Oregon DOJ tells courts Providence isn't cooperating with charity care probe

Oregon Attorney General Ellen Rosenblum has asked a state judge to require Providence to fully cooperate with its investigation into the health system’s charity care practices, which law enforcement said may have violated state laws governing nonprofit hospitals’ financial assistance.

The system, meanwhile, is pushing back on the “highly burdensome and unreasonable” document requests, saying it’s already spent more than $2.4 million cooperating with the investigation and would “likely” tally another $675,000 meeting the Oregon Department of Justice's (DOJ's) civil investigative demands.

“We intend to defend our position in court and look forward to reaching a resolution that is satisfactory to all parties,” a Providence spokesperson told Fierce Healthcare.

Rosenblum’s office launched its probe in 2022 in the wake of media reports describing internal policies for extracting payments from patients who would meet the requirements for financial assistance.

In court documents filed earlier this month, the Oregon DOJ said it “has reason to believe” Providence had engaged in unlawful policies and billing practices after reviewing initial documents and conducting investigative interviews provided by Providence. Law enforcement also said it believes the practices employed in nearby Washington—where last month the system agreed to a $157.7 million refund-and-erase settlement—were also conducted in Oregon, where it operates eight hospitals and over 200 other locations.

Specifically, the Oregon DOJ asked the court to enforce two civil investigative demands served to Providence in September 2022 and May 2023. In November, the DOJ said, it had provided the system with another list of “just 10 additional custodians” and a request that the system search for and provide documents in which specific terms like “bad debt,” “financial assistance” and “charity” appeared in close proximity.

Providence, the DOJ said, countered with a proposal in January to provide access to documents for seven custodians “but only on certain topics, a proposal that DOJ rejected.”

“Providence has not provided any information that would establish that these custodians do not possess responsive information, and its continued delays based upon a generalized ‘proportionality’ standard must be rejected,” the Oregon DOJ wrote.

In a response filed Friday, Providence said it has “consistently and comprehensively cooperated” with the DOJ and stood by its resistance to the investigation’s request.

The system said it already produced “approximately 100,000 documents, totaling more than 400,000 pages; responded to numerous interrogatories; and made 10 witnesses available for sworn interviews, many of which lasted all day.” Meeting the DOJ’s current request would probably require about 3,500 hours of attorneys’ time to review nearly 200,000 additional files, it wrote.

Providence also said that it has “never refused to provide documents for requested custodians” but sought to work with the DOJ to minimize “unnecessary burden and expense.” It said the DOJ’s “extremely broad” search terms would return “high percentages of documents” that have “nothing to do with the subjects that the DOJ is investigating” and would frequently include sensitive patient information.

“Providence has a vested interest in ensuring that DOJ has sufficient information to be able to resolve the investigation,” it wrote in the response filing. “As a result, Providence remains confused as to why DOJ filed this motion rather than engaging in discussions about scope and burden. But in light of the current posture, Providence requests that the Court deny DOJ’s motion.”

Renton, Washington-based Providence spans 51 hospitals and has had a few years of major financial losses. Following a -6.4% operating margin from a $1.7 billion operating loss in 2022, the Catholic system reported earlier this month a -4.1% operating margin and $1.2 billion operating loss for 2023.

The nonprofit said it delivered $2.1 billion in total community benefit across 2023, including $1.4 billion in unpaid Medicaid costs and $240 million in charity care. On the other hand, a recent Lown Institute review of 2021 IRS filings listed Providence as having the second largest deficit between nonprofit tax breaks and “meaningful community investment” among the nation’s health systems, behind only Kaiser Permanente.