Debt Collectors At Hospitals Face Federal Inquiry Over Allegations Of Hassling Patients

Government regulators are looking into reports of aggressive debt collectors hassling patients at hospitals.

Health and Human Services Secretary Kathleen Sebelius said on Wednesday that her department is "looking into" allegations that "aggressive contractors were confronting patients in the hospital setting, not making it clear that they were actually bill collectors and not part of the hospital system."

Sebelius was speaking at a press conference with Attorney General Eric Holder announcing the arrest of more than 100 people in major health care fraud busts.

Democrats in Congress are also demanding answers about hospital debt collection. Rep. Henry Waxman (Calif.), the most senior Democrat on the House Energy and Commerce Committee, as well as Democratic Reps. Diana DeGette (Colo.) and G.K. Butterfield (N.C.), sent a letter Wednesday to Mary Tolan, CEO of Accretive Health, asking her to attend a briefing with them on Friday. Accretive Health, the debt-collection company that reportedly embedded employees inside hospitals and allegedly hassled patients at their bedsides and in emergency rooms, was not mentioned by Sebelius in her speech.

Rep. Pete Stark (D-Calif.) and Sen. Al Franken (D-Minn.) previously called for investigations into Accretive Health. Franken also wants a response from Tolan by Friday, The Hill reported. Representatives from Accretive Health will attend Friday's briefing with Waxman, company spokeswoman Rhonda Barnat said.

Debt collectors are employing an array of increasingly harsh tactics to get money for their clients and are even reportedly resorting to lies and threats. Hospitals, which must treat everyone who shows up at an emergency room regardless of their ability to pay, are under intense pressure to collect as much money as possible. They also face lower fees for the services they provide, especially from Medicare and Medicaid, and are suffering in the sluggish economy. The American Hospital Association says hospitals bore $39.3 billion in unpaid bills in 2010.

The methods allegedly used by Accretive Health at two Minnesota hospitals, Fairview Health Services and North Memorial Health Care, have raised the ire of state and federal officials. Accretive Health employees working inside the facilities pressured emergency room patients to pay upfront or to make payments on old bills, and even visited some patients in their rooms, according to Minnesota Attorney General Lori Swanson, who issued a lengthy report last month detailing the ways company employees try to extract money from patients who owe hospitals. Swanson also sued the company in January, alleging it violated privacy laws when an employee left a laptop computer with sensitive information about 23,500 patients in a rental car, from which it was stolen.

Accretive Health denies the charges and asked a federal judge to dismiss Swanson's lawsuit on Monday. Swanson's actions have harmed the company, which is considering "legal remedies for the damages that have already resulted and will continue to flow," Accretive Health's lawyer, Andrew Clubok of Kirkland & Ellis, wrote in a letter to Minnesota Solicitor General Alan Gilbert on Wednesday.

"Your Office has disclosed confidential documents, conducted negotiations in bad faith, and failed to investigate properly the allegations that Attorney General Swanson has now take to press," Clubok wrote.

The company has been hit hard by the negative publicity. Accretive Health stock lost more than half its value in the past two weeks. Shares were valued at $19 on April 23, the day before Swanson issued her report and The New York Times published a story about the company, but have plummeted. Accretive Health closed at $8.61 Wednesday and and at one point dipped to $8.41, the lowest price since the firm went public in May 2010.

Accretive Health made the unusual move of prohibiting the news media from a shareholder meeting Wednesday and declined to discuss the allegations about its practices with attendees, the Chicago Tribune reported.