Minnesota AG sues Allina over medical billing

Minnesota Attorney General Lori Swanson is suing Minneapolis-based Allina Hospitals & Clinics in Hennepin County District Court, alleging that the health provider has been charging patients excessively high interest rates on their debt.

Swanson said interest rates could reach 18 percent. State usury laws impose a cap of 8 percent interest on such debts.

“The high cost of health care is one of the biggest financial obstacles faced by many Minnesota families. Allina has dug a deeper financial hole for patients facing tough economic times by charging usurious interest rates of up to 18 percent on medical bills,” Swanson said in a statement.

The lawsuit names as defendants both Allina Health System and its subsidiary, Accounts Receivable Services, a debt collection agency owned by Allina that does business under the name MedCredit Financial Services.

Swanson said Allina offered MedCredit as an option to patients with medical bills not covered by insurance. Patients who didn’t seek MedCredit have to either pay immediately or in three monthly installments.

Allina in a statement said it was surprised by the lawsuit because it had already made a decision to reduce interest rates on all present and future MedCredit accounts to 8 percent, and had informed Swanson’s office of the decision last month.

The health provider also argued that its previous rate structure didn’t violate Minnesota law.

“Allina believes that MedCredit remains a valuable tool to help some patients pay their medical bills and that it may be a better alternative to financing such debt through a credit card, which may charge a much higher interest rate,” the statement said.

The state Attorney General’s Office is claiming that MedCredit not only violated state usury laws, but also consumer fraud laws. Besides getting Allina to stop violating the laws, Swanson wants Allina to pay back patients who were charged the high interest rates.

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Minnesota AG sues Allina over medical billing