SEATTLE, WA – Washington State Attorney General Bob Ferguson announced today that Providence, one of the nation’s largest health care systems, must forgive more than $137 million in medical debt and refund more than $20 million to patients the company billed for services despite knowing they likely qualified for free or reduced-cost health care. The $157.8 million resolution will provide full refunds, plus interest, and debt forgiveness for 99,446 individuals. It is the largest resolution of its kind in the country.
From the A.G.’s Office:
State law requires hospitals to provide medical financial assistance, also known as charity care, to Washingtonians based on their income level — for both insured and uninsured patients. Hospitals are required to notify patients about this protection and check to see whether they are eligible for discounts on their out-of-pocket expenses.
Ferguson filed an enforcement action against Providence for deceiving patients into believing they had no choice but to pay their medical bill, and unlawfully shifting the burden onto patients to self-identify their eligibility for financial assistance. This created barriers to affordable care for thousands of the most vulnerable Washingtonians.
The legally enforceable agreement, filed today in King County Superior Court, resolves Ferguson’s lawsuit against all hospitals operated by Providence and its Washington affiliates, Swedish Medical Center and Kadlec Regional Medical Center.
Ferguson’s lawsuit asserted that between 2018 and 2023, Providence routinely disregarded its legal obligations. Instead, Providence trained staff to aggressively ask for payment from patients who were likely eligible for financial assistance, or simply billed them without determining if they qualified. In thousands of cases, Providence knowingly sent low-income patients — including Medicaid enrollees — to debt collectors. One of Providence’s own employees warned leadership that the health system’s practices were “sending the poor to bad debt.”
Providence health system operates hospitals across Washington. Many of its hospitals are either the largest or the only hospital in the area. Swedish First Hill and Providence Sacred Heart are among the largest hospitals in the state, with more than 600 beds. Together, these hospitals reported more than $18 billion in patient service revenues in 2020.
“Washingtonians concerned about the rising cost of health care should know that my team is fighting to enforce critical protections that improve affordability,” Ferguson said. “We won’t stop. Most Washingtonians are eligible for significant discounts on their out-of-pocket hospital expenses, including co-pays and deductibles. We will ensure that hospitals honor this important law.”
Today’s resolution requires Providence to pay $20.6 million in direct refunds, including 12% interest on all payments, to 34,229 patients. Providence is required to forgive $137.2 million in outstanding medical debt for 65,217 patients. Providence has already forgiven $125.8 million in patients’ medical charges as a result of this case, and will forgive the remaining $11.4 million after today’s filing.
The average payment to patients receiving refunds is approximately $478. Individual amounts will vary widely, ranging from less than $1 up to $293,000. The average write-off for patients still awaiting debt forgiveness from Providence will be more than $900. According to data Providence shared with the Attorney General’s Office, write-offs will range from under $1 up to $262,000.
Together, the refunds and debt relief will help 99,446 individuals.
Prior to this resolution, Providence refunded nearly $230,000 to 1,497 Medicaid accounts after the Attorney General began the investigation. The patients received those refunds, including interest, only after Ferguson filed his lawsuit.
Qualifying patients who received care at Providence-affiliated hospitals between 2018 and October 2023 will receive a letter from the Attorney General’s Office informing them of the resolution. They do not need to contact the Attorney General’s Office, Providence, Swedish or Kadlec to receive refunds or debt relief. Patients will receive checks in the mail or notice that their account balances have been written off.
If patients have questions about whether they qualify for this resolution, they should contact Providence. The Attorney General’s Office does not have patient data. Providence can be reached at 855-229-6466.
In addition to paying refunds and providing debt forgiveness, Providence must implement new systems to determine whether patients are eligible for financial assistance before attempting to collect payments from them. It also must stop all deceptive collection practices identified in Ferguson’s lawsuit. Providence will also pay the Attorney General’s Office more than $4.5 million to reimburse costs of the investigation and help fund continued consumer protection work.
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.
Providence billed, aggressively collected from low-income patients
Ferguson filed a lawsuit in February 2022, accusing Providence 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.
In August 2022, Ferguson expanded his lawsuit against Providence, adding two debt collection agencies hired to collect outstanding debt from Providence patients. Ferguson asserted that Harris & Harris and Optimum Outcomes violated the law by sending letters to Providence’s patients that excluded legally required disclosures about the availability of financial assistance and a patient’s right to request information on past due accounts. The debt collection issue is ongoing.
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.
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.
For more information about Washington’s medical financial assistance law, including tools to see if you qualify, visit affordablehospital.wa.gov.
