Lawsuit: Everett hospital hid ‘charity care’ in the fine print

EVERETT — Alexandra Nyfors, 66, didn’t know her kidneys were failing last fall when an ambulance rushed her to Providence Regional Medical Center in Everett.

Nyfors, already diabetic, spent two weeks in the hospital because an infection caused her kidneys to shut down. Once discharged, however, Nyfors faced a new problem. She couldn’t afford the $2,000 bill Providence sent her.

“They said I had two options,” Nyfors said. “Straight up pay the $2,000 or pay $162.50 per month. Well, I don’t have $2,000.”

Nyfors made monthly payments, causing her to run out of grocery money at the end of every month. She was determined not to fall into debt, but unaware the hospital was required to help her financially — if she applied for charity care.

According to a recent lawsuit from the Washington State Office of the Attorney General, Nyfors’ experience isn’t an isolated incident. The lawsuit, filed in King County Superior Court, alleges 14 hospitals deceived low-income patients who were eligible for free or discounted hospital care — including Providence in Everett and Swedish Edmonds.

Enacted in 1989, Washington’s charity care law requires hospitals to absorb the cost of treating some of the state’s poorest patients, if there is an outstanding bill after insurance. Some charity care patients have no out-of-pocket expenses. Others receive discounts on their hospital bills, depending on their income level. However, patients must apply for charity care to receive it.

‘Unfair and deceptive practices’

The attorney general’s lawsuit claims the hospitals, all owned by or affiliated with Providence, violated the Consumer Protection Act by failing to tell patients they were eligible for charity care and referring more than 54,000 patients’ unpaid bills to collection agencies since 2019. The lawsuit seeks $70 million in debt relief and refunds for patients, as well as fines for the hospitals.

The attorney general’s office did not respond to a request for comment Friday.

Starting in 2018, Providence became more aggressive in collecting payments from patients, including from those it knew likely qualified for charity care, according to the complaint.

“Despite its mission, for years, Providence has engaged in unfair and deceptive practices that prevent many of the most vulnerable members of the communities it claims to serve from accessing free and reduced cost charity care,” reads the lawsuit. “… Rather than screening patients for charity care eligibility, Providence trains and encourages its agents to create the impression that all of its patients are obligated to pay for their care regardless of their income level.”

In a statement posted online last month, Providence expressed disappointment in what it called “inaccurate and unfair charges” regarding its financial assistance practices. Spokesperson Casey Calamusa provided The Daily Herald with another statement on Friday and declined to comment further.

“Throughout a patient’s care journey with us, we engage with the individual at multiple points in the process to make them aware of the availability of financial assistance and encourage them to apply,” read the statement, in part. “We proactively work with our patients to understand their unique situation and help them to work through any financial issue.”

In court documents, hospital representatives claimed they gave adequate notice to patients about charity care on registration forms, on signage throughout the hospital and in billing statements.

But that’s not sufficient, state attorneys argue. During registration, the only notice of charity care given to patients allegedly is “in broad-ranging and dense forms, which … staff members review with patients in a rushed, cursory manner if at all.”

Likewise, signage about charity care is posted “among a swarm of other notices.”

Furthermore, with an analytical tool provided by Experian, Providence already identifies patients who potentially qualify for charity care, state attorneys noted. Yet hospitals knowingly pursued collections from those patients anyway. Only after extensive collection attempts failed would hospitals write off those unpaid accounts as presumptive charity care, the lawsuit alleges — without ever telling the patient they qualified in the first place.

In court papers, Providence claims its hospitals typically provide charity in excess of its peer hospitals, per state data. The hospital system also says it awards “many millions of dollars” in free care, including for patients who don’t submit an application.

Providence attorneys also argue the hospitals shouldn’t be punished for voluntarily using “rough predictive tools to increase the amount of charity awarded” to patients who haven’t applied for relief.

According to court documents, Providence stopped pursuing collections from Medicaid patients in December, and from those who likely fell under 200% of the federal poverty line as of March 11.

‘A well known secret’

Edgar Hall, managing attorney of Washington Debt Law, represents clients in debt and frequently handles charity care cases involving different hospitals in Washington. Hall referred to charity care as “a well known secret in the trade.”

Most people who contact Hall’s law firm have never heard of charity care, even though hospitals are supposed to screen patients for eligibility. Hall’s clients are often seeking help with filing for bankruptcy.

“People come to me in crisis,” Hall said. “They’re crying, they don’t know where to go. Half the time my consults are really like a therapy consult, where I’m just trying to say, ‘Hey, you’ve got options.’”

The Northwest Consumer Law Center has seen the same trend.

“I’ve helped hundreds of people with charity care issues and not a single one was told they were eligible,” Executive Director Amanda Martin said. “Everyone we speak with is eligible for some level of charity care.”

Hall said hospital staff have tried to prevent his clients from applying for charity care in the past.

“Sometimes when I send people to request a charity care application, they will be told ‘It’s in collection, we can’t do it,’” Hall said. “… That’s a lie and I’ve heard that more times than I can tell you.”

Hall tells his clients to write out the charity care laws and show them to staff. He also advises clients to literally take out their phone and say they want the staff member on record denying them their application.

“They always break down and give them the application at that point,” Hall said.

Nyfors, the Providence patient, still hasn’t applied for charity care. It has been a tough few months since her hospital stay and — healthwise — she just isn’t feeling up to it.

Almost half the money she receives from Social Security goes toward medical expenses, including the hospital bill from Providence. Her annual income is about $22,000.

Previously, Nyfors worked as a technical writer and wrote software manuals. She became disabled in 2009, and has been living on disability income since.

Nyfors didn’t know charity care existed until she read about the lawsuit. However, she repeatedly stated her issue is with how the hospital handled her bill — not the doctors and nurses who saved her life.

“I feel like it’s really important to separate the people who are the caregivers from the business that Providence does, where they’re demanding payment,” Nyfors said. “The caregivers are good people, who really care. They really took good care of me.”

The Legislature recently expanded who is eligible for charity care with House Bill 1616.

The legislation requires large hospitals, such as Providence in Everett and Swedish Edmonds, to fully cover out-of-pocket expenses if a patient’s annual income is under 300% of the Federal Poverty Level, or $83,250 for a four-person household.

Large hospitals would also be required to provide at least some financial assistance to patients under 400% of the Federal Poverty Level, or $110,000 for a four-person household.

The bill is on the governor’s desk. If Gov. Jay Inslee signs the bill, changes to Washington’s charity care law would take effect in July.

Herald writer Zachariah Bryan contributed to this story.

Katie Hayes: katie.hayes@heraldnet.com; Twitter: @misskatiehayes.

Katie Hayes is a Report for America corps member and writes about issues that affect the working class for The Daily Herald.