22711 K R J STATE OF MINNESOTA DEPARTMENT OF COMMERCE In the Matter of the Collection Agency License of Accretive Health, Inc.

DBA Medical Financial Solutions License No. CA 40235104 TO: CONSENT CEASE AND DESIST ORDER

Accretive Health, Inc. DBA Medical Health Solutions, Inc. 401 North Michigan Ave. Chicago, II 60611 Commissioner of Commerce Mike Rothman ("Commissioner") has advised Accretive

1.

Health, Inc., DBA 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 Minn. Stat. 45.027 (2010) and other applicable law, against Respondent's collection agency license based on allegations contained in the complaint entitled State ofMinnesota 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) 332.37; (D) Used false, deceptive, or misleading representations or means in connection with the Failed to provide proper notice to Minnesota debtors in violation of Minn. Stat.

collection of debts in violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692e and Minn. Stat. 332.37; and

2 2 7 ^ ^ ^ ( E ) ^ U s e d u n ^ or u^^ o f M ^ ^ ^ 3 3 ^ 0 ^ 2. Respondent ac^owledgesthat^has been advised ofitsrightstoahe^

matter to present argument to the Oon^issio^^ 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 ^om 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

providedinMinn.Stat.14.^^01^andMinn.R.1^.^0^11). 4. The following Order is in the public interest.

NO^T^REFORE^TIS^RE^ORDERE^pursuanttoMinnStat^^ 5(2010), thatRespondent shall cease and desist Irom any lu^er activity re^uiringacollector'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 ORDERED, pursuantto Minn. Stat.45.027,thatRespondentshall: A. Providealistof all past and current collectors who may have had contact with Minnesota debtors or consumers, ^ou must include each collector'slastknownaddressand telephone number.

22711 KRJ B,-Provide a copy of all letters.-notices including dunning notices or other communications - provided to debtors in their attempt to collect debtsfromMinnesota 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 all 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 FURTHER ORDERED, 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 CONSENTJTO ENTRY. OF_ORDER-

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 of 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: STATE OF T:lliu> r5
0

COUNTY OF C o o L
This instrument was acknowledged before me on ijfgtlflZ'I'tt)by (name of person) (stamp)

AnPg

frci

I
iture of notary offiefer) Title (and Rank) My commission expires:

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OFFICIAL SEAL

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UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA State of Minnesota, by its Attorney General Lori Swanson, Plaintiff, v. 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, Minn. Stat. 325D.43 et seq. & 325F.68 et seq., as follows: INTRODUCTION 1. Accretive is a portfolio company of the New York private equity fund COMPLAINT Civil File No.

Accretive, LLC, 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^ bothadebtco^ector and tr^ment coordinator 2. Accretive is licensed asadcbt collection agency in Minnesota. Accretive

has largely assumed control ofthem^agement 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" ("^TCC^ contract. Under this contract, Accretive helps Fairview negotiate contracts with HMOs and
^

ihsurancecompamestl^oughwhichthehospitalreceivesincentivepaytocut 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 its^all Street investors that it identifies patients who ar^e 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

rn^o^

The ^ ^ e ^ ^ e e r i o ^ mdi^e th^this f i ^ e ^

entanglement wih grow oneeaneweontrae^ discussed h e l o w , i s ^ 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 Fair^iewincludesa"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 of 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.

Actmg^ahcen^ddebtcohecto^A^

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. ^RI^CTIONAND^ENUE 7 TheCourt has jurisdiction pursuant to 42 U . S . C . ^ 1 3 2 0 d ^ d ) , ^ U S C

^l^l,and28USC^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 ^enue is appropriate under 2 8 U S C ^1391 PARTES 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 ^ ^ ^ ^ ^ ^ a u t h o r i t y , t o bring this action on behalf of the State ofMinnesot^andi^^ citizens. 11. Accretive is aOelaware corporation withitsprincipal executive offices

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

o^cerisMaryA.To^andi^Chairm incorporated imder the name Health

Accretive

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 ofHIFAA. 45C.F.R.^160.103. At all times relevant hereto, North Memorial has beenahealth care provider within themeaningofHIFAA. As health care providers, Fairview and North Memorial are covered entities within the meaning of HfFAA, and thus are required to comply with the HIFAA 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 HIPAA. 17931-34. FACTUAL ALLEGATIONS 1. Accretive, LLC's Prior Debt Collection Activity. a. 13.

See, e.g., 42 U.S.C.

Accretive, LLC's Relationship with the National Arbitration Forum.

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

LLC, a New York City private equity fund founded in 1999 by Wall Street investment manager J. Michael Cline. In court filings, Accretive, LLC 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^ LLC 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, LLC has a controversial history in the debt collection business in By 2009, through a series of acquisitions, corporate.

Minnesota and nationwide.

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, LLClnvolvlngtl^eem^or 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 A^ant, LLC, which bec^eadebt collector for the credit card industry and debt buyers. Accretive, LLC 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 fransacrion^ACC^

entfre"revenue eyele" (e.g., the eoheetionageney, theproseeutinglawfirm, andthe neutral arhitrator) for consumer credit eardeoheetionsm Accretive,

LLC 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-lawyersfromowning 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 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 arbitrationcompanymisled consumers, courts, and the public about the extensive financial and governance cross-ties with Accretive, LLC, 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 b a n ^ 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. At the time of their closure, all tl^ee entities had been the subject of man consumer complaints alleging heavy-handed collection conduct. b. 20. Accretive Health and the National ArbitrationForum.

Before the three companies shut their doors, Accretive, LLC angledto

profit evenmorebyjoining the Forum's operations withthose of AccretiveHealth. Accretive, LLC 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^CMaryTolan about placing arbitration clauses in hospitalpatient agreements. Accretive, LLC 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 "$lBn of dormant receivables to attempt collection, asasideline to the core relationship." Accretive, LLC told the Forum that, if they did business together, "^wjebelieveourdeepexpertiseandrelationshipsinhealthcareshouldenableusto jump-start NAF's expansion into an extraordinary market opportunity: the use of arbitration inconsumerhealthcaredisputes and payments." Accretive, LLC 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 ^asTa^en Over management of the ^Revenue Cycles^ofFair^iew 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, 20ii. 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 employeeswho 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 all 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 "incre^e^ 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

Front Office (Patient Access)

Middle Office (Health Services Billing)

Back Office (Collections)

^
7 COEs Ragatraacin Charge Capture/ Vabdalion

Oocixnomador .'CaJIna OP Documentawn /Oafcig Au#o -Payment Poeimg

i ^
ThiFd-Pany

^sivSr
u JfZZZ... Underpj/mems CrdciitBa&ncs liesoiutwn

Medkal NecesBJty

Sf^taiay

%benl

ED Bigitaiay

Lost Chaigga

Medicare Scrubber

D*dwn* PRMH

Gov&mmem Rftwr-up

In-House Panem financial Advocacy ED AWhonzaUon {it AdnHtefl Tnag&Wedical

Late Charges

Oocarrtentason /Codmg

Pfimary BilBng

mm
Management

isr
Patent ming

Fdtow-jp Pawn Financial dcv

I***IWMCD

Pmnwqnumwwi Patient Advocacy

(EDAM

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 Reimbursements Payer F/U Yield-Based Follow up* CenlraSzatiMi Patient F/U Patient Slat. Web Payment

Z S . S
Patient Pay Collection Patient Financial Advocacy

Billing and I Best Claim Status I Possible

Customer Service Lockbox I Retnittano Consolidation) Posting Pre-Collect & Dormant Collections* Shared Service SohiUons

Skip Tracing I Credit Check

Denial Management

Batch Interface

X . i 2 Transactions

13

b. 3L

Accretive Contracts with Fairview to Perform Sweeping Functions Relating to the MonetizationofHealth Treatment.

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 ^TCC services, fn a conference with Wall Street investors on January 12, 2011, Accretive called the Fairview^TCCagreement its "inaugural" contract. 33. Under the ^TCC agreement, Accretive helps Fairview negotiate contracts

with certain insurance companies and HMOs that allow Fairview to earn incentive payments from the insurers and HMOs for cutting health care costs, fn turn, Accretive receivesashare of the hospital'sihcentive payments under the ^TCC 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^^er said that the "sickest and most impactable patients" would be "identified for proactive management." 34. Accretive states that the ^TCC 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:
Risk Evaluation, Strat ificntinii & Coding Health Risk Assessment Aciniralc claim / medical record docunienlaiiim Medical and Rx claim review Per patient risk score calculation BcM possible revenue calc Automated care plans Patient social service determination
c

Deiiverv & Access Physician Incentive Structure Local PCP leadership and governance structure Comprehensive rcferrai plans Clinical protocol determination Contract subspecialties Contract ancillary services Community resources Specialist ediciency evaluation

Core

Admission Management Hospitalist program / ED management Daily census - Acute / Skilled / LTAC Patient review hy facility Length of stay management Discharge planning Delivery System re-entry Tmnsitiunal care

Coaching & Edncatlon Performance managementRevenue. Cost. Qnnlily. & Service reviews Population-based opportunity reviews Training & education on delivery Bcncfil/ Eligibility Provider service issues

Analytics & Reporting Quality scorecard Pricing/Bcnclit evaluations Utilization by all healthcare service types P/L by Patient. PCP. Croup Network Benchmarks Peer group analysis Ounier determinations

I'osl-Discliniyc foilow-up Auihori/aiioits Case Management . On-bouniing Home asscssmenls Referrals and Referral links to PCP Scheduling Medical necessity review I'harnincy Management

Payer R d u t i o n s h i p M a n u R e m e n l 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

Fah^iewisa^ore^eetedrnthevarion^oha 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 Its^all Street Investors that "populatlonbased management" tocuses on Identifying the "sickest and most Impactable patients" for "proactive management." ^ 3^. Accretive Loses Sensitive ^ata on at Least Minnesota Ratients^
^

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 0 1 ^ 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 e e e D e Fatient'sfullname Oender Number of dependents Oateofbirth Social Security number Olinicand doctor

17

D ^ ^ e e D

Ani^ertc 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 whether the patient is in "frail condition" Numherof"chromc conditions" the patient has 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 ^ Hypothyroidism o 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:

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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.

information on the laptop about North Memorial patients are their full names, dates of service (e.g., admission and discharge dates), medical record number, and encounter numbers.

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

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47.

Accretive informed North Memorial that data on approximately 2,841

Other

48.

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

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 l^own 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 l^own 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 protectedhealthlnformatlonlnvlolatlouoff^AA 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 fffFAA^an^ 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 p r o v e d hea^ Health violated these provisions 52.

Active

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

the information on the laptops thus, v^^^ the identity ofall 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 ah^ut Fairview or North Memorial patients out-of-state or overseas or whether any such data is encrypted. 4 D 55. Accretive ^as Tried to ^onceai^lts^e and identity ^ i t h patients and Has Not^o^owed Minnesota ^ebt^o^ieetion^aws^ 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

statu^andtheyareboth^

under the Internal revenue Oode. They hoth tile O^S Form 990, return of Organiza^ exempt tromlneomeTax, wlththeMlnnesota Attorney Oeneral^s Oflree. Fart^H, Seetlon^ofForm 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 rec^uiresadeht 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^ FracticesActw^ea^emptmgto^ The federal Fair Oebt s e c t i o n Frances Act 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 a t ^ ^ ^

havegone so f^ as to say,"^eare now reaching the point where your account may be turned over toacollection agency"without disclosing that Accretive^itselfadebt 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 rec^uireslicensed 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

COUNT I: VIOLATIONS OF HIPAA 63. 64. Plaintiff restates and realleges all prior paragraphs of this Complaint. Accretive is business associate of both Fairview and North Memorial as
1

defined in HIPAA. 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 HIPAA as well as applicable civil and criminal penalties. 65. Accretive violated HIPAA by failing to comply with the standards,

requirements, and implementation specifications as set forth in HIPAA, 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 that all 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 of 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). 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
1

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 . ^ 16430^^ e. Accretive failed to implement policies and procedures to limit physical 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 4 5 C F R ^ 1 6 4 3 1 ^ 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 of 45 C^R^164^12(a^l^ h. Accretive failedtoimplementreasonahleandappropriatepolicies andproceduresto comply withthestandards,implementationspecifications,or otherrequirementsofPartl64,SuhpartCin violation of 45 C ^ R ^ 1 6 4 ^ 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. COUNTO^VIOLATIONSOFT^^NN^OTA^ALTH^CO^^ 67. 68. Plaintiffrestates and realleges all prior paragraphs of this Complaint. The Minnesota Health Records Act^ Minn. Stat.^ 144.291^^.,applies

to the release of health records in Minnesota, ftprohibits p r o v i d e r s o r a n y ^ ^ ^ ^ ^ ^ ^ v ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ v ^ ^ from releasing health records u ^ (1) asignedanddatedcousentfromthepatient orthepatient's legally authorized representative authorizing the release^2) specific authorization inlaws or^arepresentation from the provider that holdsasigned and dated consent from the patient authorizing the release.

25

Mmn.S^^144^9^sub^2(2010)^mphasisadd^ The p^ien^ consent is valid for one year uniessadifferent time period is specified in the consent or is pr^^^ iaw^suhd^
^

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^^ COUNT^VIOLATIONSOF^^SOTA^^TCOL^CTIO^ 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 M^esota department of Commerce asadeht collection agency on ^anuai^ 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 Con^issioner 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 Minn. 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.^1692f 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 ofMlnn. Stat. Ch 332.

28

COUNT^VIOLATIONSOFT^ M^^FSOTAP^VFNTIONOF^ UNIFO^^CFPT^TRA^FPRACTICFSACT 87. 88. 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,isen^oinahle as provided in section 89. Theterm"merchandise" withinthemeaningofMinn. Stat. ^ Plamfiffres^es and reneges ah prior paragraphs of this Co Minnesota Stah^s, S e c t i o n s

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 or services^ (3) causes likelihood ofconfusion or ofmisunderstanding as to affiliation, 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. important to eneonrageatnhand frank exchange

Patient eonfidentiaiity is

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: "All 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 doctorfreely,toaccept 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. ^ 1 4 4 . 2 9 1 ^ ^ . , ^ ^ , 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 ^ BB ^ 30

m e d i c a r e 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 shall become 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 h^edasaconfractoro^ 990 disclosures fiied with the^temai Revenue Service or Minnesota A ^ Oenerai. d. Accretive has not disclosed that it acts as a deht collector tor Fairview, in some cases going sofar to tell patients that "your account mayhe turned over toacollection agency"without disclosing that Accretive^itselfa 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. Accretivea licensed deht collectorhas access to at least the following intormationahout Minnesota patients: D D D ^ ^ ^ ^ D ^ D ^ ^ Fatient'sfullname lender Numher of dependents Oateofhirth Social Security numher Clinic and doctor Anumeric score to predict the "complexity" of the patient Anumeric score to predict the prohahility of an inpatient hospital stay The dollar amount "allowed" to the provider 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 o o ^ o o o o o o o o o o

HIV Metabohsm disorder Hypertension Hypothyroidism hnmnne suppression disorder isehemie heart disease Osteoporosis Parkinson'sOisease Asthma Arthritis Schizophrenia Seizure disorder Renaitaiiure Low hack pain

h. Accretive represents to its investors that it "identities' patient accounts 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 a share of thehospital'sincentivepaymentsfromcertain HMOs and insurerstor cost savings generated through "managing the care coordination process." f. Under the ^TOO, 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 proactive management." 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 thefrmcfionsidentifiedon 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 o ^ a l 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. By 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. ^ ^,l^FSupp2d962,967^Minn^l) 97. Accretive has violated the above provisions through the acts and practices ^ ^ ^ ^ ^ v. ^ ^ ^ ^ ^

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!. By 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 in^unctiverelief^ civil penalties, costs, and attorneys feesunderMinn. Stat. ^

34

325F.69 et seq., 325D.43 et seq., and 8.31. As part of its request for 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. PRAYER FOR RELIEF WHEREFORE, Plaintiff State of Minnesota respectfully asks this Court to enter judgment against Defendant Accretive, awarding the following relief: 1. Preliminarily and permanently enjoining Defendant 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. 1320d-5(d)(l)(A); and from violations of Minn. 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 Minn. Stat. 8.31. 3. Awarding Plaintiff 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 utilized.

35

5.

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

just and appropriate. Dated: January 1 j , 2012

11

Respectfully submitted, LORI SWANSON Attorney General State of Minnesota AL GILBERT Solicitor General NATHAN BRENNAMAN Deputy Attorney General

J^Q

Assistant Attorney General Atty. Reg. No. 0346597 jacob.kraus@ag.state.mn.us 445 Minnesota Street, Suite 1100 St. Paul, Minnesota 55101 (651)757-1454 (Phone) (651)282-5832 (Fax) (651) 296-1410 (TTY) ATTORNEYS FOR PLAINTIFF STATE OF MINNESOTA
AG: #2944942-v1

36

District of Minnesota (DMN) C I V I L D O C K E T F O R C A S E #: 0:12-cv-00145-RHK-JJK

Minnesota, State of v. Accretive Health, Inc. Assigned to: Judge Richard H. Kyle Referred 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 01/19/2012

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

01/19/2012 01/25/2012 2

SUMMONS Returned Executed by Minnesota, State of. Accretive Health, Inc. served on 1/19/2012, answer due 2/9/2012. (Attachments: # I Affidavit of Service)(Kraus, Jacob) (Entered: 01/25/2012)