WA company has to pay $410K for withheld hospital charity care

A company providing medical care at the Overlake Medical Center emergency room will refund more than $400,000 to low-income patients under an agreement with Washington’s attorney general. 

Between 2020 and 2026, Puget Sound Physicians failed to refund nearly $347,000 to more than 1,400 patients at Overlake in Bellevue who qualified for charity care. The company has contracted with Overlake to provide physician services at its emergency room. 

Washington state law requires hospitals to help low-income patients with out-of-pocket medical costs. It applies to people with or without health insurance. A few years ago, assistance was expanded to an estimated four million residents, leading to litigation from hospitals. 

The largest hospitals have to provide more financial aid than smaller ones. And if a patient pays their bill but is later found to qualify for this charity care, the hospital owes them a refund.  

In recent years, Washington hospitals have paid out more than $1 billion in charity care annually, but there have still been several instances of major hospitals not providing the required discounts.

As part of its Overlake contract, Puget Sound Physicians agreed to follow the hospital’s charity care policies. The company, which is made up of dozens of doctors, directly bills patients treated  in the emergency department.

Puget Sound Physicians attributed its failure to refund patients to unintentional accounting errors, according to a court order filed Tuesday. The company maintains that this doesn’t amount to a violation of the state’s Consumer Protection Act, while Attorney General Nick Brown’s office believed it constituted illegal unfair or deceptive trade practices. 

“Our state’s charity care laws are designed to make sure people never forgo life-saving medical care out of fear that they can’t afford it,” Brown said in a statement. “When providers fail to follow the law, our consumer protection team stands up for Washington patients.”

Puget Sound Physicians says the errors affected fewer than 18% of patients who received free care, and that over the past five years the company has provided $2.4 million in free medical care to more than 7,700 patients.

“Providing quality medical care to patients regardless of their ability to pay is a core value of Puget Sound Physicians,” a company spokesperson said in a statement. “We take this commitment seriously and are dedicated to ensuring that patients who qualify for charity care receive these benefits. We appreciate the opportunity to resolve this matter and to strengthen our processes going forward.”

An Overlake spokesperson said that “we believe those who qualify for financial assistance should receive the support available to them under Overlake’s financial assistance policy and under Washington state law, and we remain committed to helping patients understand and access financial assistance programs for healthcare services.”

Within 120 days, Puget Sound Physicians must issue refunds with interest to 1,382 patients entitled to refunds who the attorney general’s office identified in an investigation. With interest, the total payments needed exceed $410,000. Another 24 patients are eligible but they’re owed $2 or less and so are left out of the settlement.

Puget Sound Physicians has to track down patients’ current addresses to mail them checks. If returned as undeliverable, the company has to call at least three times over the course of a month to get the correct address. If that’s not successful, the company doesn’t have to provide them a refund. It also has to follow up via phone if the check isn’t cashed within 90 days.

The company also owed the attorney general’s office $52,500 in legal fees.

As part of the order, Puget Sound Physicians agreed to comply with charity care law going forward. If it happens again, Brown’s office can come back for more penalties.

This is the latest in a slew of cases where hospitals have been forced to refund patients for withheld charity care discounts.

Last year, Confluence Health, which runs two hospitals in central Washington, refunded more than $1.8 million after failing to give discounts to more than 4,700 patients. 

In 2024, Providence agreed to refund more than $20 million to patients that qualified for free or reduced-cost healthcare, after a lawsuit from then-Attorney General Bob Ferguson. PeaceHealth said it would pay up to $13.4 million to more than 15,000 patients through direct refunds and a claims process. CHI Franciscan returned $1.8 million. And Capital Medical Center in Olympia paid at least $250,000.

Patients who think their hospital isn’t following the state’s charity care law can file a complaint with Brown’s office.