A Question Answered

Back in April, I posted about Minnesota Attorney General Lori Swanson investigating allegations that Accretive Health Care aggressively collected debts from hospital patients. These allegations included claims that Accreive was obtaining payments from people in emergency rooms and from their hospital bedsides. Yesterday, Accretive settled these claims, agreeing to pay $2.49 million and to withdraw from the state of Minnesota for a period of six years (although it can come back after two years with the attorney general's permission). New York Times coverage is here.

Over coffee this morning with a friend, I threw out the same question from my original post. How does an organization get itself to the place where it collectively comes to think such strong-arm collection tactics on hospital patients are a good idea, let alone morally defensible? A profile of Accretive's CEO, Mary Tolan, in Crain's Chicago Business contains this gem:

"My objective is just to be a happy, confident capitalist," says the devotee of Ayn Rand's and Milton Friedman's free-market gospel, which she applies with a combative, survival-of-the fittest management style.

At least I have my answer.

As it had previously, Accretive has denied any wrongdoing. In its press release, Accretive says that the Minnesota Attorney General "could not identify a single patient in Minnesota who experienced a problematic interaction with an Accretive Health employee." In her press release, however, the Attorney General stated:

The Attorney General’s Office obtained sworn affidavits from about 60 patients to support the lawsuit and heard from many others. Many of these patients say they were asked to pay money in the hospital emergency room before being treated, often while laying on a gurney, undressed, in pain, or hooked up to tubes or morphine. Most of the patients had insurance coverage.

I guess it all depends on what your definition of "problematic" is.

Comments

[AMC]

See, in an Ayn Rand novel Mary Tolan would be the capitalist hero and you would be a sniveling nay-sayer villain, undermining all that is right in the world by questioning her free market ways.

Rand would probably mock you in the book by giving you some name that reflected that you were a bad person. A name like "Lawless" or something.

Oh.

S***.

Never mind.

[Louis Paul Hebert]

Randian cult ideology is perfect for psychopaths.

[billiecat]

There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.

— John Rogers

[Patches]

Freggin hilarious AMC!

[Knute Rife]

I call libertarians in general and Randians in particular "Ropers" after the character in "A Man for All Seasons." They would cut all the laws down, conveniently forgetting that it is the law that protects those rights they are so fond of. Neither Rand nor Uncle Miltie would have lasted five minutes n the "paradise" they would foist on us. Nor would John Galt, for that matter. Someone would have taken a tire iron to him six lines into that million-page diatribe of his.

[Wingo Smith]

I went and looked at the Attorney General's complaint briefly and stopped dead at paragraph 19. Minnesota was the state that helped shut down the National Arbitration Forum whose ability to fairly adjudicate consumer issues was called into question because it was owned by a large debt collection law firm, Mann Bracken. Well guess what? Accretive was part of that world, too. The complaint is here, http://www.ag.state.mn.us/PDF/Consumer/SecondAmendedSupplementaComplaint.pdf. I've copied paragraph 19 below.

There's something fundamentally worrisome about creating self-serving legal worlds that are unhampered by a community's sense of what's just and fair.

19. Accretive, LLC 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 simultaneously took control of the nation’s largest debt collection enterprise and became affiliated through ownership and governance interests with the nation’s largest consumer debt collection arbitration company. This occurred through a series of transactions engineered by Accretive, LLC involving three major companies: National Arbitration Forum (an arbitration company based in Minnesota), Axiant, LLC (a debt collection agency), and Mann Bracken (at the time, the nation’s largest collection law firm). The transactions can be summarized as follows:

a. Accretive, LLC formed a series of private equity funds under the name “Agora” (Greek for “Forum”), which in turn acquired a $42 million, 40percent 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 funded a large national debt collection agency called Axiant, LLC, which became a debt collector for the credit card industry and debt buyers. Accretive, LLC owned over 68 percent of Axiant.

c. Axiant then acquired the assets and collections operations of the Mann Bracken law firm, the nation’s largest collection law firm (which had previously acquired two other large national collection law firms). Of the 214,000 consumer arbitrations processed by the National Arbitration Forum in 2006, 125,000, or almost 60 percent, were filed by Mann Bracken and its predecessors. 20. Through these transactions, Accretive, LLC essentially took control of the entire “revenue cycle” (e.g., the collection agency, the prosecuting law firm, and the neutral arbitrator) for consumer credit card collections in the United States. Accretive, LLC wanted to form a “broad arbitration ecosystem” which would pay huge financial dividends for the equity fund. Prior to this scheme, law firms were generally owned by individual lawyers due to professional regulations that prohibit for-profit corporations or non-lawyers from owning law firms, such that Wall Street could not profit from law firm revenues. Through these transactions, Accretive, LLC essentially sought to “monetize” for Wall Street investors the profits to be made from debt collection law firms. According to Accretive, LLC’s internal documents, the executives wanted their debt collection and arbitration system to expand to “become a comprehensive, alternative legal system.”