Hospital chain billed thousands of low-income patients without notifying them that they were likely eligible for financial assistance with their hospital bills
SEATTLE — Attorney General Bob Ferguson announced today that hospital chain PeaceHealth is refunding up to $13.4 million to more than 15,000 low-income patients of its five western Washington hospitals. The refunds are a result of an Attorney General’s Office investigation into the hospital chain’s financial assistance and collection practices. Ferguson’s investigation found that PeaceHealth billed thousands of low-income patients who likely qualified for financial assistance without informing them of their eligibility.
PeaceHealth operates hospitals in Bellingham, Friday Harbor, Longview, Sedro-Woolley and Vancouver. This resolution impacts patients at all five hospitals.
“I appreciate PeaceHealth’s cooperation in reaching this resolution that fully refunds Washingtonians for millions of dollars in medical payments, plus interest, without the need for litigation,” Ferguson said. “Washington’s hospital financial assistance law helps working families avoid crushing medical debt by making help available to those who qualify.”
At the time of the unlawful conduct, Washington households making at or below 200% of the federal poverty level were eligible for free care or discounts on out-of-pocket hospital expenses. As a result of a new law proposed by Attorney General Ferguson, Washington law now guarantees individuals making up to 400% of the federal poverty level receive financial assistance on their out-of-pocket hospital expenses, regardless of their insurance. Millions of Washingtonians are eligible for full write-offs for necessary medical expenses received in Washington hospitals. For more information about Washington’s medical financial assistance law, including tools to see if you qualify, visit affordablehospital.wa.gov.
According to a consent decree, filed today in Whatcom County Superior Court, PeaceHealth will pay approximately $4.2 million in direct refunds — including more than $400,000 in interest — to more than 4,500 patients. This represents full restitution, plus interest, for these impacted consumers. The average payment to these individuals will be more than $900. Eight Washingtonians will receive more than $10,000. Nearly 50 will see refunds of more than $5,000. Washingtonians will receive direct refunds in the form of checks in the mail.
PeaceHealth is also required to refund up to an additional $9.2 million — including more than $900,000 interest — through a claims process to approximately 11,000 patients who were also likely eligible for help on their medical bills. If they file claims, these 11,000 patients will receive full restitution plus interest. Qualifying patients will receive a letter from the Attorney General’s Office informing them of the resolution and refund process.
The primary difference between the two groups of consumers relates to their estimated income level. The first group likely has a lower estimated income, while the second group likely has a higher level. The additional 11,000 patients can return a simple form proving that they qualify to receive assistance.
None of the impacted patients have outstanding medical debt for hospital care they received from PeaceHealth during the time in question.
If patients have questions about whether they qualify for this resolution, they should contact PeaceHealth. The Attorney General’s Office does not have patient data. PeaceHealth can be reached at 877-314-2011. 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.
In addition to the up to $13.4 million in patient refunds, PeaceHealth will pay $2 million to the Attorney General’s Office. That payment will reimburse the costs of the investigation and help fund the office’s continued work to ensure Washington hospitals are following the state’s medical financial assistance laws.
Case Background
The Attorney General’s Office began investigating PeaceHealth in 2020 as part of the office’s Health Care Initiative.
PeaceHealth locations in Washington are:
- St. Joseph Medical Center — Bellingham
- Peace Island Medical Center — Friday Harbor
- St. John Medical Center — Longview
- United General Medical Center — Sedro-Woolley
- Southwest Medical Center — Vancouver
Ferguson’s investigation found that PeaceHealth failed to screen patients for financial assistance eligibility prior to attempting to collect payment, failed to meaningfully disclose the availability of financial assistance and collected payment from patients who it knew were likely eligible for financial assistance without disclosing their eligibility.
PeaceHealth runs its patients through a tool that uses public data and analytics to predict which patients may be eligible for financial assistance. However, instead of notifying patients who it found were likely eligible, PeaceHealth billed them for their care.
Many eligible patients paid for their care without knowing they likely qualified for financial assistance.
If the patient did not pay, or pay the entire balance, after being sent four bills, PeaceHealth did write off the bill, but did not inform the patient of their financial assistance eligibility.
Resolution details
In addition to paying restitution to patients and money to the Attorney General’s Office to fund continued enforcement of the state’s medical financial assistance laws, PeaceHealth is required to:
- Notify all patients of the availability of financial assistance prior to attempting to collect payment, and offer to screen the patient for eligibility,
- Provide patients with a financial assistance application if the patient appears to be eligible after screening, or if the patient requests one, and
- Refrain from billing or attempting to collect payment until the patient’s financial assistance application is processed.
Assistant Attorneys General Audrey Udashen and Will O’Connor, investigators Bau Vang and Matthew Befort, paralegal Jen Killoren and legal assistant Joshua Bennett handled the case for the Attorney General’s Office.
If you were billed for, or paid for health care at a Washington hospital but believe you were eligible for financial assistance, file a complaint with the Attorney General’s Office.
Previous AGO enforcement of Washington’s charity care law
Ferguson filed three other lawsuits against Washington hospitals for violating Washington’s Consumer Protection Act by preventing low-income patients from accessing charity care.
In February 2022, Ferguson filed a consumer protection lawsuit against five Swedish hospitals and nine Providence-affiliated facilities for failing to ensure that eligible low-income Washingtonians receive the discounts to which they are legally entitled, and aggressively collecting money from charity care eligible low-income Washingtonians. All of the hospitals are part of Providence St. Joseph Health, a national, non-profit health system based in Washington. That lawsuit is ongoing, and currently slated for trial in February.
As the result of a 2017 lawsuit, CHI Franciscan provided $41 million in debt relief and $1.8 million in refunds, in addition to rehabilitating the credit of thousands of patients who were not offered charity care when they were eligible at eight of its hospitals in Washington. CHI Franciscan also paid $2.46 million to the Attorney General’s Office to cover the costs of the investigation and enforcement of the Consumer Protection Act.
Ferguson also sued Capital Medical Center in Olympia the same year over its charity care practices. To resolve the lawsuit, Capital provided at least $250,000 in refunds and more than $131,000 in debt relief. In addition, Capital paid $1.2 million to the Attorney General’s Office.
Expanding access to medical financial assistance
Starting in July 2022, four million Washingtonians are qualified for free or discounted care at hospitals across Washington as a result of legislation that Ferguson requested.
The legislation requires large hospital systems to provide more financial assistance. Approximately half of all Washingtonians are now eligible for free or reduced-cost care at hospitals that represent approximately 80 percent of the licensed beds in the state.
Ferguson worked with prime sponsor Rep. Tarra Simmons, D-Bremerton, and Reps. Eileen Cody, D-Seattle, and Nicole Macri, D-Seattle, on HB 1616 to strengthen Washington’s law.