigating concerns that Dreyer was harming patients, falsifying diagnoses, and performing medically-unnecessary surgeries," MultiCare allowed Dreyer to maintain his practice until March 2021, when the Washington Department of Health suspended him. 

In addition to endangering patients, the complaint alleges that MultiCare fraudulently claimed and was paid millions of dollars from state and federal healthcare programs, including Medicare, Washington State Medicaid, TRICARE, the Federal Employees Health Benefits Program, and the Department of Veterans Affairs Community Care program.

"MultiCare was aware of serious concerns that Dr. Dreyer was putting patients in danger," Waldref said. "The complaint alleges that MultiCare nonetheless made the decision to allow him to treat and operate on patients, even after it became aware of the federal investigation. This is an egregious breach of the public trust."

MultiCare Responds

MultiCare issued this response to a request for comment from HealthLeaders.

"MultiCare has not yet been served with the complaint filed by the DOJ. We can assure you that MultiCare's commitment to our mission – partnering for healing and a healthy future – and our dedication to the health of the communities we serve is as strong as ever. The safety of our patients is and will always be our highest priority. We are aware of the Department of Justice's allegations, and we believe them to be unfounded and without merit. We plan to vigorously defend MultiCare in this matter."