Rahm Emanuel, Chicago Mayor, Asks Minnesota To Ease Off Hospital Debt Collection Firm

Chicago Mayor Rahm Emanuel wants his Democratic colleague Minnesota Attorney General Lori Swanson to lay off hospital debt-collector Accretive Health, which is based in the Windy City.

Accretive Health is under fire from state and federal officials for allegations that it improperly pressured and harassed patients for money -- even going so far as stationing aggressive debt collectors in hospitals to pursue patients. The company has mounted a campaign against the charges, including hiring federal lobbyists and hinting that it may sue Swanson. The firm says it helps patients find health coverage.

Swanson should "cease efforts to publicly prosecute" Accretive Health, which contracts with dozens of U.S. hospitals to collect unpaid bills from patients, Emanuel wrote the attorney general on Friday. Swanson last month issued reports blasting Accretive Health for embedding debt collectors inside two Minnesota hospitals and allegedly employing tactics including hassling emergency-room patients for money, including demanding payment of pending bills from previous treatments before a doctor sees them.

The Minnesota attorney general fired back on Tuesday to defend her investigations and rebuff Emanuel's requests that she change course. "This is a law enforcement matter, and it will continue to be addressed as a law enforcement matter. The patients who suffered indignities from Accretive will be heard," she said in a written statement. Swanson also accuses Accretive Health of pulling political strings by engaging Emanuel and several Democratic lobbyists in Washington.

By seemingly siding with the debt-collection company at the center of the controversy, Emanuel, a former congressman and previous White House chief of staff to President Barack Obama, aligns himself against other Democratic officials who have targeted Accretive Health since Swanson's reports and publication of a New York Times article detailing the company's actions.

Accretive Health is based in Chicago and employs more than 2,700 people, according to Yahoo Finance. The bad publicity has taken a severe toll on Accretive Health, which has lost clients and seen its share prices plummet by more than half. Accretive Health's stock has fallen from $19 on April 23, the day before Swanson's reports and the Times story came out, to $8.65 Monday at the close of trading in New York.

U.S. Health and Human Services Secretary Kathleen Sebelius said last week that her department is looking into the charges that "aggressive contractors were confronting patients in the hospital setting," though she didn't mention Accretive Health by name. In addition, Democratic Reps. Henry Waxman (Calif.), Diana DeGette (Colo.) and G.K. Butterfield (N.C.) scheduled a private meeting with Accretive Health representatives in Washington on Friday to discuss the matter. Sen. Al Franken (D-Minn.) and Rep. Pete Stark (D-Calif.) also have made inquiries about Accretive Health's practices. The company's debt-collection activities may be illegal, Waxman, Stark and other Democrats claim.

Swanson's accusations against Accretive Health and two hospitals in her state, Fairview Health Services and North Memorial Health Care, illustrate a confluence between a hospital industry facing financial constraints and a debt-collection industry that has grown increasingly aggressive. Hospitals must treat anyone who arrives at an emergency room regardless of an ability to pay and wind up stuck with unpaid bills -- charges totalling $39.3 billion in 2010, according to the American Hospital Association. Debt-collection companies sometimes use harsh tactics to collect from those who owe money, including lies and threats.

Emanuel has requested that Swanson meet with Accretive Health CEO Mary Tolan to discuss her investigations and actions, including a lawsuit that Minnesota filed in January against the company alleging violations of patient-privacy laws; the allegations arose from an incident in which Accretive Health employee lost a laptop containing sensitive information about 23,500 people.

Echoing a complaint lodged by Accretive Health attorneys last week, Emanuel also noted that Swanson's office canceled a scheduled meeting with Tolan prior to her release of investigative reports. Emanuel and Swanson also spoke by telephone May 1, the letter indicated, which Emanual spokesman Tom Alexander confirmed.

"I would urge you to allow this meeting to go forward," Emanuel wrote. "In the meantime, I request that the parties cease efforts to publicly prosecute this matter and rather try to resolve the matter privately. I also request that there should be no further contact between your Office and the Company's clients pending the outcome of this meeting. Please confirm to me that this is the path we are on and let me know the date for which the meeting is scheduled," the letter continued.

But according to Swanson, Tolan declined to attend the most recent meeting between the attorney general's office and Accretive Health on April 27.

Alexander didn't respond to questions about whether Emanuel is concerned about Swanson's allegations or if he or his administration has contacted Sebelius or other Democratic federal officials. "The Mayor believes these conversations between AG Swanson and Accretive should happen directly and in private, not through the media. So he simply asked her to take up the matter with the company directly," Alexander wrote in an email.

Accretive Health has pushed back hard against Swanson. The company asked a federal judge to toss her lawsuit and its lawyers indicated last week that Accretive Health may sue her for damages it claims it has suffered since she went public. "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," Accretive Health's lawyer, Andrew Clubok of Kirkland & Ellis, wrote in a letter to Minnesota Solicitor General Alan Gilbert last week.