Some patients were asked to pay while hooked to heart monitors, morphine drips and IVs. Others were dunned while lying naked and in pain on a gurney.
Minnesota attorney general Lori Swanson made those allegations in federal court in June against Chicago-based Accretive Health, one of the nation's largest collectors of medical debt. The complaint accuses Accretive of aggressively collecting late payments and current bills from emergency room patients who, in some cases, had not yet seen a doctor or been stabilized, a violation of the federal Emergency Medical Treatment and Active Labor Act. [On July 30, 2012, Accretive agreed to pay the Minnesota attorney general's office $2.5 million to settle the allegations. The company did not admit wrongdoing.]
“Accretive used ‘bedside collection visits’ in other patient hospital rooms besides the emergency room,” according to the complaint, pressuring patients scheduled for medically necessary treatment, including time-sensitive surgeries, to pay outstanding bills.
Experts say it is rare — but not unprecedented — for health care companies to pursue bedside payment from emergency-room patients, especially before they've been stabilized and received any treatment, making the allegations against Accretive particularly noteworthy.
“We've certainly heard that this happens anecdotally from some of our state partners, but I am not aware of other active investigations going on at this time,” says Jessica Curtis, director of the Hospital Accountability Project at Community Catalyst, a Boston-based advocate for health-care access nationwide.
Swanson's accusations against Accretive are not new. She had made them in a scathing six-volume report in April that documented a culture of high-pressure collection tactics at Minneapolis-based Fairview Health Services, which runs eight nonprofit hospitals. Fairview had turned over its billing and collection to Accretive in 2010.
Swanson also accused Accretive and Fairview employees under Accretive supervision of leading patients to believe that treatment would be withheld if they did not pay.
Alluding to the Accretive investigation, the Internal Revenue Service last month drafted a rule that prohibits debt collection at nonprofit hospitals “in the emergency department or in other hospital venues where collection activities could interfere with treatment.”
“In recent months, we have heard concerns about aggressive hospital debt-collection activities, including allowing debt collectors to pursue collections in emergency rooms. These practices jeopardize patient care, and our proposed rules will help ensure they don't happen in charitable hospitals,” said Emily McMahon, acting assistant secretary for tax policy at the U.S. Treasury Department.
In an April statement, as well as in a 29-page document in May, Accretive denied all accusations and said the Minnesota attorney general's report was full of “inaccuracies, innuendo and unfounded speculation.” The company called any suggestion that it put bedside pressure on patients to pay their medical bills out of pocket “a flagrant distortion of fact.” The company said, instead, it worked with insured patients to make sure they were not being over-billed for their share and with uninsured patients to find coverage, including Medicaid, disability or auto insurance and charity.
In addition, “The very serious allegation of denying access to patient care is flatly untrue,” said Accretive.
Accretive's contract with Fairview was not its most important. Its biggest is with Missouri-based Ascension Health, the nation's largest Catholic and nonprofit health system. In response to an inquiry from stltoday.com, the online news site of the St. Louis Post-Dispatch, neither company would say how many of Ascension's 80 hospitals across the country use Accretive's services. In a written statement provided to the news site, Ascension Health said it “has policies regarding patient accounts that reflect our commitment to recognize the human dignity of our patients and treat them with respect and compassion.”
Swanson began investigating Accretive after suing the company in January 2012 for allegedly failing to protect the confidentiality of patient information, as required by state and federal privacy laws. Five months earlier, an employee's laptop computer containing the unencrypted medical records of 23,500 Minnesota patients was stolen from a rental car. The latest charges were added to that lawsuit. Accretive has asked the court to dismiss the entire suit.
Sen. Al Franken, D-Minn., introduced legislation in June that would restrict the use of patient medical information for debt-collection purposes. (Getty Images/Chip Somodevilla)
The fallout this year has been swift. In January 2012, Fairview dropped Accretive as its debt collector. That decision followed mounting concerns among Fairview employees and officials about Accretive's practices at bedsides and in back offices. For example, in mid-2011, Fairview's chief financial officer, Daniel Fromm, had objected to Accretive's motivational practice of awarding gift cards to top collectors: “Do you also understand that this practice violates our corporate policy?” he asked. Another Fairview official asked Accretive to stop posting employee names with the amounts they collected.
In April 2012, Fairview severed the last of its ties to Accretive, and, in May Fairview's Board of Directors failed to renew the contract of CEO Mark Eustis, who was instrumental in hiring Accretive. A week later, Charles Mooty, Fairview's board chairman and interim CEO, apologized to patients and offered a “firm commitment on behalf of the entire organization to regain your trust.”
Mooty spoke at a congressional hearing held in Minneapolis by Sen. Al Franken, D-Minn., to investigate the Accretive charges. In June, Franken reintroduced an expanded version of his 2011 End Debt Collector Abuse Act. The legislation would restrict the use of patient medical information for debt-collection purposes and apply the consumer protections of the Fair Debt Collection Practices Act to hospital staff.
The Federal Trade Commission, Minnesota Department of Commerce and the federal Centers for Medicare and Medicaid Services are also scrutinizing Accretive for possible violations of state and federal law.
— Barbara Mantel
Calder, Lendol , Financing the American Dream , Princeton University Press, 1999. A history professor presents a social and cultural history of the rise of consumer credit in America.
Geisst, Charles R. , Collateral Damaged: The Marketing of Consumer Debt to America , Bloomberg Press, 2009. A financial writer examines the policy implications of America's recent credit crisis and proposes how to get the country's fiscal house in order.
Hyman, Louis , Borrow: The American Way of Debt , Vintage Books, 2012. A historian looks at how the rise of consumer borrowing in the past century has altered U.S. culture and the economy.
Alexander, Ames and David Raynor , “Hospital suits force new pain on patients,” charlotteobserver.com, April 23, 2012, www.charlotteobserver.com/2012/04/23/3193509/hospital-suits-force-new-pain.html. Nonprofit North Carolina hospitals are suing patients for bad debts, including some patients who were eligible for hospital financial assistance but did not receive it.
Aspan, Maria , “Borrower Beware: B of A Customer Repaid Her Bill Yet Faced a Collections Nightmare,” American Banker, March 29, 2012, www.americanbanker.com/issues/177_62/bofa-credit-cards-debt-collections-delinquent-robosigning-1047991-1.html. A Maryland woman spent a year paying off a delinquent credit card bill, only to be pursued by debt collectors after the credit-card issuer mistakenly sold her settled debt.
Lerner, Maura and Tony Kennedy , “‘Money-hungry’ tactics raised alarms at Fairview,” Star Tribune (Minneapolis), www.startribune.com/lifestyle/health/151639735.html. Employees of a Minneapolis nonprofit hospital complain about aggressive tactics of a newly hired debt-collection company.
Lundstromand, Marjie and Sam Stanton , “Debtors seethe, sue over collector tactics,” The Sacramento Bee, April 22, 2012, www.sacbee.com/2012/04/22/4432940/debtors-seethe-sue-over-collector.html. In the last seven years, the number of lawsuits in California federal courts accusing collectors of violating federal law increased fivefold.
Serres, Chris , “Debtors in court — suing collectors,” Star Tribune.com (Minneapolis), Aug. 1, 2010, www.startribune.com/investigators/99676349.html?page=1&c=y. Federal lawsuits by consumers against debt collectors have soared, but collectors say many suits are unsubstantiated.
Reports and Studies
“Additional Requirements for Charitable Hospitals,” Internal Revenue Service, June 22, 2012, p. 80–81, www.ofr.gov/OFRUpload/OFRData/2012-15537_PI.pdf. The IRS writes draft rules for implementing billing and collection polices at nonprofit hospitals required by the Affordable Care Act.
“Credit Cards: Fair Debt Collection Practices Act Could Better Reflect the Evolving Debt Collection Marketplace and Use of Technology,” U.S. Government Accountability Office, September 2009, p. 41, www.gao.gov/assets/300/295588.pdf. The Government Accountability Office finds that consumer protections should be strengthened in light of growth in debt buying and that decades-old laws should be amended to keep up with communication tools such as email and cellphones.
“Fair Debt Collection Practices Act: CFPB Annual Report 2012,” Consumer Financial Protection Bureau, March 21, 2012, p. Appendix B, Appendix C, http://files.consumerfinance.gov/f/201203_cfpb_FDCPA_annual_report.pdf. The federal consumer-protection agency reports on progress regulating consumer financial services and on trends in consumer complaints against debt collectors.
“The Path Forward: ACA International's Blueprint for Modernizing America's Consumer Debt Collection System,” ACA International, April 2011, p. 18, www.acainternational.org/files.aspx?p=/images/18898/finalblueprint-designedversion.pdf. A debt-collection industry trade group lays out its blueprint for changes in laws and regulations.
“Repairing a Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration,” Federal Trade Commission, July 2010, p. i, www.ftc.gov/os/2010/07/debtcollectionreport.pdf. After a series of roundtable discussions on litigating and arbitrating debt collectors' claims against consumers, the FTC concludes that the system is broken.
Hobbs, Robert J., and Chi Chi Wu , “Model Family Financial Protection Act,” National Consumer Law Center, June 2012, p. 14, www.nclc.org/images/pdf/debt_collection/model_family_financial_protection_act.pdf. A consumer advocacy group writes a model statue for states to regulate the debt-collection industry and fill gaps it sees in federal law.