State sues Capital Medical Center, alleging it denied charity care

The state Attorney General’s Office filed a lawsuit Friday alleging that Capital Medical Center had violated state law by withholding charity care from thousands of low-income patients.

The lawsuit, filed in Thurston County Superior Court, alleges that the hospital on Olympia’s west side aggressively demanded payment from patients without screening them for charity-care eligibility, or informing them about the availability of charity care.

“Capital’s unlawful collections practices prevented thousands of Washington’s neediest patients from receiving charity care,” Attorney General Bob Ferguson said. “I am committed to ensuring that all Washingtonians, regardless of income, have access to affordable care.”

Between 2012 and 2015, Capital Medical Center consistently provided less charity care than the regional average, according to the Attorney General’s Office. Only 0.37 percent of the hospital’s revenue went to charity care, meaning Capital Medical Center had the lowest charity care rate in Washington.

The hospital could be penalized as much as $2,000 per individual violation of the Consumer Protection Act.

This is the second South Sound hospital sued by the Attorney General’s Office in recent weeks. On Sept. 5, the office made similar allegations against St. Joseph Medical Center in Tacoma.

Capital Medical Center had been discussing charity care with the Attorney General’s Office, and made changes to its program in 2016, said Jeff Atwood, Capital Medical Center’s senior vice president of marketing and communications.

He told The Olympian on Friday that he believed the two sides were headed toward an amicable resolution.

“We are very disappointed to learn of the Office of the Attorney General’s recent filing against Capital Medical Center,” Atwood said.

“Even though Capital previously addressed the issues included in this lawsuit and is providing financial assistance (and) charity care to more individuals than state law requires, the attorney general filed this lawsuit. We remain committed to serving all of the people within our community.”

Capital Medical Center is a 110-bed, for-profit hospital. It is owned by RCCH HealthCare Partners, which owns 17 hospitals in 12 states.

The state’s Charity Care Act requires all Washington hospitals to make free and reduced-cost charity care available to low-income patients. Hospitals must notify patients of their right to apply for charity care, and screen patients for eligibility before attempting to collect payment.

The Attorney General’s Office alleges that Capital Medical Center limited charity care to patients with urgent medical needs, rather than allowing all low-income patients to access charity.

The hospital allegedly coerced payment from low-income outpatients by refusing to schedule or threatening to cancel appointments for patients who couldn’t pay upfront.

Hospital employees also “aggressively demanded” payment from patients who requested information about charity care, according to the state. The aggressive collection practices extended to patients admitted to the hospital.

“Capital created a culture that elevated aggressive collection over access to charity care. Capital provided little to no training to staff on their charity care obligations, but provided extensive direction and training on upfront collections,” according to the complaint, filed Friday.

One patient alleges that in 2012, she tried to schedule a surgery. She was unemployed and uninsured. She offered to pay through a payment plan, and wasn’t provided a charity care application. A hospital administrator reportedly told staff, “We will not move forward with this patient,” according to the lawsuit.

A former Capital Medical Center employee reported that she was trained to discourage patients from submitting charity care applications.

This story was originally published September 22, 2017 at 4:48 PM with the headline "State sues Capital Medical Center, alleging it denied charity care."