Attorney general sues Providence hospitals for allegedly violating state charity care law

Washington Attorney General Bob Ferguson has filed a lawsuit against the 14 Providence-affiliated hospitals in the state, including Sacred Heart Medical Center and Holy Family Hospital, for allegedly failing to offer charity care to patients who qualify according to state law and sending them to debt collections.

The lawsuit, filed in King County Superior Court, says Providence is failing to offer charity care to patients despite knowing their income and family data would enable the hospital to offer those patients free or discounted care.

Providence operates some of the largest hospitals in the state, including Swedish First Hill and Sacred Heart . In 2020, all 14 Providence hospitals reported more than $18 billion in patient service revenues, according to the attorney general’s office.

For two years, from September 2019 to 2021, Providence hospitals in Washington sent 46,783 accounts associated with patients who would have been eligible for charity care to debt collectors, the lawsuit says. Those accounts had outstanding balances of $53 million.

Ferguson alleges Providence hospitals are violating the Charity Care Act, a law in Washington that requires hospitals to offer free or reduced-cost care to patients who are at or below 200% of the federal poverty level, which is $55,500 for a family of four.

The lawsuit states Providence’s strategy and tactics used by employees create the impression that patients must pay their hospital bills, even if they are eligible for assistance.

State attorneys obtained internal training materials that show how staff are supposed to ask for payment. These slides show that only after an employee asks how a patient will pay, if they can pay partially or be put on a payment plan, that they offer education on financial assistance options.

“These aggressive collection measures capitalize on the power and knowledge imbalance between Providence and its patients,” the lawsuit states. “Providence is fully aware of the availability of charity care. Many of Providence’s low-income patients, however, are not.”

Providence released a statement on Thursday calling the lawsuit “inaccurate and unfair charges.” The health care organization maintains it complies with the Washington Charity Care Act.

Providence hospitals, including Swedish and Kadlec facilities, paid $79 million in free and discounted care in 2020, the statement said.

The attorney general’s office raised concerns with Providence hospitals two years ago, and the nonprofit says it cooperated in good faith.

The lawsuit includes testimony from former Providence directors involved with collections, and customer experience.

“While we strongly disagree with the allegations in this complaint, we’ll continue to support policies that expand access to charity care and make health care more accessible to vulnerable patients,” the statement from Providence says.