Accretive Health Inc Cease and Desist Order Minnesota Debt Collector

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22711 K R J

S T A T E O F M I N N E S O T AD E P A R T M E N T OF C O M M E R C E

In the Matter of the Collection Agency - C O N S E N T C E A S ELicense of Accretive Health, Inc. A N D D E S I S T O R D E RD B A Medical Financial Solutions

License No . CA 40235104

T O : Accretive Health, Inc.

D B A Medical Health Solutions, Inc.

401 North M ichigan Ave.Chicago, II 60611

1. Commissioner of Commerce Mike Rothman ("Commissioner") has advised Accretive

Health, Inc., D B A Medical Financial Solutions, Inc., and any and all subsidiaries, affiliates or related

entities (collectively, "Respondent") that he is prepared to commence formal action pursuant to M inn.

Stat. § 45.027 (2010) and other applicable law, against Respondent's collection agency license based

on allegations contained in the complaint entitled State of Minnesota v. Accretive Health, Inc.

U.S.D.C., Case No. 0:12-cv-00145-RHK-JJK (attached) that Respondent has:

(A ) Failed to implement policies and procedures to prevent, detect, contain and correct data

security violations of 45 C.F.R § 164.308(a)(1) and the Minnesota Health Records Act, Minn. Stat. §

144.293, in violation of Minn. Stat. § 45.027, subd. 7;

(B ) Engaged in a practice of allowing unregistered persons to act as debt collectors in

violation of Minn. Stat, § 332.33;

(C) Failed to provide proper notice to Minnesota debtors in violation of Minn. Stat.

§ 332.37;

(D) Used false, deceptive, or misleading representations or means in connection with the

collection o f debts in violation o f the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e and M inn.

Stat. § 332.37; and



2 2 7 ^ ^

^(E) ^ Usedu n^ or u^^

o f M ^ ^ § ^ 3 3 ^ 0 ^

2. Respondent acôwledgesthat^has been advised ofits rights oahe^

matter to present argument to the Oonîssio^^

hearing, and Respondent hereby expressly waives those rights. Respondentneither admits nor denies

the allegations herein. Respondent acknowledges that this order does notaddress any violations that

have previously occurred and Respondent expressly agrees that the purpose ofthis Order is solelyto

prevent further violations ôm occurring. Respondent further acknowledges that it has been

represented by legal counsel throughout these proceedings or hereby expressly waives that right.

3. Respondent has agreed to informal disposition ofthismatterwithoutahearing as

p r o v i d e d i n M i n n . S t a t . § 1 4 . ^ ^ 0 1 ^ a n d M i n n . R . 1 ^ . ^ 0 ^ 1 1 ) .

4. The following Order is in the public interest.

N O ^ T ^ R E F O R E ^ T I S ^ R E ^ O R D E R E ^ p u r s u a n t t o M i n n S t a t ^ ^

5(2010), thatRespondent shall cease and desist Irom any luêr activity reûiringacollector'slicense

in the State ofMinnesotaf^raperiod of at least twenty (20) days Irom the elfective date of this order

and continuingthereal er and until Respondent: l)provides at least ten (10) days priornotice to the

Con^ssionerofits intent to resume licensed collector activity,and 2) the Respondent liles with the

Commissioner an affidavit signed by an ofUcer authorised bythecompanyto sign on its behalfthat

Respondent is in compliance withMinnesotadebt collectionlaws.

I T I S F ^ R T ^ E R O R D E R E D , pursuantto Minn. Stat .§45.027,thatRespondentshall :

A . Providealistof al l past and current collectors who may have had contact with Minnesota

debtors or consumers, ôu must include each collector'slastknownaddressand telephone number.



22711 K R J

B,-Provide a copy of all letters.-notices including dunning notices or other communications - -

provided to debtors in their attempt to collect debts from Minnesota consumers.

• i

C. Provide your company's debt collector screening process as required by Minn. Stat. § 332.

D . Provide all collector training materials.

E. Provide all policies and procedures for protecting and safeguarding of consumer's personal

information.

F. Provide any and a ll other documents requested by the Department.

Respondent shall provide the above-requested documents arid information as soon as possible

but no later than fifteen (15) days after the effective date of this Order.

IT IS F U R T H E R O R D E R E D , that Respondent shall pay any and all reasonable travel

expenses for Department personnel to verify Respondent's compliance with and/or meet with company

representatives about this order.

This Order shall be effective upon signature by or on behalf of the Commissioner.

Dated: 2 — 3 ^ 1 ^ .

Mike Rothman

Commissioner

85 Seventh Place East, Suite 500

Saint Paul, Minnesota 55101

Telephone: (651)296-2488



22711 KRJ

C O N S E N T J T O E N T R Y . O F _ O R D E R -

The undersigned, acting on behalf of Accretive Health, Inc, states that he has read

the foregoing Consent Order; that he knows and fully understands its contents and effect;

that he is authorized to execute this Consent to Entry of Order on behalf of Respondent;

that he has been advised of Respondent's right to a hearing; that Respondent has been

represented by legal counsel in this matter; or that he has been advised of Respondent's

right to be represented by legal counsel and that he has waived this right; and that he

consents to entry o f this Order by the Commissioner of Commerce. It is further expressly

understood that this Order constitutes a settlement agreement between the parties hereto,

there being no other promises or agreements, either express or implied.

Accretive Health, Inc

By /

Its:

S T A T E OF T:lliu>0r5

C O U N T Y O F C o o L

This instrument was acknowledged before me on

(name of person)

(stamp)

ijfgtlflZ I tt)by AnPg f r c i

•Iiture of notary offiefer)

OFFICIAL SEAL

i ^ f e f f

Title (and Rank)

M y commission expires:

/•gyv

//^



U N I T E D S T A T E S D IS T R IC T C O U R TD I S T R I C T OF M I N N E S O T A

State of Minnesota, by its Civil File No.Attorney General Lori Swanson,

Plaintiff,

v . C O M P L A I N T

Accretive Health, Inc.,

Defendant.

The State of Minnesota, by its Attorney General Lori Swanson, brings this action

against Defendant Accretive Health, Inc. ("Accretive" or "Accretive Health") for

violations of the Health Insurance Portability and Accountability Act of 1996

( HIPAA ) , Pub. L . No: 104-191, 110 Stat. 1936, as amended by the Health Information

Technology for Economic and Clinical Health ( HITECH ) Act, Pub. L. No. 111-5,

123 Stat. 226, and Department of Health and Human Services Regulations at 45 C.F.R.

§ 160 et seq.; the Minnesota Health Records Act, Minn. Stat. § 144.291 et seq.;

Minnesota's debt collection statutes, Minn. Stat. Ch. 332; and Minnesota's consumer

protection laws, M inn. Stat. §§ 325D.43 et seq. & 325F.68 et seq., as follows:

I N T R O D U C T I O N

1. Accretive is a portfolio company of the New York private equity fund

Accretive, L L C , which has a controversial history in Minnesota relating to the arbitration

and collection of consumer debts. Accretive wears a number of hats as it relates to the



patient of two Minnesotahospi^

bothadebtcoêctor and tr^ment coordinator

2. Accretive is licensed asadcbt collection agency in Minnesota. Accretive

has largely assumed control ofthemâgement and operations ofthe so-called "revenue

cycles" ofhothFairview Health Services ("Fair iew") and North Mem

("North Memorials including their scheduling, registration, admissions, hilling,

collection, and payment functions. Accretive assumes managerial responsibility for the

hospitalemployees who performthesefimction^ and has "infused"its own employees

into the staff of thehospitals. Accretive engages in"data mining" and"consumer

behavior modeling" on patients, as described below.

3. Fai view is the only hospital system in the country to also hire Accretive to

deliver services underasocalled "duality andTotal Cost of Care" ( ^ T C C contract.

Under this contract, Accretive helps Fairview negotiate contracts with H M O s and

^

ihsurancecompamestlôughwhichthehospitalreceivesincentivepaytocut patient

costs. Accretive then receivesashar e of the hospital's incentive pay. Under the ^ f C C

contract, Accretive develops "risk scores" on individual patients and manages health risk

assessments, automated careplans, ca e andpharmacy management, anddurationof

hospital stays. Accretive tells i t s ^ a l l Street investors that it identifies patients who are

deemed"outliers"andtracks utilization andprofitandlossby patient. Fairviewhas

called Accretive its "strategic partner." Their relationship is so extensive that Fairview

accountedfor over 13 percent of Accretive'sservice revenue for the first three quarters of



2^1 (over ^75 rnô^ The ^ ^ e ^ ^ e e r i o ^ mdiê th^this f i ^ e ^

entanglement w ih grow oneeaneweontrae discussed helow ,is^

4. Through these extensive relationships, Accretive has compiled a high

volume of extremely sensitive and personal medical, financial, and other records

involving tens ofthousandsofMinnesota patients ofthe two hospital systems. Some of

thedata was storedon anunencryptedlaptop computer. The laptop was lefthy an

Accretive employee in arental car outside the har andrestaurant areaof the Seven

Comers area of Minneapolis. The computer was stolen and, with it,dataon at least

23,531 Fairviewand North Memorialpatients. In responseto one patient's request,

Fairview provided the patient witha"screenshot"of thedata ahout the patient that it

says was on the laptop. The screen shot(attached as paragraph 46)sent to the patient hy

Fairîewincludesa"medical score" to predict thelikelihood that the patient would he

admitted to the hospital,a"medical score" to predict the "complexity"of the patient,a

description o f the "frailty" of the patients and the dollar amount allocated to the patient's

healthcare provider. In addition, thedata disclosedpersonalidentifyinginformation

ahout the patient, including the patient's name, address, phone number and Social

Security number. The screen also included an itemization of whether the patient had 22

listed conditions, including bipolar disorder, schizophrenia, depression, high blood

pressure, asthma, and even low back pain. Accretive violated privacy laws by failing to

keep private patient data secure.



5. Actmgâhcen^ddebtcohectoÂ^

identity with Minnesota patients and has failed to comply with the disclosure and

registration requirements ofMinnesota'sdeht collection laws.

6. ThroughthisComplaint,theState of Minnesota seeksto hold Accretive

accountable for its violations ofhealth privacy laws, state deht collection laws, and state

consumer protection laws. TheStatealsoseeksthroughthisactionto determine and

disclose to patients the extent ofAccretive's access to data and the manner in which it

utilizes such data.

^ R I ^ C T I O N A N D ^ E N U E

7 TheCourt has jurisdiction pursuant to 42 U.S.C.^1320d^d),ÛSC

^ l ^ l , a n d 2 8 U S C ^ 1 ^ 7

8. Plaintiff has provided notice of this action to the Secretary of Health and

Human Services as required under 4 2 U S C ^ 1 3 2 0 d ^ d ^

9 ênue is appropriate under 2 8 U S C ^1391

P A R T E S

10. Lori Swanson, the Attorney General of the State of Minnesota, is

authorized under HIPAA , Minn. Stat Ch. 8, M ^

and Minnesot 'sconsumer protection statutes, and ha^ common law authority,including

^ ^^ ^ ^^ aut ho r i t y , t o bring this action on behalf of the State ofMinnesotândi^^

citizens.

11. Accretive is aOelaware corporation withitsprincipal executive offices

located at 401NorthMichiganAvenue, Suite 2700, Chicago, Illinois. Its chief executive



o^cerisMaryA.Toândi^Chairm Accretive

incorporated imder the name Health

to Accretive Health, Inc. in200^ Its shares trade under the symhoi"AH"on the New

York Stock Exchange. Accretive has heen registered asaforeigncorporation with the

Minnesota Secretary ofState since Oecemher 20, 20I0and, on that same date, registered

Medical Financial Solutions" as anassumedname withtheMinnesotaSecretary of

State. Accretive became licensed with the Minnesota Department of Commerce asadeht

collectionagency on January 20, 2011, listing Medical Financial Solutions" as an

assumed name with that agency, and is currentlylicensedasadeht collector with that

agency. Accretive lists Steve Walters as its sole individual collector. Accretive transacts

business in the State of Minnesota, including onbehalf of bothFair^viewandNorth

Memorial.

12. At all times relevant hereto, Fairview has beenahealth care provider that

operates certain affiliated entities under common ownership or control,which are treated

asacovered entity for purposes o f H I F A A . 45C.F.R.^160.103. At all times relevant

hereto, North Memorial has beenahealth care provider within themeaningofHIFAA.

A s health care providers, Fairview and North Memorial are covered entities within

the meaning of H f F A A , and thus are required to comply with the H I F A A federal

standards that govern the privacy of individually identifiable health informat At

alltimes relevant hereto, Accretive, acting asabusiness associate of both Fairview and

No^Memortal, obtained access to individually identifiable health i n f o ^ ^



providers' patients and therefore was subject to H I P A A . See, e.g., 42 U.S.C.

§§ 17931-34.

F A C T U A L A L L E G A T I O N S

1. Accretive, L L C ' s Prior Debt Collection Activity.

a. Accretive, L L C ' s Relationship with the National Arbitration

Forum.

13. Accretive was incorporated in 2003 as a "portfolio company" of Accretive,

L L C , a New York City private equity fund founded in 1999 by Wall Street investment

manager J. Michael Cline. In court filings, Accretive, L L C has described itself this way:

"Accretive manages private equity funds which invest largely in companies that manage

back-office administrative processes."

14. Cline is the Chairman of the Board of Accretive. As of April 20, 2011,

Cline and Accretive Investors SBIC , L.P. , of which Cline is managing member, each

owned 19.4 percent of Accretive, for a combined 38.8 percent ownership: In 2010,

Accretive^ L L C arranged a public offering for Accretive Health, netting over $100

million in proceeds.

15. Accretive became licensed with the Minnesota Department of Commerce as

a debt collection agency on January 20, 2011. It sometimes performs debt collection

activities in Minnesota under the assumed name Medical Financial Solutions."

16. Accretive, L L C has a controversial history in the debt collection business in

Minnesota and nationwide. By 2009, through a series of acquisitions, corporate.

formations, management contracts, and asset transactions engineered by Accretive, LLC,



the equity fund sunuhaneousiy took control of the nations largest deht collection

enterprise and became affiliated through ownership and governance Inte^^

nation's largest consumer debt collection arbitration company. This occurred througha

series of transactions engineered by Accretive, LLClnvolvlngtlêemôr companies:

National ArbltratlonForum(an arbitration company basedlnMlnnesota),^^

debt collection agency), and Mann Bracken (at the tlme,the nation's largest collection

law firm). The transactions can be summarized as follows:

a. Accretive, LLCformedaseries of private equity funds under the

name "Agora" (Greek for "Forum"), which in turn acquired a $42 million,

40 percent financial interest and governance rights in the Minnesota-based

National Arbitration Forum. The Forum was the nation's largest arbitration firm

for consumer credit card collections, handling over 200,000 consumer arbitrations

each year.

b. Accretive formed and fundedalarge national debt collection agency

called Aânt, L L C , which becêadebt collector for the credit card industry and

debt buyers. Accretive, L L C owned over 68 percent of Axiant.

c. Axiantthenacquiredthe assets and collections operations of the

Mann Bracken law firm, the nation's largest collection law firm (which had

previously acquiredtwootherlarge national collection law firms). Gfthe214,000

consumer arbitrations processed by the National Arbitratiou Forum in 2006,

125,000, or almost 60 percent, were filed by Mann Bracken and its predecessors.



17. Though these fransacrionÂCC^

entfre"revenue eyele" (e.g., the eoheetionageney, theproseeutinglawfirm, andthe

neutral arhitrator) for consumer credit eardeoheetionsm Accretive,

L L C wanted toforma^hroad arbitration ecosystem" wluchwould pay hugefina^^

dividends tor the equity fund. Prior to this scheme, law firms were generally owned hy

individual lawyers due to professional regulations that prohibit for-profit corporations or

non-lawyers from owning law firms, such that W all Street could not profit from law firm

revenues. Through these transactions, Accretive, L L C essentially sought to"monetize"

for Wall Street investors the profits to be made from debt collection law firms.

According to Accretive, L L C ' s internal documents, the executives wantedtheir debt

collection and arbitration system to expand to "becomeacomprehensive, alternative legal

system."

18. h^July,2009, the Minnesota Attorney General filedalawsuit against the

National Arbitration Forum and its affiliates in Hennepin County District Court in

Minnesota. Thelawsuit alleged, inpart,thattheNational Arbitration Forum^which

held itselfout as an independent and neutral arbitrationcompany—misled consumers,

courts, and the public about the extensive financial and governance cross-ties with

Accretive, L L C , which constituted an irreconcilable conflict ofinterest.

19. Asaresultofthehtigation, the National ArbifrationForum (the arbitration

company) exited the consumer arbitration business. Shortly thereafter, in November,

2009,Axi^t (the debt collector) filed for ban ^

in Delaware, fn or about January, 2010, Mann Bracken (the collection law firm) closed

8 ^



its doors and was placed mto j u d i c i a l ^

in Maryland. A t the time of their closure, all tl ee entities had been the subject of man

consumer complaints alleging heavy-handed collection conduct.

b. Accretive Health and the National ArbitrationForum.

20. Before the three companies shut their doors, Accretive, L LC angledto

profit evenmorebyjoining the Forum's operations withthose of AccretiveHealth.

Accretive, L L C wanted to "launch" the Forum into the arbitration ofhealth care disputes

between patients and hospitals using Accretive Health and stated that it had spoken with

Accretive Health CF^CM aryTolan about placing arbitration clauses in hospitalpatient

agreements. Accretive, L L C told the Forum that one of Accretive Health'sclients^the

largest non-profit hospital in the country (Ascension Health ofMissouri)—had provided

it with access to $ l B n of dormant receivables to attempt collection, asasideline to the

core relationship." Accretive, L L C told the Forum that, if they did business together,

"^wjebelieveourdeepexpertiseandrelationshipsinhealthcareshouldenableusto

jump-start N A F ' s expansion into an extraordinary market opportunity: the use of

arbitration inconsumerhealthcaredisputes and payments." Accretive, L L C told the

Forum that it wanted to "leverage the Accretive network" and set forthaplan in which:

h^ new industries, such as healthcare, NAFFrocedures are used early and consistent

the standard method for resolving payment disputes. Byplaying aprominentrole,NAF

fimdamentally shapes the collections players and tactics that emerge in these industries."



2. Accrete Returns to Minnesota with Accrete e a l ^

^ Accretive health âsTaên Over management of the ^Revenue

CyclesôfFairîew and North memorial.

2L Accretive makes most of its money hy entering into "Revenue Cycie

Operations"contracts with hospitals. Throughthese contracts, Accretiveiargeiy takes

confroiof the scheduling, registration, admissions,hihing, and collection and payment

functions at its client hospitals. Accretive assumes managerial responsihility tor hospital

employees who perform these factions and "infuses" its own employees into the sta^

of the hospitals. Accretive receives hoth hase fees and incentive payments for working

with hospitals to hoost their revenue and or cut their costs.

22. On its wehsite,Accretive,LLC describes its portfolio company,Accretiye

Health, this way: "Accretive Health takes over responsibility for the people, process and

technology associated with the entire revenue cycle process." It told Wall Street

investors on January 12,2011 that it has"no direct competitors" who performthese

broad functions. In its 2010 Annual Report, Accretive estimated that up to $50 billion

couldbemadethroughthese servicesnationwide (calculated at fivepercentofabout

$1 trillion in annual revenue at the nation'shospitals and large physician organizations).

23. Accretive entered intoaRevenueOycle Operations contract withFairview

in March, 2010,which became effective on May 1,2010. Fairview isalarge health care

system that operates seven hospitals and numerous primary, specialty, and urgent care

clinics. Fairview accounted for 10.7percent(orover$64million)of Accretive'snet

service revenue of $606 million in 2010, according to Accretive's 2010 Annual Reports

10



Forthenme months endmgSep^

over $75 mihion) of Accretive'snet service revenue of$566milho Fairview has eahed

Accretive its "strategic partners

24. Accretive entered intoaRevenueCycie Operations agreementwith North

Memorial in March, 2 0 i i . North Memorial operates one hospital and numerous clinics

in Minnesota.

25. Accretive assumes responsihility for a client hospital's "revenue cycle"

functions, ft controls and directs the workofhospitalemployees who are engaged in

"revenue cycle"activities. ft also places Accretive employees—who it calls "infused

management"—inside the hospitals and "connects itsj proprietary technology and

analytical applications to the hospital's existing technology systems." Accretive has

summed up this contract this way: "We emhed our technology, personnel, know how

and culture within each customer'srevenue cycle activities and serve as the customer's

B

on site operational partner."

26. Accretive describes the hreadth of its revenue cycle management services

like this: "For our purposes, the revenue cycle starts whenapatient registers for future

service or arrives at ahospital or clinic for unscheduledservice andends whenthe

hospital has collected a ll the appropriate revenue from all possible sources."

27. In its 2010 Annual Report, Accretive states: "^Wje identify patient

accounts with financial risk by applyingdata mining techniques to the data we have

collected." Accretive also "increê^ the collection rate on patient-owed obligations" in

11



part by using "consumer behavior modehngB' Proprietary algorithms assessapatient's

"propensity to pay B'

28. Aeeretive's revenue cycle management contracts "span the entire revenue

cycled including "front office" (scheduling, registration, and admissions), "middle

office" (billing), and "back office" (collections). According to Accretive,whenapatient

registers ataclient hospital, Accretive begins to compile "complete patient information"

on the patient, such as the patient'sSocial Security number and insurance eligibility. It

performs "real-time" checks for insurance coverage upon admission to assess "each

patient's ability to pay " ft maintains an "automated electronic scorecard" that tracks

each patient, including the patient's payment history, throughout ^hepatient'stimeasa

patient, ft identifies patient accounts with financial risk by applying "data mining

techniques,"and it performs "skip tracing." Accretive collects old bills for Fairview.

29. The breadth of Accretive'sactivities is depicted in the following chart from

Accretive's2010AnnualReport(p.l3):

12



The Accretive Health Revenue Cycle Process Structure and Metrics

Fron t Office

(Patient Ac c e s s )

Middle Office

(Health Services Billing)

Back Office

(Collections)

^ ™ i ^ ^

7 COEs Ragatraacin

MedkalNecesBJty

Sf^taiay ben l

In-HousePanem

financial

Advocacy

Pm-nwqnumwwiPatient

Advocacy

ChargeCapture/Vabdalion

ED Bigitaiay Lost Chaigga

EDAWhonzaUon{it AdnHtefl

Tnag&Wedical

(EDAM

Oocixnomador

.'CaJIna

OPDocumentawn

/Oafcig

mmManagement

MedicareScrubber

Late Charges Oocarrtentason Pfimary BilBng/Codmg

i s rPatent ming

Au#o -Payment

Poeimg

ThiFd-Pany

sivSr

D* dw n* Gov&mmem CrdciitBa&ncsP R M H Rftwr-up u J f Z Z Z . . . liesoiutwn

Underpj/mems

Fdtow-jpPawnFinancial«d«»cv

I***IWMCD

30. The breadth of Accretive"s involvement at the hospitals is similarly

depicted in this chart from Accretive's 2010 Annual Report (p. 22):

Scorecard and Analytics

Integrated Worfciist

Front-End

Z S . £S ^

Patient Pay

Collection

Patient

Financial

Advocacy

Skip Tracing I Credit Check

Reimbursements

Billing and I Best

Claim Status I Possible

Lockbox I Retnittano

Consolidation) Posting

Payer F/U

Yield-Based

Follow up*

Denial

Management

Patient F/U

Patient Slat.

Web Payment

Customer

Service

Pre-Collect &

Dormant

Collections*

CenlraSzatiMi

Shared Service

SohiUons

*

Batch Interface X . i 2 Transactions

13



b. Accretive Contracts with Fairview to Perform Sweeping

Functions Relating to the MonetizationofHealth Treatment.

3L Fairview advised the Minnesota AttorneyGenerai'sofficeinaietter dated

October i^20iithat"Accretive Health.bassists Fairview in care coordination efforts to

help better coordinate andmanagepatient'sheaith care needs."

32. besides the revenue cyciemanagement contract. Accretive and Fairview

entered intoafiveyear duality and Total CostofCare"^TCC")agreementin

November, 2010. As of the filing ofitsDecemberlO,2010AnnualReport,Fairview was

the only hospital system in the United States that hired Accretive for ^ T C C services, fn

a conference with Wall Street investors on January 12, 2011, Accretive called the

Fairview^TCCagreement its "inaugural" contract.

33. Under the ^ T C C agreement, Accretive helps Fairview negotiate contracts

with certain insurance companies and H M O s that allow Fairview to earn incentive

payments from the insurers and H M O s for cutting health care costs, fn turn, Accretive

receivesashare of the hospital'sihcentive payments under the ^ T C C agreement for cost

savings generatedthrough"managing the carecoordinationprocess." Accretivetold

Wall Street during an investor conference on Novemberll,2010that health care savings

would occur in part through an "intense focus" on "reducing avoidable hospital

admissions." ft f^êr said that the "sickest and most impactable patients" would be

"identified fo r proactive management."

34. Accretive states that the ^ T C C agreement "can help our customers identify

the individuals who are most likely to experience an adverse health event and, asaresult,

14



incur high healthcare costs in the coming year." It further states that when a hospital

"adopts both our revenue cycle and quality and total cost of care management solutions,

we can leverage the information available in our revenue cycle technology and data

platform to enable real-time care management."

35. The following chart from Accretive's 2010 Annual Report (p. 17) depicts

the breadth of Accretive's services:

Our quality and total cost of care services offering includes management of the following processes:

Ris k

Evaluation, Strat Deiiverv & Core Admission Coaching &Analytics &

Reportingificnt inii & Access Management Edncatlon

Analytics &

Reporting

Coding

• Health Ris k • Physician Incentive • I'osl-Discliniyc • Hospitalist program / • Performance • Quality

Assessment Structure foilow-up E D management management- scorecard

• Aciniralc claim / « Local PCP • Auihori/aiioits • Dai ly census - Acute / Revenue. Cost. • Pricing/Bcnclit

medical record leadership and • Case Management Ski l led / L T AC Qnnlily. & Service evaluations

docunienlaiiim governance On-bouniing • Patient review hy reviews • Utilizat ion by all» Medica l and Rx structure • Home asscssmenls facility • Population-based healthcare service

claim review c• Comprehensive • Referrals and • Length of stay opportunity reviews types

• Per patient risk rcferrai plans Referral links to management • Training « P / L byscore calculation • Cl in ic a l protocol PCP • Discharge planning education on Patient. P CP . Croup

• Bc M possible determination • Scheduling • Delivery System delivery Networkrevenue calc • Contract sub

specialties

• Contract ancillary

services

• Medica l necessity re-entry • B c nc f i l / E l ig ib i l it y • Benchmarks• Automated care

plans

• Patient social

• Contract sub

specialties

• Contract ancillary

services

review

• I'harnincy

• Tmnsitiunal care • Provider service

issues• Peer group analysis

• Ounier

service• Community Management determinations

determination resources

• Specialist ediciency

evaluation

Payer Rdutio nshi p ManuRemenl

People & Technology

36. Thus, according to the above table and the QTCC contract, Accretive is

responsible for the management of: "risk scores" for each patient, development of

automated care plans for patients, case management, length of hospital stay management,

and discharge planning, among other things. It also performs "analytics and reporting" to

track utilization by patient and physician, to determine profit and loss by patient, and to

identify patients who are "outliers."

15



37. The breadth of the managed care service

Fahîewisaôreêetedrnthevarionôha

account. Tor example,mSeptemher, 2011, Accretive posted an ad tor an"Analyt^

Manager" to staff the Talrvlew contract. The advertisement states that the person will

"aggregate and analyze patient population data and leverage predictive modelsm

order toldentlty Innovative strategies tor population management." As noted above,

Accretive told Itsâll Street Investors that "populatlonbased management" tocuses on

Identifying the "sickest and most Impactable patients" for "proactive management."

^ Accretive Loses Sensitive âta on at Least Minnesota Ratients

^

3^. Accretive is licensed asadebt collector with the State ofMinnesotaand,m

fact, collects debts for at least one Minnesota hospital system (Tairview). At the same

time, it also assistsTairview with health care management and medical necessity review.

3^. Accretive also manages the"revenuecycle"of North Memorial. (North

Memorial advised the Attorney Oeneral'sOtficeinaletter dated Octoberl7,2011that

Accretive does not perform debt collection services for it.)

40. Accretive states that, among other things, it engages in "data mining,""skip

tracing," "consumerbehavior modeling," and"per patient risk scorecalculation" on

patients.

41. Through these services and others, Accretive amasses and has access toa

lugh volume of sensitive and personal information, including medical informat^^

Minnesota patients served by the two hospitals. ^

16



42. On or about ^ y 2 ^ 2 01 ^ a n A c t i v e e^

unencrypted laptopcomputer^

North Memorial patients in the back seat ofarental ear parked in the Seven Com^

and restaurant district ofMinneapoiis. The laptop was stolen.

43. The information on tbelaptop was not encrypted. Tbelaptop was only

passwordprotected. The laptop contained sensitive personalinformationonatleast

23^31Minnesota patients.

44. On or about September 20, 2011, Accretive informed Fairview that

protected health information of approximatelyl4,000 Fairview patients was contained on

the stolen laptop. Accretive stated that the laptop contained protected health information,

including renames, addresses, dates ofbirth, Social Security numbers, other identic

clinical information, includmg diagnosis and conditions, and other financial info

onFairview patients. Other information on the laptop aboutFairview patients included

their dates of service, account balances, account numbers, and medical record numbers.

45. paragraph 46 contains a "screen shot" sent by Fairview to one of its

patients who requested an accounting ofthe information about the patient that was on the

laptop. The information on the "screen shot" sent by Fairview to the patient included the

following:

D Fatient'sfullname

e Oender

e Number of dependents

e Oateofbirth

D Social Security number

e Olinicand doctor

17



D Aniêrtc score to predict the "complexity" of the patient

^ Annmerlcscore to predict the pr^hahihty of an inpatient hospital stay

^ The dollar amount "allowed" to the provider

e whether the patient is in frail condition"e Numherof"chromc conditions" the patient has

D Fields to denote whether the patient has:

^ Macular degeneration

^ bipolar disorder

o depression

o l iahetes

o daucoma

o Hl^

o Metaholism disorder

o Hypertension

^ Hypothyroidismo hnmune suppression disorder

o Ischemic heart disease

o Osteoporosis

o Farkinson'sOisease

o Asthma

o Arthritis

o Schizophrenia

o Seizure disorder

o Renal failure

o Low hack pain

46. Thisisaredacted copy of the "screen shot" sent hyFairviewto the patient:

1



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* f • Mon ths Ewot i s i I" Atdv c l ai t Da y iAt l iJrc is X • jAJdre»'2 ' i { State | . Zip Owl * j Pt-nnp Ni;mo#i a-Eiribttrsrf Tin

•H

im

^ ^m

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: UpW

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Mpid; .

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I HfPKtltmxkm Wypothyrc jd: * m

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47. Accretive informed North Memorial that data on approximately 2,841

North Memorial patients was contained on the stolen laptop. Accretive stated that the

laptop contained protected health information, including the name and clinical

information, including diagnosis, condition, and other treatment information. Other

information on the laptop about North Memorial patients are their ful l names, dates of

service (e.g., admission and discharge dates), medical record number, and encounter

numbers.

48. North Memorial later retained a computer expert on its own initiative to

undertake an independent forensic investigation to corroborate the representations of

Accretive about the nature, scope, and extent of the lost data as it relates to North

Memorial patients. According to North Memorial, the expert discovered an additional

19



patient whose names and data w ^

revealed to he on the laptop hyAeeretive. North Memorial sent letters to these patients

tonotltythemofthedatahreaeh.

49. It Is not lôwn whether Fah^lew took steps to corroborate the Information

provided to It hy Accretive ahont the nature, scope, and extent ofthe lost data as It relates

to Fairview patients. Fairview has not Informed the Attorney Oeneral s Offlce of any

such steps, and It Is not presently lôwn whether data about additional Fairview patients

not disclosed to It by Accretive may have been on the laptop.

50. fn Its 2010 Annual report. Accretive states "Oata and Information

regardlngour customers^ patients Isencryptedwhentransmltted over the mtemetor

traveling off slte oh portable media such as laptops or backup tapes." This was not the

case with the stolen laptop.

51. Accretive agreed with bothFalrvlew and North Memorial that It would not

use or disclose protectedhealthlnformatlonlnvlolatlouoffÂA or f^TF^

woulduse"approprratesafeguards"topreventthemlsuseordlsclosureof protected

health Information, ft also agreedtokeepallprotectedhealthmformatlon"strlctly

^

confidential" and require all of Its employees and subcontractors and agents to mamtam

confidentiality of protected health Information as required by f f fFAAân ft

further agreed to develop, implement, maintain and use appropriate administrative,

teclmical and physical safeguards to preserve the integrity,confidentiality and availabili^

of protected health information and to prevent nonDpermitted or violating use or

20



dis osure of proved hea^ A c t i v e

Health violated these provisions

52. l pon information and helief,Aeeretive tailed to adequately keep traek of

the information on the laptops thus, v^^^

the identity o fa l l the individnalswhose data was exposed.

53. Aeeretive^seontraets indicate that eost savings will depend on the manner

and extent to which thehospitals elects to utilize the^Shared Services blended Shore

centers off^xcellence^..^

54. Accretive operatesashared service center in New Oelhi, India. The New

Oelhi service center carries out functions at the same time for multiple hospitals.

Accretive recently told ^ a l l Street investors that it wanted to increase the use of these

shared service centers, ft is unknown at the present time whether Accretive exported any

data ahût Fairview or North Memorial patients out-of-state or overseas or whether any

such data is encrypted.

4D Accretive âs Tried to ônceai^l tsê and identity i th patients and

Has Notôôwed Minnesota êbtôîeetionâws^

55. B^ven though Accretive amasses so much private data ahout patients, it goes

to great length to conceal its activities, going so far as to "infuse" employees into^

hospitals andengageinarecycled payroll system. Asaresult, it would he difficult fbra

patientto understand or even he aware ofthe role ofAccretive in their lives.

5 . Fairview and North Memorial are hoth registered with the Minnesota

Attorney Oeneral s Office as charitable organizations under chapter 309 of the

21



Minnesota statuândtheyareboth^

under the Internal revenue Oode. They hoth tile O S Form 990, return of Organiza^

exempt tromlneomeTax, wlththeMlnnesota Attorney Oeneral s Oflree. Fart^H,

SeetlonôfForm 990 requires an organization to disclose the tlve highest compensated

Independent contractors that received more than ^100,000 ofcompensatlon tor services,

whether professional or other services, from the organization Inthe particular year.

Neither Fairview nor North Memorial disclose their payments to Accretive on their Form

990s. Thus,apatlent or regulatory agency could not read the Form 990 to Identic the

nature of Accretlve^srole as It relates to their treatment or payment tor that treatment.

57. f^pon Information and hellef, the hospltals patlent admission and medical

authorization forms do not Identify Accretive hy name or disclose the scope and hreadth

oflnformatlon that Is shared with It. l^pon Information and hellef, patients are uot aware

that Accretlvels developlnganalytlcal scorestoratethecomplexlty of their medical

condition, the likelihood they will he admittedto ahospital, their "frailty," or the

likelihood that they will he ahle to pay for services, among otherthings.

5^. As noted ahove, Accretive hecame licensed with the Minnesota department

of commerce asadeht collection agency on January 20, 2011,listing Medical Financial

Solutions" as an assumed name.

59. Minnesota law recûiresadeht collection agency,when initially contacting

aMinnesotadehtorhy mail, to includeadisclosureonthe notice stating "This collection

agency is licensed hy the Minnesota department of commerce." Minn. Stat.

^332.37(21^2010^. fn addition, the Minnesota deht collection laws makeit unlawful

22



for aco^ction agency t^

FracticesActwêaêmptmgto^

The federal Fair Oebt sec t i o n Frances Act a t ^ ^ ^

following conduct unlawful

The lailnre to disclose in the initial written communication with the

consumer and, in addition, if the initial communication with the consumer

is oral, in that initial oral communication, that the deht collector is

attempting to collectadeht and that any information obtained will he used

for that purpose, and the failure to disclose in subsequent communications

that the communication is fromadebt collector,....

^0. fn some cases, debt collection letters sent byAccretive to Fairview patients

havegone so f^ as to say,"êare now reaching the point where your account may be

turned over toacollection agency"—without disclosing that Accretiveîtselfadebt

collection agency attemptingtocollectadebt.

^1 . Although Accretive ust entered the Minnesota market, it already has been

sued onanumber of occasions in Minnesota by patients who allege that it failed to give

the required disclosures identifying itself asadebt collection agency.

^2. Minnesota law recûireslicensed debt collection agencies toregister with

the State ofMinnesota all individuals employed by the agency who perform the duties of

a"collector" under Minn.Stat.Oh.332. According to the Minnesota department of

commerce, Accretive lists Steve Walters as its sole individual collector with the

Minnesota department of commerce. Accretive does not, however, identify the other

employees who act as "collectors" in Minnesota according to the department of

commerce.

23



C O U N T I: V I O L A T I O N S O F H I P A A

63. Plaintiff restates and realleges all prior paragraphs of this Complaint.

64. Accretive is business associate1 of both Fairview and North Memorial as

defined in HIPA A. See, e.g., 45 C.F.R. § 160.103. Because HITECH Section 13401 (42

U.S.C. § 17931) provides that 45 C.F.R. §§ 164.308, .310, .312 and .316 apply to a

business associate of a covered entity in the same manner as they would to a covered

entity, Accretive is thus subject to the security provisions contained within H I P A A as

well as applicable civil and criminal penalties.

65. Accretive violated H I P A A by failing to comply with the standards,

requirements, and implementation specifications as set forth in H I P A A , including the

following:

a. Accretive failed to implement policies and procedures to prevent,detect, contain, and correct security violations in violation of 45 C.F.R. §164.308(a)(1).

b. Accretive failed to implement policies and procedures to ensure thatall members of its workforce have appropriate access to electronic protected health

information and to prevent those workforce members who do not have authorized

access from obtaining access to electronic protected health information in

violation o f 45 C.F.R. § 164.308(a)(3-4).

c. Accretive failed to effectively train all members of its workforce,

including agents and independent contractors involved in the data breach, on the

policies and procedures with respect to protected health information as necessary

and appropriate for the members of its workforce to carry out their functions and

to maintain security of protected health information in violation of 45 C.F.R. §

164.308(a)(5).

1

A business associate is an entity that performs or assists in the performance of activities

that involve the use or disclosure of individually identifiable health information or other

regulated functions on behalf of a covered entity, but is not a member of the covered

entity's workforce. 45 C.F.R. § 160.103.

24



d. Accretive tailed to identity and respond to suspected or known

security incidents andtomitigate, to the extent practicable, harmtul etfectsof

security incidents that were known to them in violation ot 45 ^ ^ R . ^

1 6 4 3 0 ^ ^

e. Accretive failed to implement policies and procedures to limitphysical access to its electronic information systems in violation of 4 5 d ^

^164310^1)

f Accretive tailed to implement policies governing the receipt and

removal ofhardware and electronic media that contain electronic protected health

information into and out ofafacility,and the movement of these items witb^ the

facilityin violation of 45CFR^16431^d^l)

g. Accretive tailed to implement technical policies and procedures for

electronic information systems that maintain electronic protected health

information to allow access only to those persons or software programs that have

heen granted access rights in violation o f 45 C^ R^164^12(a^l ^

h. Accretive failedtoimplementreasonahleandappropriatepolicies

andproceduresto comply withthestandards,implementationspecifications,or

otherrequirementsofPartl64,SuhpartCin violation o f 45 C^R^164^1^

66. The Attorney general has reason to believe that the interests ofMinnesota

residents are threatened and have been adversely affected by the above violations.

C O U N T O ^ V I O L A T I O N S O F T ^ ^ N N ^ O T A ^ A L T H ^ C O ^ ^

67. Plaintiffrestates and realleges all prior paragraphs of this Complaint.

68. The Minnesota Health Records Act Minn. Stat. 144.291^^.,applies

to the release of health records in Minnesota, ftprohibits pro viderso ran y^^^^^

^ ^ v ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ v ^ ^ from releasing health records u^

(1) asignedanddatedcousentfromthepatient orthepatient's legally

authorized representative authorizing the release^2) specific authorization

inlaws orârepresentation from the provider that holdsasigned and

dated consent from the patient authorizing the release.

25



Mmn.S^^144^9^sub^2(2010)^mphasisadd^ The pîen^ consent is valid

for one year uniessadifferent time period is specified in the consent or is pr^ ^

i a w ^ s u h d ^

^

69 . Accretive nniawfnhy released the health records of at least 23,531

Minnesotapatientsonorahout^nly 25,2011, when an Accretive employeelett those

patients'health records inacar, in an unencrypted laptop, and that laptop was stolen.

70. Even ifFairviewandNorth Memorial had consent from patients to release

medical intormationto Accretive, Accretivehadanohligationtosecnrethe patients'

health records from further release. Minn.Stat.^l44.293,suhd.2.

71. The State ofMinnesota seeks to er oin Accretive from further violations of

MinnStat.^144291^^

C O U N T ^ V I O L A T I O N S O F ^ ^ S O T A ^ ^ T C O L ^ C T I O ^

72. Plaintiffrestates and realleges all prior paragraphs of this Complaint.

73. Minnesota law contains the following definition of"collectionagency'':

"Collection agency" means and includes any person engaged in the

husinessofcollection for others anyaccount,billor other indehtedness

except as hereinafrer provided, ft includes persons who furnish collection

systems carryinganame which simulates the name ofacollection agency

and whosupply formsor form letters toheusedhy the creditor, even

thoughsuch forms directthe dehtortomakepayments directly to the

creditorratherthantosuchfictitious agency.

Minn.Stat^ 332 31,suhd3(2010)

74. ^ Accretive is a "collection agency" under Minnesota law. ft hecame

licensed with the Mêsota department of Commerce asadeht collection agency on

ânuai 20, 2011, listing Medical Financial Solutions" as anassumed name.

26



75. Minn. ^^.^332.37 (2010) provides

(21)wheninifialiyeon^mgaMi^

diselosnre on the eontaet notice, inatype size or font wlueh is ^

larger than the largest other type of type size or font nsed in the text of the

notice. The disclosure mnst state: "This collection agency is licensed hy

the Minnesota Oeparhnent ofConnnerce."

76. Accretive sent deht collection noticestoMinnesotapatientsthatdonot

complywithMinnStat^3237(2010).

77. MinnStat. ^33233, suhd. 5a (2010) provides that "^licensed collection

. ^ ^

agency,onhehalf of an individual collector, must register with the state all individuals in

the collection agency'semploy who are performing the duties ofacollector as defined in

sections 332.31to33245"of the Minnesota statutes. Minn.Stat ^3233,suhd 1

(2010)also requiresaperson acting under the authority ofacollection agency,asa

collector, to first register with the Minnesota Conîssioner of Conuherce.

78. MinnStat^3231,suhd.6(2010)definesa"collector" as follows:"Collector" isaperson acting undertheauthorityofacollection agency

undersuhdivision3, andonitshehalf inthehusinessofcollectionfor

others an account, hill, or other indehtedness except as otherwise provided

in this chapter.

79. Accretive lists Steve Walters as its sole individual collector with the

Minnesota department Commerce. Cther employees, however, also act as collectors in

Minnesota. Asaresult, Accretive has violated M inn. Stat.^332.33,suhd. 5a (2010).

80. Minn Stat. ^332.37(12)(2010)providesthat no collection agency or

collector shall:

27



violate any oftheprovisionsoftheFa^

1977, Public Law 95 lO^wlnleattem^^

or other Indebtedness

81. The federal Pair Oebt Collection Practices Act contains a number of

provisions. Por example, f5U.S.C^1692e provides tbat,"Adebt collector may notuse

any talse, deceptive, or misleading representation or means In connection with the

collection of anydebt." Accretive violated this provision by telling Minnesota patients

that, If they do not settle with It, their debt may be referred toacollectlon agency when

Accretive Is, ltself,adebt collection agency attemptingtocollectadebt.

82. 15USC^1692e(ll)makes the following conductunlawtul:

The failure to disclose In the mitral written commumcatlon with the

consumer and,maddltlon, If the Initial communication with the consumer

Is oral, In that Initial oral commumcatlon, that the debt collector Is

attemptingtocollectadebt and that any Information obtained will be used

for that purpose, and the f lure to dlscloselnsubsequent communications

that the commumcatlon Is fromadebt collector, "

83 15 U.S.C ^1692^10) also makes unlawful "^be use of any false

representation or deceptive means to collect or attempt to collect anydebt or to obtain

Information regardlngaconsumer."

84. 15 U . S . C . ^ 1 6 9 2 f also provides tbatacollector may not use any "unfair or

unconscionable means to collect or attempt to collect any debt."

85. Accretive has not always complied with the prohibitions of the federalPalr

OebtCollectlonPractlcesActmvlolatlonofMmn.Stat.^332.37(12).

86. defendant's conduct described above constitutes multiple, separate

violations o f M l n n . Stat. Ch 332.

28



C O U N T ^ V I O L A T I O N S O F T ^M ^ ^ F S O T A P ^ V F N T I O N O F ^

U N I F O ^ ^ C F P T ^ T R A ^ F P R A C T I C F S A C T

87. Plamfiffresês and reneges ah prior paragraphs of this Co

88. Minnesota Stah^s, Sec t i o n s

provides:

The aet,nse,orempioymenthyanyperson of any frand^taise pretense,

faise promise, misrepresentation, misleading statement or deceptive

praetiee,with the intent that others rely thereon ineonneetion with the sale

of any merchandise, whether or not any person has in tact heen misled,

deceived, or damaged therehy,isenôinahle as provided in section

89. Theterm"merchandise" withinthemeaningofMinn. Stat. ^

includes services. ^Minn.Stat.^325T.68,snhd.2(2010). Health care services area

formof"merchandise."

90 Minn. Stat. ^3250.44, snhdivisionl^010)provides, in part:

Apersonengages inadeceptivetradepractice when, intheconrseof

husiness,vocation, or occupation, the person:

(1) passes offgoods or services as those of another

(2) causes likelihood ofconfusion or ofmisunderstanding as to

the source, sponsorship, approval, or certification of goods orservices

(3) causes likelihood ofconfusion or ofmisunderstanding as toaffiliation, connection, or association with, or certification hy,

another...

(13) engages in any other conduct which similarly creates a

likelihood ofconfusion or of misunderstanding.

91. ThedoctorDpatient relationship ispredicatedontrust. Patients havethe

right to confidentiality of their medical records and to expect that their medical

29



informafion wih not be released without their eonsent. Patient eonfidentiaiity is

important to eneonrageatnhand frank exchange

their doctors. Patients also have the right to make informed choices ahont their health

care(e.g., to give their "informed consent") and to withhold consent follow

frank exchange of information between the patient and doctor. Simply put, if patients

have to be concerned about the dissemination of their medical information, they w ^

get treatment. Pheconsequenceofthistobothpatients and the state asawholeis

obvious as it relates to conditions like communicable diseases, mental health, or

management of chronic conditions.

92 Phese concepts have been part of the doctor patient relationship for

thousands of years. Over2,500yearsago,theearlyffippocratic Oath for physicians

provided: A l l that may come to my knowledge in the exercise ofmy profession... will

keep secret and will never reveal." Poday,the modem Code ofEthics of the American

Medical Association requires physicians to "maintain your patient'sconfidentiality" and

to "respect your patient'sright to choose their doctor freely,to accept or reject advice and

to make their own decisions about treatment or procedures." Phese concepts are reflected

asamatter of statelawandpolicy in the Minnesota Health Records Act, Mhm.Stat.

^ 144 . 291^ ^ . , ^ ^ , w h i c h restricts the release of health records in Minnesotaand

which prohibits p r o v i d e r s ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^

releasing health records without the patient's informed consents Phe concepts are also

^

reflected asamatter of state law and policy in the Minnesota Healthcare Patient Bill of

Rights, Minn. Stat. 144.651, which gives patients the right to: (l)have appropriate

^ A ^ B B ^ 30



medicare based on their mdividualn^

whoisresponsibieforeoordinafi^^

provider^^to have eompiete information regarding di^

risk and prognosis^5) to be respected and(6) to have their medieai records kept private

and confidential

The Minnesota SnprerneConrt has said this abont the right to privacy:

The right to privacy is an integral part of onr humanity one hasapnbiic

persona, exposed and active, and a personal personam guarded and

preserved. The heart of our liberty is choosing which part of onr lives shallbecome public and which parts we shall hold close.

^ ^ v ^ ^ ^ ^ ^ ^

medical and health care records to be among the most personal, private types of

information, fn order to safeguard their privacy and make informed health care

decisions, patients need full, transparent, and accurate information about how their

medical information is used. As set out in this Complaint, Accretive impeded those

rights.

93. Accretive goes to great lengths to mask from patients its involvement with

Minnesota hospitals, including but not limited to the following:

a. Accretive has "infused" its employees into the staff at the hospital.Upon information and belief, patients are not aware who is and is not an Accretive

employee at the hospitals.

b. EventhoughAccretivehasby contract assumed responsibility for

managing key functions at the hospitals, as set forth above, Accretive charges the

hospitals for the payroll costs ofFairview'semployees, and then pays the payroll

backtothehospitalsothatthehospitalemployeesseeahospitalcheck, even

thoughAccretive manages the function.

31



c Accretive is not hêdasaconfractoro^990 disclosures fiied with the^temai Revenue Service or Minnesota A Ôenerai.

d. Accretive has not disclosed that it acts as a deht collector torFairview, in some cases going sofar to tell patients that "your account mayhe

turned over toacollection agency"—without disclosing that Accretiveîtselfa

deht collection agency attempting to collectadeht.

94. Accretive hasmisled, deceivedor caused likelihoodot contusionor of

misunderstanding to patients ahout the role of Accretive in their health care. Among

other things, Accretive leads patients to helieve that, or conceals from patients that, tasks

undertaken hy Accretive are done hy Fairview.

95. Minnesota patients are not aware of the extent of Accretive's involvement

in their health care or the extent to which it amasses data ahout them. This includes that:

a. Accretive—a licensed deht collector—has access to at least the

following intormationahout Minnesota patients:

D Fatient'sfullname

D lenderD Numher of dependents

^ Oateofhirth

^ Social Security numher

^ Clinic and doctor

^ Anumeric score to predict the "complexity" of the patient

D Anumeric score to predict the prohahility of an inpatient hospital

stay

^ The dollar amount "allowed" to the provider

D whether the patient is in frail condition"

^ Numherof"chronic conditions" the patient has^ Fields to denote whether the patient has:

o Macular degeneration

o Bipolar disorder

o depression

o Oiahetes

o glaucoma

32



o HIV

o Metabohsm disorder

o Hypertension

^ Hypothyroidism

o hnmnne suppression disordero isehemie heart disease

o Osteoporosis

o Parkinson'sOisease

o Asthma

o Arthritis

o Schizophrenia

o Seizure disorder

o Renaitaiiure

o Low hack pain

h. Accretive represents to its investors that it "identities' patientaccounts with tinanciai risk hy applying data mining techniques to the data ithasj

cohectedB'

c. Accretive represents to its investors that it "increased the collection

rate on patientowed obligations" in part hyusing"consumerhehaviormodeling"

d. Accretive represents to its investors that it uses proprietary

algorithms to assessapatient's"propensity to pay."

e. Under the ^TOO agreement with Fairview, Accretivereceives ashare of thehospital'sincentivepaymentsfromcertain H M O s and insurerstor

cost savings generated through "managing the care coordination process."

f. Under the ^ T O O , Accretive works to achieve health care savings in

part through an "intense focus"on "reducing avoidable hospital admissions" and

by identifying the "sickest and most impactable patients" "for proactivemanagement."

g. Accretive helpshospitals identify the individuals who are"most

likely to experience an adverse health event and, asaresult, incur high healthcare

costs in the coming year."

h. Accretive tells its investors that,whenahospital "adopts both our

revenue cycle and quality and total cost of care management solutions,we can

leverage the information available in our revenue cycle technology and data

platform to enable real-time care management."

33



Accretive manages the frmcfionsidentified on page i7otits20i0

Annnai Report, incinding that it performs "analytics and reporting" to track

utilization hy patient and physician, to determine profit and loss hy patient, and to

identify patients who are "outliers."

96. fn sharp contrast to the lack of information provided hy Accretive to

Minnesota patients, it provides much more detailed information t oâl l Street investors

ahout its role in the health and lives of patients. Minnesota patients are entitled to know

the information that Accretive amasses ahout them and its extensive role in their health

care so that they can make informed choices ahout their health care and medical records.

B y withholding such information, Accretive has omitted and failed to make necessary

disclosures to Minnesota consumers to enahle them to make informed choices ahout their

health care and medical records. Accretive is responsible to provide such information to

patients. Among other things, it manages, oversees, and controls the hospital employees

responsible to provide such information. ^ ^ ^ ^ ^ ^ v. ^ ^ ^ ^ ^

^ , l ^ F S u p p 2 d 9 6 2 , 9 6 7 ^ M i n n ^ l )

97. Accretive has violated the above provisions through the acts and practices

described in this Complaint, as well as through its material omissions of information to

which Minnesota patients are entitled in order to make informed health care decisions.

98. defendant's conduct described above constitutes multiple, separate

violations of Minn. Stat.^325F.69, subd. 1 and Minn. Stat.^3250.44, subdivision .

B y failing to disclose and on^tting material facts, defendant f i ^ e r engaged in deceptive

and fraudulent practicesinviolationof the these acts. Fortheseviolations,theState

seeks inûnctiverelief civil penalties, costs, and attorneys feesunderMinn. Stat. ^

34



325F.69 et seq., 325D.43 et seq., and 8.31. A s part of its request fo r equitable relief, the

State also seeks an order requiring Accretive to disclose to Minnesota patients the data

that it has about them and where and how such data is stored, including but not limited to

whether it has been sent overseas.

P R A Y E R F O R R E L I E F

W H E R E F O R E , Plaintiff State of Minnesota respectfully asks this Court to enter

judgment against Defendant Accretive, awarding the following relief:

1. Preliminarily and perma nently enjoining Defendan t from violations of the

federal health privacy laws, 45 C.F.R. §§ 164.308(a)(1), .308(a)(3-4), .308(a)(5),

.308(a)(6), .310(a)(1), .310(d)(1), .312(a)(1), and .316 as provided under 42 U.S.C.

§ 1320 d-5(d)(l)(A); and from violations of M inn. Stat. Ch. 144, Minn. Stat. Ch. 332, and

Minnesota's consumer protection laws, Minn. Stat. §§ 325D.43 et seq., 325F.68 et seq.

2. Awarding judgment against Defendant for statutory damages for all

violations by Defendant as provided under 42 U.S.C. §§ 1320d-5(d)(l)(B), (2) and for

civil penalties pursuant to M inn. Stat. § 8.31.

3. Awarding P laintiff costs of the action and reasonable attorneys fees to the

State of Minnesota as provided under 42 U.S.C. § 1320d-5(d)(3) and Minn. Stat. § 8.31.

4. An order requiring Accretive to disclose to Minnesota patients the data that

it has about them, where and how such data is stored, including but not limited to whether

it has been sent overseas, and how such data is u tilized.

35



5. Such other and further relief as provided by law and/or as the Court deems

just and appropriate.

Dated: January 1 j , 201211 Respectfully submitted,

LORI SWANSONAttorney General

State of Minnesota

A L GILBERTSolicitor General

N A T H A N B R E N N A M A NDeputy Attorney General

J ^ Q

Assistant Attorney General

Atty. Reg. No. 0346597

[email protected]

445 Minnesota Street, Suite 1100

St. Paul, Minnesota 55101(651)757-1454 (Phone)

(651)282-5832 (Fax)

(651) 296-1410 (TTY)

ATTORNEYS FOR PLAINTIFFSTATE OF MINNESOTA

AG : #2944942-v1

36



District of Minnesota ( D M N )

C I V I L D O C K E T F OR C A S E #: 0:12-cv-00145-RHK-JJK

Minnesota, State of v. Accretive Health, Inc.

Assigned to: Judge Richard H . K yleReferred to: Magistrate Judge Jeffrey J. Keyes

Cause: 28:1331 Fed. Question

Date Filed: 01/19/2012

Jury Demand: None

Nature of Suit: 890 Other Statutory

Actions

Jurisdiction: Federal Question

Date Filed # Docket Text

01/19/2012 I C O M P L A I N T against Accretive Health, Inc. ( Filing fee $ 350 receipt

number 3-009192.) assigned to Judge Richard H . Kyle per Master List and

referred to Magistrate Judge Jeffrey J . Keyes, filed by Minnesota, State of.

(Attachments: # 1 Cover Letter, # 2 Civil Cover Sheet). (Imb) QC'd on

1/26/2012 (jmf). (Entered: 01/19/2012)

01/19/2012 Summons Issued as to Accretive Health, Inc. (Imb) (Entered: 01/19/2012)

01/25/2012 2 S U M M O N S Returned Executed by Minnesota, State o f. Accretive Health,

Inc. served on 1/19/2012, answer due 2/9/2012. (Attachments: # I Affidavitof Service)(Kraus, Jacob) (Entered: 01/25/2012)

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