Accretive Health Asks Court to Toss State of Minnesota Suit

Accretive Health Inc. asked a U.S. judge to throw out Minnesota Attorney General Lori Swanson’s lawsuit accusing the company of breaching privacy laws after a laptop containing data on about 23,500 patients was lost.

Accretive, which manages hospital billings and collections, filed a motion today with U.S. District Judge Richard H. Kyle in St. Paul, Minnesota, in which it called some of Swanson’s allegations “factually baseless and legally indefensible.”

The Chicago-based company’s filing comes six days after the attorney general released a six-part report critical of its practices.

The laptop containing patient data was lost last year, Swanson said when she sued the company in January. She filed a revised complaint six weeks later, in both instances challenging the company’s work for Minnesota-based Fairview Health Services and North Memorial Health Care.

“Rather than litigate this case in the courtroom, the attorney general orchestrated a nationwide media campaign against Accretive Health,” according to its dismissal request, “giving numerous television and print interviews to trumpet her release of a so-called ‘compliance review.’”

‘First Step’

Ben Wogsland, a spokesman for Swanson, said today that the dismissal request is a “typical first step” for a corporate defendant.

“We’re very confident in the legal claims that are laid out in the complaint,” Wogsland said in a telephone interview. The state’s opposition papers are due on July 12, he said. A hearing before the judge is scheduled for Aug. 2.

The attorney general’s report alleged Accretive improperly posted its debt collectors in hospital emergency rooms and at patient bedsides. Fairview Health patients in some instances were pressured for payment before they received care by debt collectors who didn’t properly disclose their roles, according to the report.

“Those claims “grossly distort and mis-characterize” Accretive’s revenue cycle services, the company said in a statement issued yesterday. It called the bedside collection claims, a “flagrant distortion of fact.”

Accretive shares fell almost 42 percent the day after Swanson’s report was released, sparking an investor lawsuit claiming securities fraud and the interest of Illinois regulators.

Since closing at $19 on April 23, Accretive’s value has fallen about 47 percent to $10.06 at the end of New York Stock Exchange trading today.

Holds License

“We are reaching out to the Minnesota attorney general’s office, to get a sense of what they’re working on,” to see if Illinois authorities can be of assistance, said Natalie Bauer, a spokeswoman for Illinois’ Attorney General Lisa Madigan, in a telephone interview today.

Because it is a collections agency, Accretive Health holds a license issued by Illinois’ Department of Financial and Professional Regulation. A spokeswoman for that agency, Sue Hofer, today said the department has authority to lift a license in the event a licensee is found to have committed wrongdoing in another state.

“We’ve been aware of the Minnesota attorney general’s investigation,” Hofer said, adding that state law bars her from confirming or denying whether Accretive is being probed by her agency.

Swanson’s case is State of Minnesota v. Accretive Health Inc. (AH), 12-cv-00145, U.S. District Court for Minnesota (St. Paul). The shareholder’s lawsuit is Wong v. Accretive Health Inc., 12- cv-3102, U.S District Court, Northern District of Illinois (Chicago).

To contact the reporter on this story: Andrew Harris in Chicago at aharris16@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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