Providence settles lawsuit over low-income patient billings

SEATTLE — Providence Healthcare, which operates Kadlec Regional Medical Center in Richland, among others, must forgive more than $137 million in medical debt and refund more than $20 million to low-income patients, according to an announcement from Washington Attorney General Bob Ferguson. 

The agreement, filed today in King County Superior Court, resolves Ferguson’s lawsuit against all hospitals operated by Providence and its Washington affiliates Swedish Medical Center and Kadlec. 

The $157.8 million resolution will provide full refunds, plus interest, and debt forgiveness for 99,446 individuals.

State law requires hospitals to provide medical financial assistance, also known as charity care, to Washingtonians based on their income level, for both insured and uninsured patients, according to the announcement. Hospitals are required to notify patients about this protection and check to see whether they are eligible for discounts on their out-of-pocket expenses.

Ferguson’s lawsuit asserted that between 2018 and 2023, Providence routinely disregarded its legal obligations, the announcement said. Instead, Providence trained staff to aggressively ask for payment from patients who were likely eligible for financial assistance, or simply billed them without determining if they qualified. In thousands of cases, Providence knowingly sent low-income patients — including Medicaid enrollees — to debt collectors. One of Providence’s own employees warned leadership that the health system’s practices were “sending the poor to bad debt,” the lawsuit claimed.

In addition to paying refunds and providing debt forgiveness, Providence must implement new systems to determine whether patients are eligible for financial assistance before attempting to collect payments from them, the announcement said. It also must stop all deceptive collection practices identified in Ferguson’s lawsuit. Providence will also pay the Attorney General’s Office more than $4.5 million to reimburse the costs of the investigation and help fund continued consumer protection work.

“Washingtonians concerned about the rising cost of health care should know that my team is fighting to enforce critical protections that improve affordability,” Ferguson wrote in the announcement. “We won’t stop. Most Washingtonians are eligible for significant discounts on their out-of-pocket hospital expenses, including co-pays and deductibles. We will ensure that hospitals honor this important law.”