MultiCare to pay millions to settle lawsuit over allegations of fraudulent billing, risky surgeries from doctor with history of legal troubles

The United States Attorney’s Office for the Eastern District of Washington says MultiCare will pay more than $3 million to settle the case.

SPOKANE, Wash — The United States Attorney’s Office for the Eastern District of Washington announced Wednesday that Tacoma-based MultiCare Health System (MultiCare) will pay $3,728,000 to settle federal and state allegations it knowingly endangered patient safety and falsely and fraudulently billed Medicare, Medicaid, and other federal health care programs. 

The allegations are over spinal surgeries performed at Deaconess between 2019 and 2021 by Dr. Jason Dreyer, formerly a licensed physician and MultiCare neurosurgeon.

The U.S. District Attorney’s Office says the settlement comes after more than two years of litigation from the U.S. and the State of Washington, and six years of federal and state investigations. The case began in April 2022, when a former patient of Dr. Dreyer’s at MultiCare, Dr. Deannette Palmer, filed a complaint under seal in the U.S. District Court for the Eastern District of Washington.

KREM 2 News has covered Dr. Dreyer and similar allegations against him when he worked for Providence, including accusations of fraudulent billing and unnecessary surgeries. Providence Health & Services Washington (Providence) agreed to pay a nearly $22.7 million settlement in 2022. A former patient of Dr. Dreyer’s told KREM 2 in 2021 he wanted to avoid surgery for a back injury, but felt pushed by the doctor to have a herniated disk removed. The man said the surgery did not solve his problem, leaving him in pain.

The district attorney’s office says based on court records and the company’s own admissions, MultiCare hired, credentialed, and supervised Dr. Dreyer while ignoring and failing to act on numerous warnings and evidence of his fraud and endangerment of the public.

“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,” the district attorney’s office said in a press release.

The U.S. Attorney’s Office in Spokane began investigating after two physician assistants reported their concerns; the office informed MultiCare it was looking into allegations that “Dr. Dreyer had harmed patients, falsified diagnoses, and performed medically unnecessary surgeries, while working at Providence,” the office said.

The attorney’s office says Dr. Dreyer was also allowed to perform surgeries as a neurosurgeon with little restrictions at MultiCare until the state Department of Health restricted him from doing so, over the health system’s objection.

“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 Wednesday’s settlement.

“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.”

MultiCare released its own statement Wednesday, saying the complaint concerned reimbursement for certain neurosurgical services provided by Dr. Dreyer, calling him a former employee.

“The settlement resolves the allegations in the government’s complaint and does not involve any admission of liability or determination of wrongdoing. MultiCare’s decision to resolve this matter allows the organization to avoid the cost and uncertainty of continued litigation and focus its resources on its mission of providing high-quality care to patients. ‘MultiCare is confident in the quality of care provided to our patients and the clinical decision-making of our providers,’ said Bill Robertson, CEO of MultiCare. ‘MultiCare vigorously litigated the government’s allegations for nearly two years. The record that developed during that process speaks for itself. We are pleased to have resolved this matter and remain focused on delivering high-quality care to the communities we serve,'” the company’s statement said in part.