Minn. AG: Accretive broke law with 'ASS,' 'Blue Balls' program

John O'Brien Jun. 19, 2012, 1:50pm


ST. PAUL, Minn. (Legal Newsline) - Minnesota Attorney General Lori Swanson wants to add new allegations in her lawsuit against Accretive Health, a company that engages in medical debt collection.

Her initial complaint, filed in January, alleged the company failed to protect patient health care confidentiality. In April, she released a report that alleged the company may have broken the law by asking patients to pay their bills as they sought care.

The report prompted a stock plunge and shareholder lawsuits. Her second amended complaint would add the report's allegations to her lawsuit.

"Accretive prepared a document called the 'Accretive Secret Sauce,' or 'ASS,' touting: 'You've never seen ASS like ours!' and 'Check out our ASS!'" says Swanson's memorandum in support of a second amended complaint, filed Tuesday.

"The main ingredient of the 'Secret Sauce' is that only in 'Accretive hospitals' are emergency room patients hustled with bedside collection visits. The impact of the 'Secret Sauce' on patients is very real. Its tactics also violate the law."

Swanson says state law forbids debt collectors to imply or suggest medical care will be withheld in an emergency situation when collecting on a bill.

Included in her memorandum are stories from several individuals who claim Accretive did just that. Those testimonials allege a woman from Accretive demanded payment while the patients were receiving emergency care.

The woman allegedly gave the impression care would be withheld if payment was not collected. Seventeen affidavits in support of Swanson's motion were filed with it.

Swanson also alleges Accretive overbilled patients using its own software program, known as A2A.

"A hospital registration employee using A2A cannot process a patient electronic record unless he or she first processes informational 'balls' that pop up on the screen," the motion says.

"The system is derisively referred to by hospital employees as the 'Blue Balls' program. A2A purportedly determines the financial responsibility of insured patients for co-pays, deductibles, co-insurance, and for past balances, as well as the amount to be asked of uninsured patients for past balances and present bills.

"Based on the information in A2A, patients are then told to pay money to the hospital. The amount calculated by A2A for patients to pay often exceeded the amount owed by the patient. As a result, Minnesota patients sometimes paid more than they owed."

Accretive's stock plunged 42 percent (to $10.86 per share) shortly after Swanson issued her report in April. On Tuesday, the company was trading at $12.25.

Swanson's probe began when an Accretive employee allegedly lost a laptop that contained the unencrypted health data of approximately 23,500 patients in Minnesota, including patients of Fairview.

Swanson's lawsuit alleges that Accretive gained access to patient data that was sensitive through contracts with the hospitals and used a numerical score to determine patients' risk of hospitalization and medical complexity. The lawsuit also alleges that the company graded patients' "frailty," compiled per-patient loss and profit reports and identified patients that were deemed "outliers."

Pending is the company's motion to dismiss Swanson's lawsuit.

"The suggestion that our focus or practice is to put bedside pressure on patients to pay their medical bills out of pocket is a flagrant distortion of fact," a statement released in April by the company says.

U.S. Magistrate Judge Jeffrey Keyes will hold a hearing on Swanson's motion to amend on July 6.

From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.

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