Systems Settled Suit Over Unnecessary Spine Surgeries
Healthcare operators must review compensation models that tie physician pay directly to complex procedure volume.
Updated on Oct. 5, 2026 in Healthcare
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Providence and MultiCare Health System have agreed to pay $155.5 million to resolve class-action lawsuits alleging neurosurgeon Jason Dreyer performed unnecessary spine surgeries. The settlements address claims stemming from productivity-based compensation structures that allegedly incentivized excessive procedures.
Why it matters
The settlements highlight the legal and reputational risks of linking physician compensation too closely to surgical volume, a practice that can unintentionally encourage over-treatment. Health systems chose to settle to avoid the high costs and unpredictable outcomes associated with protracted litigation.
The $155.5 million settlement provides $2,000 payouts to patients of Dr. Dreyer or Daniel Elskens at Providence St. Mary. These figures follow previous government fraud payments totaling $27.6 million across the involved systems and the physician.
The players
Providence
A massive nonprofit health system operating 51 hospitals across the Western United States.
MultiCare Health System
A large, not-for-profit community-based healthcare organization based in Tacoma, Washington.
Jason Dreyer
A neurosurgeon who served as a high-producing physician at both Providence and MultiCare.
The details
Providence St. Mary Medical Center utilized a compensation metric that rewarded neurosurgeons for complex procedures, effectively incentivizing volume over clinical necessity. Dr. Jason Dreyer, who previously earned between $2.5 million and $2.9 million annually, was placed on leave in 2018 after concerns were raised regarding his surgical practices. MultiCare later hired him in 2019 before he resigned in 2021, a period during which the state of Washington also restricted his medical license.
Timeline
Dr. Dreyer was a high-producing neurosurgeon from 2014 to 2018.
Providence placed Dr. Dreyer on administrative leave in May 2018.
Dr. Dreyer resigned from Providence in November 2018.
MultiCare hired Dr. Dreyer in 2019.
Dr. Dreyer resigned from MultiCare and saw his license restricted in 2021.
Market Landscape
This settlement follows the pattern set by False Claims Act enforcement against health systems that link provider compensation to procedure volume. It marks a significant shift as systems now face class-action liability in addition to government-led fraud investigations.
Owners and managers should audit physician incentive programs to ensure productivity metrics do not override clinical standard of care. Reevaluating these contracts now can mitigate both regulatory scrutiny and the risk of civil litigation.
The takeaway
Productivity-based compensation remains a high-risk area when it conflicts with patient safety protocols. Operators should regularly review their incentive models with legal counsel to ensure they comply with evolving standards regarding medically necessary care.
Further reading
For broader trends in medical compliance and litigation, explore Healthcare.
Source note: This article includes information reported by Becker's Hospital Review | Healthcare News & Analysis.
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