MultiCare Health System has agreed to pay $7.5 million to settle a lawsuit brought against it and one of its former contractors by patients who claim the regional health care giant misused the state’s medical lien law to squeeze more money out of them than it could get by billing their insurance.
MultiCare attorneys and those of the plaintiffs signed the agreement Monday, court records show.
A hearing is scheduled Friday in Pierce County Superior Court for Judge Jerry Costello to consider the agreement. If he gives preliminary approval, lawyers will begin trying to notify about 4,000 people who could benefit from the settlement.
They would have a chance to weigh in on the proposal, probably in January, before final court approval makes funds available.
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MultiCare, which has fought the lawsuit vigorously for more than 18 months, admitted no wrongdoing in reaching the settlement.
The parties agreed to settle “in order to put to rest all controversy and to avoid further burdensome, protracted and costly litigation,” court records show.
“As a community health care system, we take very seriously our responsibility to operate in an ethical and transparent manner,” MultiCare spokeswoman Marce Edwards said Tuesday. “Settlement is the right thing to do for our patients.
“The settlement is a compromise of plaintiffs’ disputed claims, including claims of wrongdoing by Hunter Donaldson,” the health system’s collection agency. “Although we had a number of legal defenses, our goal was to conclude the plaintiffs’ lawsuit.”
The plaintiffs’ attorney, Darrell Cochran, said the agreement was “a long time coming.”
“The business of medicine should not be allowed to harm the public’s trust in the practice of medicine,” he said. “And that’s definitely what was happening here.
“Now, we can argue about whether it was two or three bad eggs or a more widespread corporate culture, but a definite pattern emerged where hospital revenue became a higher priority for some executives than patient care.
“And that’s not right. Patients deserve better; the doctors and nurses deserve better.”
The plaintiffs’ attorneys will seek one-third of the settlement amount to cover their fees and costs, court records show.
Five people who sued MultiCare in two actions wrote affidavits in which they said they believe the agreement is fair. Those lawsuits were merged into one, and that suit is expected to be certified as a class action as part of the settlement agreement.
The litigation began in April 2013 when Velma Walker, Melanie Smallwood, James Stutz, Karl Walthall and Gina Cichon sued MultiCare. Christian Meismer also sued later that year. Cichon’s claim eventually was dismissed.
They sought treatment at MultiCare facilities after being hurt as the result of actions by third parties.
The plaintiffs contended Hunter Donaldson, with the knowledge of MultiCare executives, improperly filed medical liens against settlements they reached with those responsible for their injuries rather than billing the plaintiffs’ insurance carriers.
The practice allowed MultiCare to get more money for the reimbursement of medical services it provided, which often left little money to compensate accident victims for pain and suffering and other losses, the lawsuits contended.
Auto and medical insurance often pays only a percentage of the costs of hospital treatment.
MultiCare countered that it had the right, and arguably the duty, to recoup as much money as possible for the services it provided and pointed out that the law allowed it to seek no more than 25 percent of a settlement to recover the costs of its services.
The combined lawsuit included allegations that former MultiCare executive Jason Adams helped a Hunter Donaldson employee get a Washington state notary public license even though she lived and worked in California.
The employee notarized thousands of liens filed in Pierce and King counties, liens the plaintiffs said were illegal because the license was a sham. The state later rescinded the woman’s license.
Adams later left MultiCare, and Hunter Donaldson, which MultiCare since has fired, filed for bankruptcy last year.
MultiCare on Tuesday laid much of the blame for the controversy on Hunter Donaldson.
“Last spring, we identified circumstances where it appeared liens had been improperly filed, but we also learned of some other circumstances where Hunter Donaldson had failed to follow the terms of our contract and the law as it relates to some patients who may have had commercial health insurance coverage,” Edwards said.
MultiCare continues to use the liens to recoup money where appropriate, she said.
“We have terminated our relationship with Hunter Donaldson and hired a new company that handles medical liens in a manner consistent with the law and MultiCare’s values,” Edwards said. “We also have tightened our internal controls, which include requiring a MultiCare-employed notary to personally notarize every medical lien.
A lawyer for Hunter Donaldson did not return a call for comment Tuesday.