MultiCare Health System to Pay Millions to Settle Fraud Case

In this settlement, MultiCare made factual admissions regarding its conduct, agreeing to pay a total of $3.728 million, $1.6 million of which is restitution, due to the egregious nature of MultiCare's violations of federal and state law as shown by its own admissions and detailed court records. .[4] Based on MultiCare's factual admissions and court records, the investigation and resulting litigation has shown that MultiCare hired, credentialed, and supervised Dr. Dreyer while MultiCare ignored and failed to take appropriate action on numerous red flags, warnings, and specific evidence of Dr. Dreyer's fraud and endangerment of the public, all while increasing its own revenue with fraudulently obtained tax payer money.

Significantly, the court records reveal that, within months of Dr. Dreyer starting to operate on patients at MultiCare, two different physician assistants assigned at MultiCare to assist Dr. Dreyer in the operating room raised patient safety concerns directly to MultiCare management. The first physically walked out of the operating room while Dr. Dreyer was performing surgery, out of fear of patient harm, and immediately complained to MultiCare management. The second physician assistant also raised patient safety concerns to MultiCare management and resigned from MultiCare rather than continuing to work with Dr. Dreyer for fear of further patient endangerment. Court records show that MultiCare did not stop or curtail Dr. Dreyer's surgeries based on the serious patient safety concerns of its own medical staff, or multiple other red flags. MultiCare instead allowed Dr. Dreyer to perform a high volume of medically unnecessary complex spinal surgeries. Despite knowledge of these concerns about Dr. Dreyer, MultiCare not only permitted Dr. Dreyer to continue performing surgeries, but further incentivized Dr. Dreyer to perform medically unnecessary surgeries quickly by tying his compensation directly to the number of surgeries he performed and their complexity. MultiCare continued to fraudulently bill various federal health care benefit programs for those surgeries.

Several months after two physician assistants reported concerns about Dr. Dreyer, the United States Attorney's Office directly informed MultiCare that it was investigating concerns that Dr. Dreyer had harmed patients, falsified diagnoses, and performed medically unnecessary surgeries, while working at Providence. The United States Attorney's Office even supplied documents and evidence to support its concerns. Dr. Dreyer was still permitted to perform surgeries at MultiCare, including the surgery that initiated the present case. Dr. Dreyer was permitted to perform surgeries as a neurosurgeon at MultiCare with little restriction until, over MultiCare's objection, the Washington State Department of Health summarily restricted Dr. Dreyer from conducting spinal surgeries.

"As the voluminous court records of this case demonstrate, MultiCare had direct knowledge of the danger Dr. Dreyer posed to patients, including through reports made by its own medical staff, and later from explicit warnings from federal investigators," said Pete Serrano, the First Assistant U.S. Attorney for the Eastern District of Washington. "MultiCare nonetheless allowed Dr. Dreyer to operate on unsuspecting patients for nearly two years, generating thousands in additional revenue and putting profits before patient safety. Today, thanks to years of comprehensive investigation and litigation, MultiCare has been held accountable for its role in defrauding the taxpayers and endangering some of the most vulnerable members of our community."

Court records show that MultiCare signed a prior settlement agreement in August of 2023 resolving these allegations, then backed out of the agreement, and then litigated the case for two years before resolving it with the settlement announced today. "Today's settlement shows that no matter who you are, from an individual to a large corporation, if you commit fraud and choose to litigate with the United States rather than accept responsibility, you will be held accountable for your violations and you will pay more in the end," said Serrano.

"The alleged violations by MultiCare show a wanton disregard for ethics and the medical principle to do no harm," Washington Attorney General Nick Brown said. "This settlement is a win for patient safety and protecting public dollars to get people necessary healthcare."

"Patients trust that the care that they receive from their health providers is medically necessary and in their best interest," said Special Agent in Charge Robb R. Breeden of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). "When providers perform medically unnecessary surgeries and bill federal health care programs including Medicare and Medicaid for them, they not only violate that trust but also exploit programs designed to protect vulnerable populations. HHS-OIG will continue to work closely with our law enforcement partners to hold accountable those who put their own profits over patient safety."

"Healthcare providers have a fundamental duty to protect the well-being of their patients, and the Defense Criminal Investigative Service will work tirelessly to ensure the health and safety of our service members and their families," said John Helsing, Special Agent-in-Charge of the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service, Western Field Office. "This settlement concludes an intensive multi-year investigation and underscores our commitment to holding providers accountable for putting financial gain over patient safety."

"We will continue to hold accountable those who prioritize profits at the expense of the health and safety of vulnerable patients," said Special Agent in Charge Derek M. Holt of the U.S. Office of Personnel Management Office of the Inspector General. "We applaud our law enforcement partners and colleagues at the Department of Justice for their dedicated work to protect the welfare of the millions of Americans who rely on our federal health care programs, including the FEHBP."

"This settlement highlights our steadfast commitment to ensuring high-quality healthcare for veterans," said Special Agent in Charge Dimitriana Nikolov with the Department of Veterans Affairs Office of Inspector General's Northwest Field Office. "The VA OIG is grateful for the support of the U.S. Attorney's Office and our law enforcement partners in this case."

"This is the culmination of a multi-year, multi-agency, collaborative effort to fight egregious health care fraud directly impacting patient safety in Eastern Washington. For years Dr. Dreyer, and both MultiCare and Providence, the hospitals that employed him and unleashed him on an unsuspecting public, endangered and harmed our friends and neighbors while lining their own pockets with taxpayer money," said First Assistant Serrano. "We could not have held this individual accountable, nor the hospitals that knowingly profited from the fraud, without a dedicated multi-agency team. It is that team that has forced those responsible to pay tens of millions of dollars, stopped Dr. Dreyer from being able to continue harming patients, and that brought the truth of what happened out from the corporate shadows and into the light of day. I'm grateful for the close collaboration we have had with our partners at the Washington Medicaid Fraud Control Division, the Department of Health and Human Services Office of Inspector General, the Office of Personnel Management Office of Inspector General, the Defense Criminal Investigative Service, and the U.S. Department of Veterans Affairs Office of Inspector General," continued First Assistant Serrano.

This court case began in April 2022, when a former patient of Dr. Dreyer's at MultiCare, Dr. Deannette Palmer, filed a qui tam complaint under seal in the U.S. District Court for the Eastern District of Washington.[5] The joint investigation and litigation was conducted by the U.S. Attorney's Office for the Eastern District of Washington; the U.S. Department of Health and Human Services, Office of Inspector General, Seattle Field Office; the U.S. Department of Veterans Affairs, Office of Inspector General, Spokane Resident Office; the Office of Personnel Management, Office of Inspector General, Seattle Field Office; the Defense Criminal Investigative Service, Seattle Field Office; and the State of Washington Attorney General's Medicaid Fraud Control Division. Assistant United States Attorneys Tyler H.L. Tornabene and Derek Taylor and health care fraud contractor Echo Fatsis of the Eastern District of Washington handled this matter for the United States. Assistant Attorney Generals Rachel Sterett and Adam McGerty of the Washington State Attorney General's Office handled this matter for Washington.

Settlement Agreement

2:22-cv-00068-SAB