As a result of state Attorney General Bob Ferguson’s lawsuit, St. Joseph Medical Center in Tacoma and seven other CHI Franciscan hospitals will forgive as much as $20 million in debt, pay $2.22 million in refunds, pay the Attorney General’s Office $2.46 million, and rehabilitate the credit of thousands of patients who qualified for charity care between 2012 and 2017 but did not receive it. CHI Franciscan entered into a legally enforceable agreement to reform its charity care practices across all eight of its acute care hospitals. Attorney General Ferguson sued St. Joseph Medical Center, but the resolution involves charity care reforms for eight CHI Franciscan hospitals and provides restitution for patients withheld charity care at all eight hospitals.
“Medical debt is one of the leading reasons why families get trapped in poverty,” Ferguson said. “Hospitals are required to inform low-income patients about the availability of charity care. St. Joseph failed to live up to its duty, and imposed obstacles on vulnerable Washingtonians trying to access affordable care. Today’s resolution rights a wrong committed against thousands of patients across Washington.”
The resolution, filed in Pierce County Superior Court, affects thousands of Washington consumers who sought care at eight CHI Franciscan acute care hospitals.
The resolution requires a multi-faceted strategy to ensure any Washingtonian who qualified for charity care but did not receive it will get the relief they deserve. Every patient from January 2012 to December 2017 will have the opportunity to receive debt forgiveness or refunds if they qualified for charity care, whether they had insurance or not.
So far, at least 5,451 patients have been identified who will receive automatic refunds totaling $2.22 million. In addition, the Attorney General’s Office anticipates that several thousand patients will receive automatic debt relief, totaling as much as $20 million.
The Sisters of St. Francis of Philadelphia founded St. Joseph Hospital in 1891. According to St. Joseph’s website, the sisters “ministered to all people, regardless of race, religion or financial status.” The hospital’s stated vision is to “lead the transformation of healthcare to achieve optimal health and wellbeing for the individuals and communities we serve, especially those who are poor and vulnerable.”
The Attorney General’s Office filed a lawsuit against St. Joseph in 2017, asserting that the hospital repeatedly violated the state Consumer Protection Act by failing to make charity care accessible to tens of thousands of low-income patients. St. Joseph is one of eight acute care hospital systems in Washington operated by CHI Franciscan: St. Elizabeth Hospital, St. Francis Hospital, St. Anthony Hospital, St. Clare Hospital, St. Joseph Medical Center, Harrison Medical Center and Highline Medical Center.
In Washington, state law requires hospitals to make charity care accessible to patients whose income is at or below 200 percent of the Federal Poverty Guidelines. Hospitals are required to:
Provide notice of the availability of charity care both verbally and in writing;
Screen patients for charity care eligibility before attempting to collect payment, and;
Only require patients to provide one income-related document to prove charity care eligibility.
The lawsuit asserted that St. Joseph violated all of these requirements. Some of the unlawful practices continued until the Attorney General’s Office began its investigation.
St. Joseph demanded payment from patients up to three times before providing information about the availability of charity care or screening patients for charity care eligibility. The hospital also required patients to provide several forms of income documentation to show they were eligible to receive assistance.
Conifer, St. Joseph’s revenue management contractor, trained staff to use language designed to give patients the impression that they were required to pay for their care upfront.
For example, former employees reported they were told to “never volunteer information about St. Joseph’s charity care program to patients, even if they were obviously low income or homeless.” A 2015 “user guide” from Conifer directed employees to “avoid phrases that give patients the option to not pay.”
A former employee told Attorney General’s Office investigators that she was trained to “encourage patients to pay the deposit by indicating that I could only provide them with a charity care application if they paid a deposit first.” This violates the law’s requirement that hospitals screen for charity care eligibility before attempting to collect payment.
As early as 2014, St. Joseph senior management was aware of complaints about aggressive collection practices. The complaints included a patient who said that St. Joseph’s demand for a large upfront payment made him reconsider whether to have heart surgery.
Another complaint came from one of St. Joseph’s own employees, who had difficulty accessing charity care for her own medical bills.
The employee was assured her accounts were on hold while her charity care application was being processed, but then was served with a debt collection lawsuit over the accounts.
“This is terrible news from a very credible employee,” a senior VP wrote when forwarding the September 2014 email, adding that the labor union representing some St. Joseph employees had relayed similar complaints. She noted the union “is telling us it happens on a regular basis.”
One of the recipients, St. Joseph’s chief financial officer, commented, “we probably need to shore up our processes. I’m afraid this is going to backfire on us if we are not very careful very soon.”
Who Will Get Relief
All patients who received care at any of the eight hospitals between 2012 and 2017 will have the opportunity to receive relief.
All uninsured patients -- likely tens of thousands of patients statewide — will receive an attestation form in the mail to receive relief. Patients should complete the attestation that their income was at or below 200 percent of the federal income level at the time of treatment. Eligible patients will receive a refund or discharge of their medical bills.
In addition to the blanket notification to uninsured patients, a third party is reviewing uninsured patient financial accounts for automatic relief.
So far, the third-party review has determined that CHI Franciscan withheld charity care from at least 5,451 charity-care eligible patients who paid some or all of their hospital bills. These patients will receive automatic refunds totaling $2.22 million.
An additional third-party review will screen an estimated 7,000 uninsured patients who received care at a CHI Franciscan hospital between 2012 and 2017 for charity-care eligibility. These individuals owe approximately $26 million. Once charity-care eligible patients are identified, CHI Franciscan must forgive any unpaid medical bills. The Attorney General’s Office estimates that CHI Franciscan will provide up to $20 million in automatic debt forgiveness to thousands of patients burdened by debt as a result of its unlawful conduct.
The Attorney General’s Office expects most, if not all, affected patients to receive automatic relief as a result of these reviews. However, the notice and form will be mailed to all uninsured patients to ensure no one is missed.
Moreover, CHI Franciscan is required to contact credit bureaus in order to rehabilitate patients’ credit that suffered because of the medical debt. CHI Franciscan will notify the credit reporting bureaus that their accounts are paid in full and request that they delete any reports indicating the medical bills were delinquent. Affected consumers should check their credit reports to ensure this happened. If it did not, they should contact the Attorney General’s Office at www.atg.wa.gov/file-complaint or 800-551-4636.
Insured patients will not receive a notification in the mail. Those who believe they qualified for charity care when they received care should call CHI Franciscan at 888-779-6380 and request a charity care application. If they qualify, they will also receive refunds and debt relief of their out-of-pocket costs. Insured patients who are unable to provide income documentation from the time of their treatment will be able to provide a written statement to apply for charity care.
In addition to relief for consumers, today’s agreement also requires the eight hospitals to not only comply with Washington’s charity care law, but to go above and beyond for the next five years, providing charity care to patients with an income up to 300 percent of the federal poverty level.