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Hospitals accused of billing the poor instead of offering state-mandated charity care

UPDATED: Tue., Oct. 17, 2017, 10:46 a.m.

Washington’s attorney general filed lawsuits against hospitals in Tacoma and Olympia last month, accusing them of withholding charity care from thousands of low-income patients.

The suits say low-income patients at St. Joseph Medical Center in Tacoma and Capital Medical Center in Olympia were subjected to aggressive tactics, such as being required to pay hundreds of dollars before they could have surgeries. The patients weren’t told they could be eligible for free or reduced-cost care, as required by state law.

The litigation follows a similar lawsuit filed in June against the former owner of two Spokane-area hospitals: Deaconess and Valley.

Empire Health Foundation sued Tennessee-based Community Health Systems, alleging the for-profit hospital chain failed to provide up to $110 million worth of charity care promised to patients during its tenure in Spokane.

Antony Chiang, Empire Health Foundation’s president, said the foundation’s lawsuit has helped draw attention to Washington’s charity care requirements.

Until recently, “no one was holding the hospitals accountable,” Chiang said.

State law requires hospitals to provide charity care to people who are near the federal poverty level. Hospitals must alert patients verbally and in writing about the availability of charity care and screen patients for eligibility before attempting to collect payment. In addition, patients are only required to provide one income-related document to prove their eligibility.

The owners of all three hospitals are disputing the lawsuits’ claims.

St. Joseph Medical Center in Tacoma is run by CHI Franciscan Health. State Attorney General Bob Ferguson noted in a news release that the nonprofit hospital’s stated mission is to care for the poor and vulnerable.

At St. Joseph, however, employees were told not to volunteer information about charity care, even if patients were “obviously low-income or homeless,” according to the attorney general’s lawsuit.

The lawsuit also said a hospital contractor trained its employees to demand upfront payments from patients while concealing their right to apply for charity care.

A former employee of the contractor, Conifer Health Solutions, told the attorney general’s office she was trained to tell patients they had to pay a deposit before receiving a charity care application, the suit said.

When patients were able to apply for charity care, the lawsuit said, St. Joseph required them to provide multiple documents to prove income eligibility, in violation of state law.

The lawsuit also alleges that St. Joseph’s senior management was aware of the problems as early as 2014 but didn’t act.

Cary Evans, CHI Franciscan’s vice president of communications and government relations, said the organization is committed to providing “the highest quality care to everyone who needs it.”

He said CHI Franciscan covers the cost of care for people with incomes lower than 300 percent of the federal poverty level, which goes beyond state requirements. Last year, the organization provided $20 million in charity care to more than 19,000 patients, he said.

The attorney general’s office accused Capital Medical Center in Olympia of employing similar tactics in a separate lawsuit. The for-profit hospital is owned by RCCH Healthcare Partners.

Capital Medical Center’s former chief executive said in a 2012 meeting that the hospital needed “to get something” out of every patient and told staff not to let uninsured patients “leave without paying anything,” the suit said.

Capital threatened to cancel medical appointments and surgeries if patients did not agree to make upfront payments, the lawsuit said. Patients were not informed of their right to apply for charity care, the suit said. When they did apply, they were required to provide up to eight documents to prove income eligibility, the lawsuit said.

Jeff Atwood, a spokesman for RCCH Healthcare Partners, said Capital Medical Center worked to resolve charity care issues after the attorney general’s office alerted the hospital of problems in 2016. Atwood said the hospital now exceeds the state’s requirements for charity care.

He said the company was disappointed by the lawsuit, because RCCH Healthcare officials thought they were on track for an “amicable resolution.”

The Spokane lawsuit said Community Health Systems agreed to meet or exceed the average level of hospital charity care spending in Eastern Washington, as required by the state, but failed to meet that pledge.

Empire Health Foundation was formed with the proceeds from CHS’ 2008 purchase of Deaconess and Valley hospitals. The nonprofit foundation’s mission is to improve the health of the region’s residents. The foundation also is tasked with overseeing CHS’ contracts and agreements from the sale, which includes the charity care provisions.

CHS asked the district judge to dismiss the lawsuit, saying Deaconess and Valley hospitals fulfilled obligations to the state and actually exceeded charity care requirements.

Both hospitals were sold June 30 to Multicare Health System of Tacoma, which is not part of the lawsuit.

Last week, a judge ruled the charity care claims against CHS can proceed.

The case hinges on “whether CHS made reasonable efforts to meet or exceed the regional average of charity care on a year-to-year basis,” said Eleanor Hamburger, a Seattle attorney who is representing Empire Health Foundation.

This story was corrected online to reflect that Cary Evans is a man.