Hospital Groups & Surgeon Pay to Settle False Claims Allegations

Retired orthopedic surgeon Kevin Schoenfelder, M.D., CHI Franciscan Health, and St. Joseph Medical Center have agreed to pay to settle False Claims Act allegations.

In accordance with the settlement, Dr. Schoenfelder will pay $197,054. The payments settle allegations against Dr. Schoenfelder for purportedly performing medically unnecessary spinal surgeries. In 2018, Dr. Schoenfelder retired as a physician and in 2019 he surrendered his physician license.

CHI Franciscan Health and St. Joseph Medical Center will pay $745,654. The payments resolve claims that, per the Department of Justice press release, CHI Franciscan Health “billed for Dr. Schoenfelder’s performance of spinal surgery at more spinal levels than necessary and medically unnecessary spinal fusions at Tacoma’s St. Joseph Hospital.”

In the press release, U.S. Attorney Tessa M. Gorman commented, “Unnecessary surgeries put patients at risk of medical complications.”

Gorman continued, “In this case we are concerned about protecting taxpayer funded health care, but even more concerned that patients may have needlessly suffered when enduring procedures that were more invasive than was necessary.”

The settlement is the result of a qui tam lawsuit filed by another physician in 2018. The physician relator alleged that Dr. Schoenfelder, a board certified orthopedic spine surgeon based in Tacoma, Washington, had been performing medically unnecessary spinal surgeries. He alleged that over a period of five years the medically unnecessary surgeries were billed to government health care programs including Medicare, TRICARE, and Veterans Affairs.

In the original complaint, the physician relator claimed that two types of fraud were being perpetrated in the alleged scheme. According to the complaint, the first type of alleged fraud was “falsely billing one type of procedure as a more expensive type of procedure.” The second type of alleged fraud was “performing and billing for medically unnecessary procedures.” In support of the allegations the physician relator claimed that Dr. Schoenfelder would falsely bill for a “redo discectomy” when he actually performed a “redo laminectomy.” The physician relator also claimed that Dr. Schoenfelder would perform surgical decompressions that were more extensive than necessary in order to generate more revenue.

While the payments resolve the case, none of the parties are admitting to wrongdoing. According to the Department of Justice press release, “each is paying the government health programs the amount that was improperly billed and additional penalties.” The physician relator who brought the original lawsuit will receive 22% of the payments.