Providence and Swedish health services have been fined $1.4 million after the Washington Attorney General’s Office determined they had used a laboratory that fell outside its network, resulting in excessive bills.
Providence Health & Services and Swedish Health Services have agreed to pay $1.4 million to settle a complaint filed by the Washington Attorney General’s Office alleging the health-care providers used a laboratory that was out-of-network for many patients, resulting in unnecessary costs.
A civil complaint filed in King County Superior Court alleged that the two affiliated health-care providers for more than a year referred pathology tests to the laboratory CellNetix without informing patients that the company was out-of-network.
Attorney General Bob Ferguson alleged the practice violated the state’s Consumer Protection Act.
As a result of the settlement, patients who paid the out-of-network charge will receive a total of $385,101 in restitution. As many as 6,400 patients were affected, according to the complaint.
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Providence and Swedish entered into a consent decree to resolve the lawsuit without admitting liability.
“Patients deserve to know what to expect from their medical bills,” Ferguson said. “Navigating our health system is challenging, and this type of unfair and deceptive conduct makes things harder for patients.”
Premera let Providence and Swedish know in 2015 that CellNetix had been dropped from its network. Yet, according to an attorney general’s investigation, the hospitals did not notify patients for more than a year that the lab had fallen from preferred status.
The AG said Providence and Swedish officials had received internal warnings about the billings, in addition to the heads-up from Premera. A hospital executive pointed out that patients would not be pleased to know test were being done by a lab not covered by insurance. An employee who received a bill from CellNetix after being treated at Providence also raised the alarm.
Despite the warnings, Providence and Swedish each renewed the CellNetix contracts without ensuring Premera patients wouldn’t have to pay additional costs.
Patients were billed between $7 and $7,000 for tests during the 13 months CellNetix was not covered by Premera, according to the lawsuit.
In a statement, Providence and Swedish said, “We know that this experience frustrated our patients who received these unexpected bills and we have taken steps to prevent this issue from arising again.”
The consent degree will require Providence and Swedish to notify patients of an out-of-network lab or mitigate extra costs if one is employed.
One patient, Karen Stricklin of Seattle, was unexpectedly billed $600 after a breast biopsy at Swedish. Stricklin said she is much more careful now about understanding what insurance will pay.
“Getting a breast biopsy is not the best day of my life. It was nerve wracking. Then getting a bill for $600 — it was insulting,” she said.