Providence, Swedish to pay $1.4M for failing to inform patients about out-of-network lab testing charges

State Atty General
Bob Ferguson

Attorney General Bob Ferguson announced at the end of March 2018 that affiliated health care providers, Providence Health and Services and Swedish Health Services, will pay more than $1.4 million as a result of an investigation by the Attorney General’s Office.

Providence and Swedish failed to disclose use of a pathology lab that was out-of-network for many of their patients, resulting in hundreds of thousands of dollars in unexpected charges for more than 6,400 Washingtonians who received pathology testing in 2015 and 2016.

Providence’s Western Washington facilities and Swedish facilities exclusively use CellNetix for pathology testing. From January 2015 to February 2016, Premera Blue Cross, a health insurer for many Providence and Swedish patients, pulled CellNetix from its network. 

Despite having advance notice of the change, Swedish and Providence failed to inform their patients that an out-of-network lab would be providing their pathology testing. Consequently, Premera-insured patients received substantially higher medical bills than they expected.

For more than a year, Providence and Swedish did not notify their patients of their use of CellNetix, despite many complaints from patients, including their own employees. In that timeframe, individual Premera patients paid CellNetix between $7 and $7,000 for testing.

The complaint, filed in King County Superior Court, alleges that the companies’ failure to inform their patients about their use of an out-of-network lab violates the Consumer Protection Act.

Patients who paid the CellNetix out-of-network charges will receive a total of $385,101 in restitution, which represents the estimated amount of unexpected out-of-network charges consumers paid beyond what they would have paid for in-network lab testing.

“Patients deserve to know what to expect from their medical bills,” Ferguson said. “Navigating our health system is challenging, and this type of unfair and deceptive conduct just makes things harder for patients.”

As a result of the Attorney General’s investigation, Providence and Swedish entered into a consent decree filed in King County Superior Court. The consent decree requires Providence and Swedish to pay:

• $385,101 in restitution for the Swedish and Providence patients who paid the out-of-network costs; and
• $1,053,899 to the Attorney General’s Office to recover the costs of its investigation and legal action and fund consumer protection efforts in Washington.

Patients will receive restitution checks at the address CellNetix has on file for the patient.

The consent decree also requires that if Providence and Swedish use out-of-network labs on an exclusive basis in the future, they must either provide sufficient notice to patients, or maintain contract terms preventing out-of-network labs used on an exclusive basis from billing patients for more than what their bill would have been if the lab was in-network.

Assistant Attorney General Audrey Udashen is handling the case for the Attorney General’s Office.