MultiCare says it will compensate patients for bad liens

March 28--MultiCare Health System this week announced it has severed ties with a collection agency it hired to file medical liens on its behalf, and the regional health-care giant apologized to patients hurt by what it called the vendor's "improper practices."

President and CEO Diane Cecchettini said MultiCare will offer compensation to patients who suffered financial losses as a result of improperly filed liens. The system has set up a toll-free number for people who have questions or concerns.

It also has hired a company to replace its vendor, California-based Hunter Donaldson, and "tightened our internal controls" to better monitor how and when such liens are filed, said Chris Knackstedt, the system's chief financial officer.

"We want to do what's right by our patients," Cecchettini said. "We apologize to anyone who's been harmed by this."

But a lawyer for Hunter Donaldson took issue with MultiCare's characterization of the situation -- and the health system's shifting of blame to his client -- and the attorney for six people suing MultiCare and Hunter Donaldson over the liens said the health system's announcement has done nothing to "put an end to our litigation."

"We're disappointed and discouraged in the approach MultiCare has taken in terminating our contract," said Kevin Smith, general counsel for Hunter Donaldson.

MultiCare and Hunter Donaldson are embroiled in at least three lawsuits in Pierce County stemming from their use of liens to recoup unpaid medical bills.

Seven people contend MultiCare and Hunter Donaldson conspired to file improper liens against monetary settlements they received after being hurt by third parties in accidents. Mount Rainier Emergency Physicians also is named as a defendant.

State law allows some health-care providers, including hospitals and doctors, to seek such liens to recover the cost of providing care to patients who have no medical insurance or other ways to pay.The plaintiffs contend Hunter Donaldson used an improperly registered notary public to file medical liens against settlements won by up to 5,000 MultiCare patients since 2010. Some of those people had commercial insurance and should not have been subject to liens, the plaintiffs argue.

Attorney Darrell Cochran represents six of the plaintiffs and is seeking class-action status for one of the lawsuits. He has argued in court records that the alleged conspiracy deprived accident victims of money they were awarded for pain and suffering and other damages or tied up their settlement money while they disputed the liens.

MultiCare, he said, used the alleged scheme to "maximize its profits" by going after settlement money instead of negotiating with insurance carriers.

The defendants have denied wrongdoing.

"Both MultiCare and Hunter Donaldson believe that the lawsuits are without merit," Smith said.

Smith said Thursday that Hunter Donaldson did not realize at the time that its notary public's application was flawed and immediately rectified the situation when notified otherwise.

"We had no idea at the time that that was wrong or incorrect or challengeable," he said.

Smith also denied his client filed improper liens or did anything to violate MultiCare policies.

MultiCare launched an internal investigation into liens filed by Hunter Donaldson shortly after the first lawsuit was filed last year. Preliminary results were reported this week in a statement released by the health system.

"In the course of our review, we have discovered instances of improper practices by this vendor and improper actions by a MultiCare employee, who is no longer with MultiCare," according to the statement.

The statement does not name the former employee, but court records identify him as Jason Adams, who worked as the system's vice president of revenue cycle before resigning and leaving the state when the lawsuits began.

Adams procured the contract with Hunter Donaldson and allowed one of its employees to use his home address on her application to become a Washington state notary, court records show.

"As a result of an independent investigation, we found that our medical lien program did not have enough internal checks and balances," according to the statement. "We also discovered information indicating that our former employee had a questionable business relationship with the primary owner of Hunter Donaldson and was not acting entirely in MultiCare's best interests. We are continuing to investigate this relationship."

Attempts to contact Adams have been unsuccessful. Court documents suggest he has moved to Maine.

Smith called MultiCare's contentions that it did not know what was going on with the liens "simply not consistent with the facts."

"MultiCare, at its highest levels of management -- even at the board of directors -- has been aware and involved in the medical lien process from the beginning," Smith said. "MultiCare was keenly aware of what was going on."

Cochran agreed.

Citing MultiCare emails he's received as part of the litigation, Cochran said health system administrators aside from Adams knew about what he characterized as Hunter Donaldson's aggressive pursuit of medical liens.

"Trying to blame it on a rogue employee and its contractor contradicts the evidence he have in our files," Cochran said.

Smith also denied there was any untoward relationship between Adams and his client.

Yes, they worked together closely, he said, but only because that was what was required to put together a complicated transaction.

"We know that Mr. Adams reported regularly to the MultiCare board of directors about the work that we do," he said.

Cecchettini, Multicare's president and CEO, told The News Tribune earlier this week that the system might seek legal redress against Adams if it's proven he violated Multicare's ethics and business policies in his dealings with Hunter Donaldson.

Knackstedt said it is unclear how many MultiCare patients might be eligible for refunds. Hunter Donaldson's reluctance to turn over records is frustrating the system's investigation, he said.

"Hunter Donaldson has some of that detailed information that we need," Knackstedt said.

Smith said that "simply is not true."

"They have all the information," he said. "I can't speak to how they read it, analyze it or understand it. And since they severed their relationship with us, it would be difficult for us to help them with that."

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