MultiCare loses 2 rounds in court

The health system and a collection agency are accused of conspiring to defraud accident victims

Staff writerSeptember 23, 2013 

MultiCare Health System lost two rounds in court recently in its fight against allegations it and one of its contractors conspired to defraud accident victims out of settlement money.

The first occurred Sept. 13, when Pierce County Superior Court judge Stephanie Arend ruled that a plaintiff in one of two lawsuits against MultiCare and collection agency Hunter Donaldson had a decent chance at winning her case.

The second took place Sept. 16, when U.S. District Court Judge Benjamin Settle decided a suit involving MultiCare’s use of medical liens to try to recoup treatment costs from some patients should be heard in state court, not federal court as the defendants prefer.

MultiCare spokeswoman Marce Edwards declined to comment on the decisions, referring a reporter to previous statements in which MultiCare defended the practice of issuing medical liens. “We believe the cases in which Hunter Donaldson has filed medical services liens on behalf of MultiCare Health Systems were cases where a lien filing was appropriate,” MultiCare said in a statement sent to The News Tribune in June.

Plaintiffs’ attorney Darrell Cochran said the recent court decisions were a boon to his clients.

“Judge Arend’s ruling doesn’t yet hold that the liens are invalid and, therefore, unusable, but it does mean that she believes we are likely right and wants each side to fully brief it. That’s a motion we are preparing now,” Cochran told The News Tribune.

“It does mean that any continuing effort by Hunter Donaldson and MultiCare to use these liens to continue extracting money from its patients really violates the public trust in a way that should be punished under the law, both criminally and civilly.”

MultiCare and Hunter Donaldson are fighting two lawsuits in which the plaintiffs allege improper medical liens were filed against them.

State law allows some health-care providers, including hospitals and doctors, to place a lien against money an accident victim might get from successfully suing or settling with the person responsible for his or her injuries.

MultiCare has said the liens are necessary to recoup costs of treatment provided to accident victims that commercial insurance doesn’t cover. MultiCare employs Hunter Donaldson, a collection agency headquartered in California, to file medical liens on its behalf.

It voluntarily suspended using Hunter Donaldson to file such liens when it was first sued over the issue in April.

The plaintiffs contend Hunter Donaldson knowingly used a notary public not authorized to work in Washington state to file liens against thousands of MultiCare patients, and in one of the cases they’ve sought class-action status for their lawsuit.

They also allege MultiCare employees, including a former executive, conspired “to provide false residency information for and falsely endorse” the Hunter Donaldson employee acting as the notary on MultiCare’s behalf.

Using an improper notary invalidates the liens, the plaintiffs contend.

“Defendants’ deceptive and unlawful medical lien practice has caused great financial harm to plaintiffs and to the proposed class by obstructing and/or delaying settlement of claims and by extorting payments from plaintiffs and the proposed class from third-party damage recoveries,” one of the lawsuits states.

MultiCare and Hunter Donaldson have denied wrongdoing and asked Settle to dismiss one of the lawsuits outright.

That suit was brought in April by Pierce County residents Velma Walker, James Stutz, Karl Walthall, Gina Cichon and Melanie Smallwood. It originally was filed in Pierce County Superior Court but was moved to U.S. District at the request of the defendants.

Lawyers for Hunter Donaldson wrote in pleadings in that case that the plaintiffs are mad at the wrong people.

“At its core, this lawsuit is more about plaintiffs’ dissatisfaction with the statutory scheme providing for medical liens in Washington rather than any wrongful actions on the part of defendants,” attorney Cori Gordon Moore wrote on behalf of Hunter Donaldson.

Moore also wrote the plaintiffs still would be on the hook for repaying their medical bills out of third-party settlements even if it’s proven in court the original liens are invalid, which Moore did not concede.

On Sept. 16, Settle declined to dismiss the case and agreed with the plaintiffs that Pierce County Superior Court is the proper venue for the action.

Citing previously settled case law, Settle ruled the “controversy is at its core a local one” and sent the case back to state court, records show. Further proceedings have yet to be scheduled.

Arend’s ruling came as the result of a second suit filed against MultiCare and Hunter Donaldson over the same issue. Cochran, who also is representing the original group, filed that suit on behalf of Christina Miesmer in state court earlier this month.

Miesmer contended she, too, was a victim of an allegedly improper medical lien and that the defendants were unfairly holding up money from an insurance settlement.

MultiCare and Hunter Donaldson argued otherwise, but Arend sided with Miesmer, and ordered at least some of her settlement money freed up while the case proceeds.

The plaintiff “has demonstrated that she has a reasonable likelihood of succeeding on the merits of her case at trial with respect to the notary and signature on the lien,” according to the order Arend signed.

MultiCare pointed out that ruling applies only to Miesmer, not to plaintiffs in the other case.

Cochran didn’t disagree but said the ruling has far-reaching implications.

“It does apply to the one case, but all the liens are exactly the same, with the exact same fraudulent notary problem at the root,” Cochran told The News Tribune. “That’s why the implications are huge.”

A trial in that case is scheduled for March 2015.

Adam Lynn: 253-597-8644
adam.lynn@thenewstribune.com
@TNTadam
facebook.com/TNTadamlynn

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