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New lawsuit accuses St. Charles Health of charity care violations

The new suit filed by a Bend resident hopes to win class-action status against the Central Oregon health system, which denies wrongdoing.
St. Charles Health System in Bend. | COURTESY OF ST. CHARLES HEALTH
February 23, 2024

A new lawsuit claims that St. Charles Health System routinely sent poor patients to a debt collector instead of helping them access the free care they were legally entitled to. 

Filed in U.S. District Court in Eugene on Thursday, the suit was brought on behalf of Kristine Reiger. The Bend resident tried to work out a payment plan with St. Charles after being treated for a car crash in 2022 but was instead sent to a debt collector Ray Klein, Inc., the suit states. At the time, Reiger’s income of $25,240 made her eligible for financial assistance. 

“St. Charles and Ray Klein have a standard practice of failing to screen patients for financial assistance and subsequently initiating debt collection actions against patients on those alleged hospital debts despite this failure,” according to the suit. 

The suit claims that at least “hundreds” of other patients have had similar experiences, and requests the judge to certify it as a class action, meaning other patients with similar experiences could join it. 

St. Charles had not been notified of the suit and couldn’t comment on it, health system spokesperson Kayley Mendenhall told The Lund Report in an email. She said St. Charles regularly reviews its financial assistance policies and processes and believes they are in compliance. 

“Our teams work incredibly hard to make sure patients understand the financial assistance that is available to them,” she said. “We take our role as a local, community-based nonprofit health system seriously and are proud to provide approximately $120 million annually in unreimbursed care to our Central Oregon communities.”

The litigation is the latest in a series of allegations that Oregon’s nonprofit hospitals are disregarding state requirements that they provide free or discounted care to poor patients. 

patient filed a similar lawsuit against Sky Lakes Medical Center in Klamath Falls in November. 

Recently, Washington Attorney General Bob Ferguson announced a $157.8 million settlement with Providence Health and Services over violations of the state’s financial assistance law. Oregon Attorney General Ellen Rosenblum has been investigating Providence Health & Services for more than a year related to an Oregon Health Authority preliminary finding that the system had improperly billed as many as 108,000 low-income members of the Oregon Health Plan. Providence has questioned the finding.

Charity care is an expectation of nonprofit hospitals, which enjoy lucrative tax exemptions. 

Oregon lawmakers overwhelmingly voted last year to tighten the minimum amounts hospitals must spend on patients who can’t afford medical care and other benefits. The move came in response to reports from The New York Times, the Oregon Health Authority and Service Employees International Union Local 49 that hospitals continued to sidestep their obligations. 

 SEIU Local 49 highlighted the new lawsuit in a Feb. 23 press release. “We’ve been sounding the alarm that our state’s financial assistance process hasn’t been working for hospital workers, or patients more broadly, for some time,” it said. “You know there is a large-scale problem when people who work in the hospital can’t afford the healthcare delivered there, nor are they able to access the supposedly available assistance offered to ease the debt.”

The suit claims that St. Charles didn’t screen Reiger to determine if she was eligible for financial assistance. 

St. Charles has stated it has software to determine if unpaid debts are from poor patients, according to the suit, “however, in practice St. Charles sends patients to collections without screening them, despite the requirement and ability to do so.” 

St Charles sent Reiger a medical bill in June 2022 for $3,410.66 for her treatment at the hospital, according to the lawsuit. Reiger was unable to reach St. Charles to negotiate a plan to pay the bill and received a notice in March 2023 that the debt collector had filed a small claim against her for $1,217.35, the suit states. 

Ray Klein, Inc. is a Springfield-based company that operates under the name Professional Credit Service. In 2022, Ray Klein, Inc. agreed to pay $2 million to settle a lawsuit that it illegally collected consumer debts, but denied wrongdoing.

The company served Reiger with a debt collection lawsuit in April and began calling her to pressure her to set up a payment plan, according to the new suit. Reiger began making payments to the firm through November 2023, according to the suit.

In total, Reiger paid at least $1,339.18 to the debt collector and St. Charles for care that should have been covered by the hospital, according to the lawsuit. 

The lawsuit alleges both companies violated state and federal debt collection laws. It does not specify how much money it is seeking from the companies but is asking for “an award of actual damages, punitive damages, statutory damages, attorneys’ fees and costs.” 

Ray Klein, Inc. did not immediately respond to a request for comment from The Lund Report.