Providence hospitals sent to collections more than 50,000 accounts of charity care eligible patients
SEATTLE — Attorney General Bob Ferguson announced today a consumer protection lawsuit against five Swedish hospitals and nine Providence-affiliated facilities for failing to ensure that eligible low-income Washingtonians receive the discounts to which they are legally entitled, and aggressively collecting money from charity care eligible low-income Washingtonians.
Ferguson will also file a motion for preliminary injunction unless the hospitals agree to stop their conduct while the case is ongoing.
Washington’s charity care law protects low-income Washingtonians from out-of-pocket hospital costs. The protections apply to both insured and uninsured patients.
The hospitals are located around the state, from Seattle to Spokane, Walla Walla to Everett. In their communities, many of the hospitals are either the largest, or the only hospital in their area. Swedish’s location at First Hill is the largest hospital in the state with over 800 beds. Together, these hospitals reported more than $18 billion in patient service revenues in 2020.
Ferguson’s lawsuit, filed in King County Superior Court, asserts that these hospitals committed thousands of Consumer Protection Act violations, including:
- Training employees to aggressively collect payment without regard for a patient’s eligibility for financial assistance, instructing them to use a specific script when communicating with patients that gives patients the impression that they are expected to pay for their care. Providence instructed employees: “don’t accept the first no”;
- Failing to notify patients they were eligible for charity care financial assistance when the providers determined they qualified for assistance;
- And sending more than 54,000 patient accounts to debt collection, despite knowing the patients were eligible for financial assistance. These 54,000 patient accounts totaled more than $70 million. Under Washington’s current charity care law, those patients were eligible for discounts on their bills. Moreover, under its own charity care policies that Providence promoted, these patients should have been eligible for full write-offs of their medical debt.
The hospitals’ illegal conduct began in 2018. Much of their conduct continues to this day, the lawsuit asserts, despite the Attorney General’s Office investigation and previous lawsuits Ferguson has filed against other hospitals over similar practices. A Providence financial executive admitted in a deposition in November that the hospitals continue to send patients eligible for financial assistance to collections.
This is the third major lawsuit Ferguson has filed related to charity care. Ferguson launched the investigation after receiving complaints about Swedish’s charity care practices.
“Charity care helps low-income families avoid crushing medical debt by making financial assistance available to those who qualify,” Ferguson said. “Hospitals cannot deceive Washingtonians about their legal right to access medical financial assistance. They must follow the law, and ensure low-income patients have access to the resources they need.”
The lawsuit seeks restitution in the form of full write-off of medical debts, and refunds, plus interest, for patients who did not receive financial assistance. In addition to the $70 million in debt relief and refunds, Ferguson is also seeking millions of dollars in civil penalties. The total number of Consumer Protection Act violations will be determined as the case progresses.
If you paid for medical services or are in collections for a medical bill from a Providence or Swedish hospital or Kadlec Regional Medical Center, and believe you may be eligible for charity care, contact Attorney General’s Office Investigator Bau Vang at 206-516-2989 or by email at firstname.lastname@example.org.
Hospitals’ conduct runs contrary to their mission
Non-profit Swedish Health Services operates two hospitals in Seattle, as well as facilities in Ballard, Issaquah and Edmonds.
Providence Health & Services Washington’s eight non-profit locations include:
- Spokane (two)
- Walla Walla
Kadlec is located in Richland. All 14 of the hospitals operate under the national nonprofit health system Providence St. Joseph Health, which is based in King County.
In contrast to its conduct, Swedish proclaims in its values statement the hospitals “stand in solidarity with the most vulnerable, working to remove the causes of oppression and promoting justice for all.” Providence states its mission is “serving all, especially those who are poor and vulnerable.” Kadlec Regional Medical Center, which is also included in Ferguson’s lawsuit, similarly says it is “committed to serving all within our communities, especially the poor and vulnerable.”
Aggressive collection practices
Washington’s charity care law requires all hospitals — for-profit and non-profit, public and private — to forgive some or all of the out-of-pocket cost of essential health care for low-income patients who qualify. The law covers Washingtonians whose household income is at or below 200 percent of the federal poverty level.
Hospitals are required to provide notice of the availability of charity care both verbally and in writing and screen patients for charity care eligibility before attempting to collect payment.
Ferguson’s lawsuit asserts that Providence, Swedish and Kadlec developed and encouraged a corporate culture that prioritizes collection over charity care, aggressively attempting to collect payment at the time of treatment and continuing to collect post-treatment even when the hospitals know that a patient is eligible for financial assistance. The Attorney General’s Office investigation revealed that the hospitals train employees to ask for payment in a way that implies that payment is expected, while obscuring a patient’s right to apply for charity care.
The hospitals train staff to “ask every patient every time” to pay their outstanding medical costs in every patient interaction without adequately disclosing the availability of charity care.
Slide from Providence employee training.
Training materials outline a strategy titled “Don’t accept the first No” to encourage employees to continue pressing for payment even after the patient says they can’t pay.
If a patient declines the first request, the hospitals instruct employees to ask for partial payments up front, then attempt to commit patients to payment plans. If all else fails, the hospitals permit employees to discuss financial assistance.
Employees are also trained to use phrasing that gives patients the impression that “payment is expected.”
Revenue targets are also assigned to teams of employees that collect patient revenue, and those employees meet frequently to “cultivate a culture of collections and promote accountability,” training documents show.
Fail to tell patients when they know they are eligible
After treatment, the Providence-affiliated hospitals also fail to inform patients they know are charity care-qualified, the lawsuit asserts.
If a patient does not pay at the time of treatment, the hospitals send patients three bills and a pre-collection letter to attempt to collect. If the patient does not pay after the pre-collection letter, the hospitals typically send the patient’s account to a third-party debt collection agency, including Harris &
Slide from Providence employee training.
Harris and Optimum Outcomes Inc. Before sending a patient’s account to a collection agency, the hospitals run the accounts through a tool that projects the patient’s income and identifies if they are charity care-qualified.
Some accounts the tool identifies as eligible for financial assistance are written off. However, the hospitals do not notify all the patients of their status, the lawsuit asserts. This means the patients do not know to request financial assistance on other outstanding accounts, or the next time they or a family member seek hospital treatment. The hospitals also do not offer financial assistance on the patient’s other outstanding accounts.
Until September 2019, the hospitals ran all delinquent accounts through the tool. After that date, the hospitals stopped running any accounts where the patient was insured, including public insurance like Medicaid. Most Medicaid patients are charity care-eligible due to the income requirements of the program.
Hospitals continue to send charity care-eligible patients to collections
After September 2019, the hospitals also stopped granting presumptive financial assistance when the tool identified that the patient’s income was between 151 percent and 200 percent of the federal poverty level — income levels still eligible under Washington state law.
Internal emails reveal that the hospitals made these changes to increase collections from patients in this income range because they believed they might pay their bills if collection attempts continued.
In a January 2020 email, Providence’s executive director of customer experience explained that Providence narrowed its use of the tool because of concerns that patients who could “potentially pay” could receive financial assistance. In the same email, the director confirmed that the changes resulted in the desired impact of lowering charity care “across all markets.”
Between September 2019 and September 2021, the hospitals sent 46,783 accounts associated with patients with income between 151-200% of the federal poverty level to debt collection agencies. Collectively, these accounts had outstanding balances of $53 million. They continue this practice to this day. In addition, since it stopped running insured patients through the tool, the hospitals sent an additional 8,454 accounts of currently enrolled Medicaid patients to debt collectors, totaling $20.3 million in out-of-pocket patient costs.
Once their accounts are sent to collections, it is likely the patient’s credit is negatively impacted by the debt.
Concerned employees notified management they were alarmed by Medicaid patients being sent to collections, the lawsuit asserts. For example, Providence’s then-director of financial counseling and assistance for its Pacific Northwest region warned in an email to colleagues: “We are sending the poor to bad debt.”
Despite these warnings, the hospitals continued to send the accounts to collections.
Lawsuit seeks restitution for patients, corporate reforms
Ferguson’s lawsuit asserts that the conduct of the Providence-affiliated hospitals violates Washington’s Consumer Protection Act. The violations include:
- Failing to screen patients for charity care eligibility before attempting to collect payment, as required by law
- Concealing the availability of charity care with aggressive collection tactics
- Deceiving patients by failing to notify them when they knew that they were care-eligible
- Continuing to attempt to collect payment from patients they identified as eligible
The lawsuit asks the court to force the hospitals to stop these practices. Ferguson is seeking refunds — including interest — for patients who paid for care when they were eligible for financial assistance. Ferguson is also seeking debt relief or forgiveness in the form of full write-offs for eligible patients who still owe money.
This covers tens of thousands of patients.
Ferguson is also seeking millions of dollars in civil penalties for thousands of individual violations of the state’s Consumer Protection Act. The total number of Consumer Protection Act violations will be determined as the case progresses.
Assistant attorneys general Audrey Udashen, Will O’Connor, Aileen Tsao and Matthew Geyman, investigators Matthew Befort and Bau Vang, paralegal Jen Killoren, and legal assistants Josh Bennett and Michelle Paules are handling the case for Washington.
Washington’s charity care law provides critical protections — and requires strengthening
Current law requires hospitals to provide Washington families making up to 100 percent of the federal poverty level with care without requiring that they pay out-of-pocket expenses, including co-pays and deductibles, after their insurance is exhausted. Hospitals are required to provide Washingtonians making between 101 percent and 200 percent of the federal poverty level with discounts on their out-of-pocket expenses.
Currently, more than 1.8 million Washingtonians are eligible.
Attorney General Ferguson is working with prime sponsor Rep. Tarra Simmons, D-Bremerton, and Reps. Eileen Cody, D-Seattle, and Nicole Macri, D-Seattle, to strengthen Washington’s charity care law. Ferguson’s Attorney General Request legislation will expand charity care eligibility to more than 1 million Washingtonians, and increase financial assistance for another million Washingtonians who are currently eligible.
The bill, House Bill 1616, passed the House by a bipartisan 63-33 vote on Feb. 2. It is currently being considered in the Senate.
Providence is supporting this legislation.
In 2019, the Oregon Legislature passed landmark legislation expanding eligibility for financial assistance to all Oregonians making up to 400 percent of the federal poverty level.
Previous AGO enforcement of Washington’s charity care law
Ferguson has filed lawsuits against two other Washington hospitals for violating Washington’s Consumer Protection Act by preventing low-income patients from accessing charity care.
As the result of a 2017 lawsuit, CHI Franciscan provided $41 million in debt relief and $1.8 million in refunds, in addition to rehabilitating the credit of thousands of patients who were not offered charity care when they were eligible at eight of its hospitals in Washington. CHI Franciscan also paid $2.46 million to the Attorney General’s Office to cover the costs of the investigation and enforcement of the Consumer Protection Act.
Ferguson also sued Capital Medical Center in Olympia the same year over its charity care practices. To resolve the lawsuit, Capital provided at least $250,000 in refunds and more than $131,000 in debt relief. In addition, Capital paid $1.2 million to the Attorney General’s Office.
Washington’s Attorney General serves the people and the state of Washington. As the state’s largest law firm, the Attorney General’s Office provides legal representation to every state agency, board, and commission in Washington. Additionally, the Office serves the people directly by enforcing consumer protection, civil rights, and environmental protection laws. The Office also prosecutes elder abuse, Medicaid fraud, and handles sexually violent predator cases in 38 of Washington’s 39 counties. Visit www.atg.wa.gov to learn more.
Brionna Aho, Communications Director, (360) 753-2727; Brionna.email@example.com
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