The Washington State Attorney General is suing Providence-Swedish Health Care Group, which includes Swedish Edmonds hospital. The lawsuit alleges that Providence-Swedish has failed “to ensure that eligible low-income Washingtonians receive the discounts to which they are legally entitled.”

The attorney general also alleges that the hospital chain is “aggressively collecting money” from low-income patients who are entitled to charity care. The state Charity Care law is designed to protect low-income patients from out-of-pocket hospital costs and applies to insured and uninsured patients.

Citing Providence-Swedish documents, the attorney general said that from September 2019 to September 2021, the hospital chain sent more than 46,000 accounts to collection agencies — accounts of patients whose income was between 150-200% of the federal poverty level. For a family of four in 2021, 150% of poverty level was $39,750; 200% of poverty level was $53,000.

The total outstanding balances were $53 million.

The lawsuit contends that Providence-Swedish also sent 8,500 more accounts of current Medicaid patients to debt collectors, totaling another $20 million.

Swedish Edmonds is a 217-bed hospital with more than 450 physicians and 1,400 staff. Swedish says the facility offers full medical and surgical services as well as Level IV emergency trauma treatment.

The lawsuit includes all non-profit Providence and Swedish medical centers statewide — Edmonds, Everett, two locations in Seattle, Spokane, Olympia, Centralia, Walla Walla and Richland, and other associated facilities.

The lawsuit charges that Providence-Swedish created “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 state also alleges that the hospitals trained employees to push for payment, implying that it is expected, while downplaying “a patient’s right to apply for charity care.” A rendering of a Providence-Swedish training brochure tells staff to “ask every patient every time” to pay their bills while avoiding talking about charity care.

Providence released a statement saying the group is “extremely disappointed… that the Attorney General has chosen to file inaccurate and unfair charges against us regarding our charity care and financial practices.” We have asked for a response from Swedish Edmonds, but they have not replied. We do not know how many of the 46,000 accounts sent to collection agencies were SwedishEdmonds patients.

In its statement, Providence said the lawsuit filing is “inconceivable” and “runs counter” to the information it provided to the Attorney General during the two-year investigation. The hospital group said that in 2020, it provided $79 million in free and discounted care.

“Providence remains unwavering in our commitment to working with patients through any financial issue, and we continue to offer a range of options to best support them, including charity care,” the statement said.

Attorney General Bob Ferguson’s office claims that the hospital group violates Washington’s Consumer Protection Act by:

• 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 state alleges that from 2019 until late last year, Providence stopped automatically granting charity financial assistance for all patients with incomes of 150-200% over the poverty level because “they believed they might pay their bills if collection efforts continued.”

The lawsuit states that once accounts go to debt collectors, it’s likely to negatively affect a patient’s credit. The document includes an email warning to colleagues from the then-director of Providence’s financial counseling and assistance office that “we are sending the poor to bad debt.”

Ferguson is asking the courts to force Providence-Swedish to stop these practices, for a full write-off of the medical debts – $70 million – and refunds plus interest for patients who did not get financial assistance. The state has previously sued two other hospital groups along the same lines and forced them to settle.

The Attorney General is also working with lawmakers this session to expand the state Charity Care law coverage to more than one million Washington residents and increase financial aid for another million who are currently eligible. House Bill 1616 passed the State House of Representatives with strong bipartisan support and is now in the Senate for hearings.

— By Bob Throndsen