Medical Debt Collectors Added to Wrongful Billing Lawsuit

Two medical debt collection agencies have been added to a Washington state lawsuit against 14 associated hospitals over alleged violations of consumer protection laws related to financial assistance practices, the state’s attorney general announced.

The lawsuit, initially filed in February, mainly targets the Providence healthcare system, which operates dozens of hospitals in Washington and other western states, for its alleged mishandling of financial assistance and medical debt collection. The actions affected “tens of thousands of patients and hundreds of millions of dollars in medical debt,” according to the attorney general’s statement.

Harris & Harris and Optimum Outcomes, both nationwide debt collection agencies, also violated the state’s Collection Agency Act and Consumer Protection Act, the statement said. Consumer complaints sent to the attorney general’s office prompted the agencies’ inclusion in the suit, according to the statement.

“Collection agencies cannot deceive Washingtonians about their legal right to access medical financial assistance,” Attorney General Bob Ferguson said in the press release. “I fought to expand our charity care law so more individuals can have access to affordable health care — I am going to fight to ensure those laws are honored.”

The violations listed in the lawsuit include the agencies’ failure to send notification of eligibility of financial assistance with the first debt collection requests to individuals, according to the lawsuit.

A new Washington law requires hospitals to forgive at least some of the medical costs for qualified patients. It provides financial assistance to all state residents who earn less than three times the federal poverty level of $27,750 for a family of four. The law, which went into effect July 1, also provides discounts for anyone earning less than four times the federal poverty level.

In addition to failing to notify eligible individuals, the attorney general also accused the debt collection agencies of failing to inform individuals of their right to request information about their debt.

The attorney general’s office said an estimated 54,000 accounts of low-income patients were referred by Providence to debt collection agencies, and those accounts held more than $470 million in outstanding medical debt.

Providence contracted Harris & Harris and Optimum Outcomes in September 2019 to begin collecting medical debts on the health system’s behalf, according to the suit.

The original lawsuit included nine Providence hospitals, including the largest in Washington state, according to the press release. It charged that the hospitals violated the consumer protection act “thousands” of times, including training employees to “aggressively collect payments without regard for a patient’s eligibility for financial assistance,” Ferguson’s office said.

The lawsuit seeks full write-off of medical debts as well as refunds, including interest, for patients who did not receive the qualified financial assistance. The attorney general’s office will also seek “millions of dollars in civil penalties,” but the total number of violations has not yet been determined.

The collection agencies could not be contacted immediately for comment. However, Providence said in a statement to MedPage Today that the allegations were not an accurate portrayal of the company’s efforts around financial assistance in the state.

“We continue to believe strongly that the charges against the Providence family of organizations in Washington state are inaccurate and unfair,” a Providence spokesperson said. “Charity care and financial assistance are a central tenet of our mission as a not-for-profit organization. As the largest provider of charity care in the state of Washington, the Providence family of organizations provided $75.5 million in free and discounted care statewide in 2021 alone. We also absorbed $471 million in uncompensated Medicaid costs last year in Washington state. Our practices comply with, and in many instances exceed, the requirements of Washington’s Charity Care Act. In fact, our threshold for charity care eligibility is at least two times more generous than Washington state standards.”