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Lawsuit Seeks Charity Care Restitution from Washington Hospitals

Analysis  |  By Alexandra Wilson Pecci  
   March 02, 2022

A lawsuit accuses hospitals of failing to ensure that eligible low-income patients received the charity care to which they were legally entitled.

Hospitals are again coming under fire for their charity care practices, this time in Washington State, where Attorney General Bob Ferguson has filed a consumer protection lawsuit against five Swedish Health Services hospitals and nine Providence Health & Services-affiliated facilities.

The lawsuit accuses the hospitals of failing to ensure that eligible low-income Washingtonians received the charity care to which they were legally entitled, as well as aggressively collecting money from those eligible patients.

Washington's charity care law requires hospitals to forgive some or all out-of-pocket costs of essential healthcare for Washingtonians whose household income is at or below 200% of the federal poverty level. It applies to both insured and uninsured patients.

The lawsuit alleges that the hospitals:

  • Trained employees to aggressively collect patient payment despite their eligibility for financial assistance. Employees also had to use a specific script to tell patients they were expected to pay for care. Providence instructed employees, "don't accept the first no," according to the lawsuit.
  • Failed to notify patients they were eligible for charity care financial assistance when the providers determined they qualified for assistance.
  • Sent more than 54,000 patient accounts to debt collection, despite knowing the patients were eligible for financial assistance.

The attorney general is seeking restitution in the form of full write-off of medical debts and refunds, plus interest, for patients who did not receive financial assistance, as well as millions of dollars in civil penalties.

Providence called the charges "inaccurate and unfair," saying that when the attorney general's office "first raised their concerns with us two years ago, we cooperated fully and in good faith. That is why it is inconceivable that the AG has chosen now to file this complaint, which runs counter to the facts we provided to his office."

Ferguson has had success with these types of lawsuits twice before:

  • 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. It 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.
  • Capital Medical Center provided at least $250,000 in refunds and more than $131,000 in debt relief for violating charity care rules. In addition, Capital paid $1.2 million to the Attorney General's Office.

Washington lawmakers are currently seeking to improve consumer protections from hospital bills. HB 1616 would increase the number of Washingtonians eligible for financial assistance with their out-of-pocket healthcare costs.

Hospitals are increasingly coming under fire for their charity care practices. For instance, a report from the North Carolina state treasurer's office found that hospitals there are routinely billing low-income patients who should qualify for charity care.

Alexandra Wilson Pecci is an editor for HealthLeaders.

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