AG Ferguson: Providence debt collector Harris & Harris to pay $1 million for failing to inform patients of their medical debt collection rights

Attorney General Bob Ferguson announced that debt collection agency Harris & Harris will pay his office $1 million to resolve a lawsuit, which asserted the company unlawfully collected medical payments from more than 160,000 Washington patients without providing them with disclosures about their rights when faced with medical debt. By excluding those disclosures, Harris & Harris created barriers that kept patients from learning about and accessing financial assistance on their hospital bills.   

Harris & Harris is one of two debt collectors hired by Providence Health & Services, which recently resolved another related lawsuit filed by the Attorney General. Earlier this month, Providence entered into a legally enforceable agreement that requires the health system to provide $157.8 million in refunds and debt forgiveness to nearly 100,000 patients over unlawful medical charges to low-income Washingtonians who likely qualified for free or reduced-cost hospital care.

Ferguson expanded that lawsuit in the summer of 2022 by adding Harris & Harris and Providence’s other debt collection agency, Optimum Outcomes. The state’s amended complaint asserted that both debt collectors collected on medical debt without informing patients of their right to request specific information about their medical debt. The debt collectors also failed to provide a phone number for the hospital where patients received care, so that they could learn about their financial assistance rights. Optimum Outcomes also failed to inform patients that they may be eligible for financial assistance, as required by state law.

Today’s legally enforceable agreement only resolves the lawsuit with Harris & Harris. Ferguson’s case against the other debt collection agency, Optimum Outcomes, is scheduled to go to trial Feb. 22.

“Debt collectors must play by the rules,” Ferguson said. “Washingtonians have a right to know about certain protections related to medical debt, and debt collectors have an obligation to inform them of those rights. We will continue to enforce these protections on medical debt.”

Today’s resolution requires Harris & Harris to reform its practice to include legally required disclosures in first written collection notices in the future. Harris & Harris will pay for consumer education to approximately 166,000 Washingtonians who received the debt collection letters that lacked the disclosures. These individuals will receive a letter explaining their medical debt collection rights, including their right to apply for financial assistance on hospital bills. The $1 million will fund future consumer protection enforcement work. 

Background on lawsuit against debt collectors

Ferguson added the collection agencies to his lawsuit in the summer of 2022.   

Both collection agencies entered into a contract with Providence in September 2019. The agreement allowed them to collect hospital debts on Providence’s behalf and act as its agents.

When sending a first collection notice, collection agencies must include:

• Written notice that an individual may be eligible for charity care;
• Contact information for the hospital; and
• Notice that the patient has the right to request the hospital account number assigned to the debt, date of last payment, and an itemized statement stating whether the patient was found eligible for charity care, and, if so, the amount due after all charity care has been applied.

The state asserts that in first written collection notices, Harris & Harris included its own phone number rather than the phone number for Providence, and did not inform patients of their right to request detailed information about their medical debts.

On Feb. 2, 2024, the court found that Optimum Outcomes failed to provide any of the required information in 82,759 first written notices it sent to Providence patients.  

According to Ferguson’s lawsuit, Harris & Harris sent more than 294,652 first written collection notices without the legally required disclosures to 166,872 Washingtonians. Harris & Harris collected nearly $25 million from patients in the process, earning $1.7 million in commission from Providence.

Patients who were likely eligible for financial assistance but were sent to collections and paid for their care will receive refunds, including interest, as a result of the resolution with Providence. Patients who incurred debt when they were likely eligible for financial assistance will have their debt written off as a result of the resolution with Providence.

Assistant Attorneys General Audrey Udashen, Will O’Connor, Michael Bradley, Matthew Geyman, Lucy Wolf, Tad Robinson O’Neill and Robert Hyde, Paralegals Jen Killoren, Judy Lim, Matthew Hehemann and Joseph Drouin, and Legal Assistants Josh Bennett and Michelle Paules handled the case for Washington.

Providence billed, aggressively collected from low-income patients

Ferguson filed his lawsuit against Providence in February 2022, accusing its affiliated hospitals of billing and aggressively collecting money from low-income Washingtonians without determining if they qualified for financial assistance.

Ferguson’s Consumer Protection investigation started in 2020, following complaints about collection practices at Swedish. It revealed Providence engaged in numerous practices between 2018 and 2022 that prevented patients from accessing financial assistance. Providence trained employees on aggressive and deceptive collection tactics. Their script included:

• “Ask every patient every time” to pay outstanding medical costs;
• “Don’t accept the first no;”
• If a patient declines the first request, ask for partial payment;
• Use phrasing that signals to patients “payment is expected.”

The lawsuit asserted that Providence knew many of its patients were likely eligible for financial assistance and not only failed to inform them, but also kept collecting payments from them. In fact, Providence sent thousands of patients it identified as “presumptively” qualified for financial assistance to debt collectors. Internal emails revealed Providence did this because it knew those patients were more likely to pay their bills if collection attempts continued.

Moreover, starting in 2019, Providence sent thousands of Medicaid patients to debt collectors. Medicaid enrollees are among the lowest income Washingtonians, and are deemed eligible for financial assistance under Providence’s own policies. Providence staff caught the issue early and raised concerns to leadership. In fact, according to internal records, one employee warned: “We are sending the poor to bad debt and not treating them the same as other patients.” Providence did not correct the problem for more than two years.

Even when Providence wrote off debt for patients it later determined to be “presumptively” qualified for financial assistance, the company kept them in the dark about those write-offs, and therefore their eligibility for future assistance.

In all, Ferguson asserts that Providence’s deceptive and unfair practices amounted to more than 100,000 violations of the state Consumer Protection Act.

The case against Providence is part of Ferguson’s Health Care Initiative. The resolution is the largest of four charity care cases handled by his office, resulting in more than $205 million in debt forgiveness and refunds for Washingtonians. Washington is one of 11 states with broad charity care protections and the only state to pursue any large-scale enforcement.

Ferguson’s three other charity care resolutions include:

• PeaceHealth agreed to pay up to $13.4 million to more than 15,000 low-income patients, including $4.2 million in direct refunds and up to $9.2 million through a claims process.
• CHI Franciscan provided $41 million in debt relief and $1.8 million in refunds, in addition to rehabilitating the credit of thousands of patients.
• Capital Medical Center in Olympia paid at least $250,000 in refunds and provided more than $131,000 in debt relief to resolve Ferguson’s lawsuit filed in 2017.

Anyone who feels they are not receiving the financial assistance on their hospital bill they are entitled to should file a complaint with the Attorney General’s Office.

New law expands access to medical financial assistance

Before 2022, state law required hospitals to provide free or reduced-cost care to Washington families making up to 200% of the federal poverty level.

In March 2022, the Legislature passed an Attorney General Request bill strengthening Washington’s medical financial assistance law. It went into effect July 1, 2022. Ferguson worked with prime sponsor Rep. Tarra Simmons, D-Bremerton, and Reps. Eileen Cody, D-Seattle, and Nicole Macri, D-Seattle, on House Bill 1616. The new law expanded eligibility for financial assistance to more than one million Washingtonians and guaranteed free hospital care to an additional million Washingtonians.

Now, approximately half of all Washingtonians are eligible for free or reduced-cost hospital care. Washingtonians up to 300% of the federal poverty level are now eligible for free care at the state’s large health care systems and large, urban hospitals — representing approximately 80 percent of the licensed beds in the state. The bill also significantly increased medical financial assistance at the state’s smaller, more rural hospitals, with free care up to 200% of the federal poverty level and discounted care up to 400%.

Under the medical financial assistance law, hospitals are required to:

• Provide notice of the availability of financial assistance both verbally and in writing;
• Screen patients for eligibility before attempting to collect payment, and;
• Only require patients to provide one income-related document to prove eligibility for financial assistance.

If a patient appears to be eligible for financial assistance, hospitals must suspend any collection attempts and give the patient a reasonable opportunity to apply.

Original source can be found here.