Medical Debt Collector to Settle Suit for $2.5 Million

Accretive Health, one of the nation's largest collectors of medical debt, has agreed to pay $2.5 million to the Minnesota state attorney general's office to settle accusations that it violated a federal law requiring hospitals to provide emergency care, even if patients cannot afford to pay.

As part of Monday's settlement, Accretive Health is also barred from contracting with hospitals within the state for at least two years, effectively ending its business at three Minnesota hospitals. For four years after that, the company will have to obtain permission from the attorney general before resuming business in the state.

In April, Lori Swanson, the Minnesota attorney general, disclosed hundreds of Accretive's internal documents that outlined aggressive collection tactics, including embedding debt collectors in emergency rooms and pressuring patients to pay before receiving treatment.

Carol Wall, a 53-year-old Minnesota resident, said "a woman with a computer cart" told her she owed $300 as she was "vaginally hemorrhaging large amounts of blood" at an Accretive-affiliated emergency room in January, according to court records.

Another patient, Terry Mackel, 50, said he was asked to pay $363.55 at another Accretive-affiliated emergency room in Minnesota as he waited "alone, groggy and hooked up to an IV" waiting to see an emergency room doctor, according to court documents. Fearing that it was the only way to see a doctor, both patients paid.

Accretive Health declined to comment about Ms. Wall and Mr. Mackel. "The conduct described by these patients is directly contrary to Accretive Health's policies, practices and training," Accretive said in a statement.

In an interview Monday, Ms. Swanson said "a hospital emergency room should be a sanctuary for the sick and wounded, not a hunting ground for collectors." The settlement will end a civil suit against Accretive, which Ms. Swanson filed in January after a laptop with patient information was stolen, saying that the company had violated state and federal debt collection laws and patient privacy protections.

"Even though we believe the claims against us were either baseless or exaggerated, we have used this opportunity to carefully examine our own practices in order to ensure we are setting the very highest standards for our own performance and achieving the best possible outcomes for hospitals, patients and communities," Mary Tolan, Accretive Health's chief executive, said in a statement.

The revelations in Minnesota have reverberated across the country because they raise concerns that such aggressive tactics have become widespread at hospitals. Accretive Health contracts with some of the largest hospital systems in the country to help them recoup money on unpaid bills that have piled up during the financial crisis and the economic downturn.

Regulators in Illinois, where Accretive is based, have been watching the developments closely, according to Sue Hofer, a spokeswoman with the state Department of Financial and Professional Regulation.

Pete Stark, the Democrat of California who is the highest ranking member of the House subcommittee that oversees Medicare and other health services, led an investigation in March into the company's practices.

Hospitals have long hired outside collection agencies to pursue patients after they have received care. But mounting financial pressures have resulted in hospitals letting collection firms in the front door, turning over the management of their staffing, like patient registration and scheduling, along with their collection activities, according to Ms. Swanson.

Concerns are escalating that such cozy relationships will threaten patient privacy and care, according to consumer advocates.

Still, hospitals say that they are in a tough position. The more than 5,000 community hospitals in the United States provided $39.3 billion in uncompensated care