Accretive banned from Minnesota for at least 2 years, to pay $2.5M

Accretive Health will be barred from operating in Minnesota for two to six years under a settlement agreement announced Monday by Minnesota Attorney General Lori Swanson.

The agreement ends a six-month legal battle in which Swanson had accused the Chicago consulting firm of deceiving patients, harassing them for money in emergency rooms and mishandling patient data at Fairview and North Memorial hospitals.

Accretive, one of the country's largest health care consulting firms, has consistently denied any wrongdoing. In a statement Monday, the company said there were "no findings of fault," and that it agreed to the settlement "in order to prevent this matter from being a continued distraction."

Under the agreement, Accretive will pay about $2.5 million to the state of Minnesota as part of a "restitution fund" administered by a retired judge to compensate patients.

The company also will be forced to give up its only remaining client in Minnesota, North Memorial Medical Center in Robbinsdale, by Nov. 1, and will be banned from all business in the state for two years. After that, it would need permission from the attorney general to return to Minnesota before November 2018.

The settlement was approved Monday by U.S. District Judge Richard Kyle in St. Paul.

At a news conference Monday, Swanson said it may be unprecedented in Minnesota for a publicly traded company the size of Accretive to get thrown out. But the harsh action was justified by the severity of the case, she said. All but two of the 60 patients who provided affidavits about Accretive's intimidation tactics had good insurance, Swanson said.

Hospital emergency rooms "should be a solemn place, not a place for a financial shakedown of patients," she said. "It is good to close the door on this disturbing chapter in Minnesota health care."

Ann Johnson, an emergency room patient at Fairview Southdale who complained to Swanson's office about Accretive's tactics, said after the news conference that it's a relief to know Accretive is banned from Minnesota.

"I would hate to see one more loved one have to go through this," she said. "You are so vulnerable when you are in the emergency room.''

Lost laptop triggered probe:

Swanson and Accretive had been locked in an escalating battle since January, when Swanson sued the company over the loss of an unencrypted laptop computer containing data on 23,500 Minnesota patients. The incident triggered a broader investigation of Accretive's business practices, and led to a blistering report in April about heavy-handed debt-collection tactics, including pressure on patients to pay before they got treatment.

Some patients said they were asked to pay while in the emergency room, lying on a gurney or hooked up to morphine. One woman said she was asked for payment while she was being treated for a miscarriage.

The fallout, which drew national headlines, cost Mark Eustis his job as Fairview CEO and prompted at least two federal investigations, including a Senate hearing in May. Swanson said she has referred several patient affidavits to federal officials. Under federal law, hospitals are required to assess and stabilize emergency room patients without regard to their ability to pay.

Accretive, however, said Monday that Swanson "did not and could not identify a single patient" who had been denied care or had a bad experience with an Accretive employee. It continued to assert that Swanson's actions were "unnecessarily aggressive" and cost more than 100 Minnesotans their jobs.

Joe Anthony, an attorney for Accretive, said it settled because the attorney general was making it too difficult to do business in the state. Accretive was confident it would prevail in court, but in the meantime would have to deal with more negative publicity, he said.

Fairview cut its ties with the company in April. In June, Accretive also lost its contract with Maple Grove Hospital, partly owned by Fairview. North Memorial, Accretive's only remaining customer in Minnesota, issued a brief statement saying that the two had "mutually decided" to end their contract before Monday's settlement, and that their relationship "was different than what was depicted in news stories about other hospitals."

As part of the settlement, Swanson agreed to drop her lawsuit. Accretive agreed to return all Minnesota patient data to its former clients.

For Accretive, the settlement comes one week before it is scheduled to report its second-quarter earnings. It had a profit of $29 million in 2011, on annual sales of $786 million. Fairview, which paid Accretive $100 million last year for consulting services, had been its largest client by far since 2010.