Providence to pay $22.7 million to settle Medicare, Medicaid fraud whistleblower complaint brought against two Walla Walla neurosurgeons

Providence Medical Group has agreed to pay a $22.7 million penalty following a whistleblower complaint that two of its neurosurgeons in Walla Walla provided substandard care and committed billing fraud for several years.

The amount is the largest health care fraud settlement in Eastern Washington, said Vanessa Waldref, U.S. attorney for the region, in a news conference Tuesday morning in Spokane.

“What makes this case, and this resolution, so significant is not just the money,” Waldref said, “The most important aspect is the critical impact on patient safety.”

The complaint, filed in January 2020, alleges that two neurosurgeons – Dan Elskens and Jason Dreyer – provided substandard care at Providence St. Mary’s Medical Center between 2013 and 2018. The complaint alleges that Dreyer in particular filed Medicare claims for surgeries that were never performed, and that Elskens performed at least two surgeries that necessitated intervention by another surgeon to repair damage. The whistleblower brought this to the attention of superiors at Providence and urged their dismissal. Instead, the surgeons were placed on administrative leave and resigned.

In a statement released Tuesday, Providence said it was cooperating with a five-year settlement agreement that will require audits of its billing practices.

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

Waldref commended Providence for working with her office to investigate the fraud, but noted that the provider did not contact “appropriate state or federal regulatory bodies” when the allegations of overbilling and substandard care became apparent. The office believes hundreds of patients were affected, she said.

The case was built through a partnership between the U.S. Attorney’s Office and the Washington Attorney General’s Office. Larissa Payne, director of that office’s Medicaid Fraud Control Division, said the willingness of a whistleblower to come forward helped unravel significant fraud.

“Because one person decided to do the right thing, millions of Medicaid dollars will be protected,” Payne said.

Both doctors have been the subjects of regulatory action taken by the Washington Department of Health’s Medical Commission.

In December 2020, Elskens agreed to an order by the commission requiring additional medical training and supervision after it was alleged he’d performed a patient’s spinal infusion in a wrong location, according to publicly available documents. It’s unclear whether that incident, which occurred in November 2016, was the one the whistleblower reviewed and included in their complaint that was filed in federal court and unsealed Monday.

Elskens’ medical license expired in Washington state. Dan Fruchter, an assistant U.S. attorney who helped investigate the fraud, did not identify the doctors by name at the news conference, but noted that one of the involved physicians “left the state, and so we provided the information about that neurosurgeon to the appropriate component of the Department of Justice over where he’s currently practicing.”

Dreyer left his employment in Walla Walla and was hired by MultiCare in Spokane. In March 2021, the Medical Commission opened an investigation into his care of six patients in Walla Walla alleging that Dreyer performed spinal surgeries based on unclear medical evidence. In April, the commission entered a preliminary order preventing Dreyer from conducting spinal surgeries without supervision.

MultiCare placed Dreyer on administrative leave after becoming aware of the Medical Commission’s action, said Kevin Maloney, media relations manager for the provider in the Inland Northwest, in an email Tuesday. Dreyer resigned from his position Nov. 18, Maloney said.

“MultiCare requires all physicians, whether they are employed by MultiCare or not, to be in good standing with the Washington State and federal healthcare authorities to practice medicine at our facilities,” Maloney wrote.

Dreyer disputes the allegations in the Medical Commission’s statement of charges, and the restrictions on his license have been removed, said Ryan Beaudoin, an attorney representing the physician in the proceedings. Beaudoin said Dreyer is not currently practicing.

The most recent order publicly available from the Health Department indicates Dreyer’s license to practice is still restricted. 

At least one of Dreyer’s former patients has filed a medical negligence lawsuit in federal court, alleging that he billed insurance more than $300,000 for a spinal surgery conducted in Walla Walla in March 2018 not confirmed as necessary by an MRI and that was performed incorrectly, causing permanent pain. The complaint also alleges he billed for other work that was not performed at all.

Dreyer denied the allegations and a trial is scheduled for February .

Waldref said the settlement agreement did not preclude her office from filing additional charges.

“This does not involve any other direct civil or criminal investigations at this time, which we can’t speak to,” Waldref said.

The statute permits whistleblowers who may have been discriminated against for coming forward to receive damages. The whistleblower, who later resigned from Providence, will receive $4 million in damages from the agreement amount, Waldref said. Medicare, Medicaid and other affected federal programs will receive $10 million. The rest will return to the federal Treasury, Waldref said.

Those who may be aware of Medicaid and Medicare fraud can contact the Washington Attorney General’s Office at (360) 586-8888, or they can email tips to mfcureferrals@atg.wa.gov.

Staff writer Colin Tiernan contributed to this report.