Providence Hospitals Sued by Washington AG Over 'Collection Tactics,' Allegedly Failing to Provide Charity Care


Fourteen Providence Health & Services hospitals in Washington have failed to provide free or discounted medical care to low-income patients and pressured them to pay whether or not they're eligible for financial assistance, according to a lawsuit filed Thursday by state Attorney General Bob Ferguson.

According to the complaint, Providence has not developed an "adequate" system for identifying or protecting patients eligible for charity care, which is free or reduced-cost medical care that hospitals are legally required to give those who can't afford the full amount.

The complaint names eight Providence sites (in Everett, Olympia, Centralia, Chewelah, Colville, Walla Walla and two in Spokane), five Swedish Health Services hospitals (three in Seattle, one in Issaquah and one in Edmonds), and Kadlec Regional Medical Center in Richland.

Swedish and Kadlec are both affiliated with Providence.

"Charity care helps low-income families avoid crushing medical debt by making financial assistance available to those who qualify," Ferguson said in a Thursday statement. "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."

In a statement Thursday, the hospital system denied the allegations.

"The Providence family of organizations is extremely disappointed that the Office of the Washington State Attorney General has chosen to file inaccurate and unfair charges against us regarding our charity care and financial assistance practices," the statement said.

The statement says the hospital system delivered $79 million in free and discounted care in 2020 and that Providence's policies comply with the requirements of the state's charity care law.

"If we find out we've fallen short of the high standards we hold ourselves to, we make immediate changes," the statement said. "... While we strongly disagree with the allegations in this complaint, we'll continue to support policies that expand access to charity care and make health care more accessible to vulnerable patients."

Washington's charity care law was established in 1989.

Those with a household income at or below 200% of the federal poverty level are eligible for charity care, including more than 1.8 million Washingtonians, according to Ferguson's statement. Protections apply to both insured and uninsured patients.

The Washington law also requires hospitals to tell patients about charity care verbally and in writing, and screen them for eligibility before attempting to collect payments.

The hospital system added that it's supporting legislation, House Bill 1616, to increase access to affordable health care. The bill was approved in the House earlier this month, and is being considered by the Senate.

The complaint alleges Providence employees have been trained since 2018 to use "collection tactics" that create the impression that all patients must pay for care regardless of income level, according to the complaint.

One tactic gives staffers a script to follow and instructs them to "ask every patient every time" to pay their hospital bills, the complaint says, referencing Providence's training materials. Another training tells staffers, "Don't accept the first no," meaning staff should continue to ask patients how they want to pay for their treatment even after patients say they can't afford the bill.

The training directs staff to try at least three times to collect payment after the "first no" — and then only give information on charity care after that.

"These aggressive collection measures capitalize on the power and knowledge imbalance between Providence and its patients," the lawsuit says. "Providence is fully aware of the availability of charity care. Many of Providence's low-income patients, however, are not."

Ferguson also alleges Providence has sent more than 54,000 patient accounts to a third-party debt collection agency even though the hospital knew the patients were eligible for financial assistance. Sending accounts to a debt collector likely could have damaged the patients' credit, the lawsuit says.

The accounts totaled more than $70 million.

The complaint requests a full write-off of medical debts and refunds for patients who paid for care when they were eligible for financial assistance, as well as millions of dollars in civil penalties for alleged Consumer Protection Act violations.

The total number of violations has not been determined.

Ferguson, who launched the investigation into Providence after his office received complaints about Swedish's charity care practices, has filed at least two other major lawsuits related to financial assistance for medical needs, according to a statement from his office.

One of them was filed in 2017 against St. Joseph Medical Center in Tacoma and its health system CHI Franciscan (now known as Virginia Mason Franciscan Health), and resulted in the hospital system paying $41 million in debt relief and $1.8 million in refunds.

Ferguson also sued Capital Medical Center in Olympia in 2017 for similar charity care accusations. Capital ultimately paid almost $400,000 in refunds and debt relief.