EXHIBIT I

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STATE OF MINNESOTA

OFFICE OF THE ATTORNEY GENERAL

Compliance Review of Fairview Health Services’ 

Management Contracts with Accretive Health, Inc. 

Volume 1

The Accretive Management Contracts 

LORI SWANSON

ATTORNEY GENERAL

April 2012 

Review Conducted Pursuant to Minnesota Statutes Chapters 309, 501B, and 317A 

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VOLUME ONE 

THE ACCRETIVE MANAGEMENT CONTRACTS 

Executive Summary.........................................................................................................................1 

I. Accretive’s “Revenue Cycle” Agreement Empowers a Wall Street For-Profit 

Corporation to “Infuse” Its Employees into Fairview, Usurping Management 

Control of the Charitable Organization. 

 1.1 Fairview Health Services .........................................................................................1 

 1.2 Accretive Health, Inc. ..............................................................................................2 

 1.3 The Revenue Cycle Agreement (“RCA”)................................................................3 

II. The Revenue Cycle Agreement Unnecessarily Places at Risk the Assets of a 

Minnesota Charitable Organization and Places the Interests of Accretive, a 

For-Profit Company, Ahead of the Mission of Fairview as a Charitable 

Organization. 

1.4 The Revenue Cycle Agreement Inappropriately Places at Risk Tens of 

Millions of Dollars of Fairview Assets....................................................................4 

1.5 The Revenue Cycle Agreement Inappropriately Places at Risk Tens of 

Millions of Minnesota Charitable Dollars by Requiring that Incentive 

Payments be Advanced to Accretive on a Quarterly Basis Even Though 

the Parties Have Not Yet Agreed that Accretive Has Earned These 

Incentive Payments ..................................................................................................6 

1.6 The Revenue Cycle Agreement Undermines the Reciprocity of the State of 

Minnesota and Its Citizens with Its Charitable Organization by 

Outsourcing Portions of Its Administration to Another Country.............................7 

III. The “Quality Total Cost of Care” Contract Empowers a Wall Street Company to 

Improperly Assert Control over Fairview’s Health Care Delivery. 

 1.7 The “Quality Total Cost of Care” Contract and Risk Scoring.................................9 

1.8 Accretive May Want to Gain Advantage from Fairview’s Business 

Opportunities and Transfer Them to Ascension Health or Intermountain 

Health Care ............................................................................................................12 

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1.9 Accretive Has a Strategy to, by 2015, Reduce Health Care Costs by 

Almost $500 Million as it Relates to Treatment of Fairview Patients...................14 

 1.10 Charitable Organizations .......................................................................................15 

Conclusion .....................................................................................................................................20 

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VOLUME ONE 

THE ACCRETIVE MANAGEMENT CONTRACTS 

Executive Summary: Fairview Health Services is registered as a charitable 

organization under Chapter 309 of the Minnesota Statutes, and its assets are held in 

charitable trust under Chapter 501B. The State of Minnesota and its citizens have given 

Fairview exemption from paying property taxes, income taxes, and sales taxes, and 

investors who buy its bonds receive tax-exempt status on the dividends. Accretive’s 

management activities jeopardize the mission of Fairview as a charitable organization. 

I. Accretive’s “Revenue Cycle” Agreement Empowers a Wall Street For-Profit 

Corporation to “Infuse” Its Employees into Fairview, Usurping Management 

Control of the Charitable Organization. 

1.1. Fairview Health Services. Fairview Health Services (“Fairview”) owns ten 

hospitals and directly or indirectly employs 2,500 physicians based at many Fairview-owned 

clinics, including through Fairview Physician Associates and the University of Minnesota 

physician group. (Ex. 1.) In 2010, Fairview had revenue of approximately $2.8 billion. (Ex. 2.) 

Fairview is registered as a charitable organization with the Attorney General’s Office 

pursuant to Minnesota Statutes section 303.52 (2010). It is exempt from federal income taxation 

under section 501(c)(3) of the Internal Revenue Code. Fairview’s mission statement is: 

“To improve the health of the communities we serve. We commit our skills and 

resources to the benefit of the whole person by providing the finest in health care, 

while addressing the physical, emotional and spiritual needs of individuals and 

their families. We further pledge to support the research and education efforts of 

our partner, the University of Minnesota, and its tradition of excellence.” 

(Ex. 3.) 

On March 29, 2010, Fairview entered into a Revenue Cycle Operations Agreement 

(“RCA”) with Accretive Health, Inc. (“Accretive”). (Ex. 4.) On November 9, 2010, Fairview 

entered into an Infrastructure Services Agreement with Accretive, which Accretive calls the 

Quality and Total Cost of Care (“QTCC”) agreement. (Ex. 5.) 

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1.2 Accretive Health, Inc. Accretive Health, Inc. was originated by principals of 

Accretive, LLC, a New York private equity fund, in 2003. Accretive began principally as a 

consultant for Ascension Health, a national non-profit health system. (Ex. 6, p. 11.) In 2009, the 

Minnesota Attorney General shut down, directly or indirectly, the activities of three affiliates of 

Accretive, LLC that engaged in disreputable collections activity: National Arbitration Forum (an 

arbitration company based in Minnesota), Axiant (a debt collection agency), and Mann Bracken 

(the nation’s largest debt collection law firm). (See, e.g., Ex. 7.) Over the last five years, 

Accretive Health has rapidly expanded its operations and is now a public company. (Ex. 6.) 

Accretive provides “revenue cycle” management services to hospitals. Accretive claims 

in its Annual Report that: 

“We are not a traditional outsourcing company focused solely on cost reductions.” 

(Id., p. 4.) 

A review of over 100,000 pages of documents produced by Accretive and Fairview 

indicates that Accretive is, in essence, an India-outsourced über-collection agency. Accretive 

has two offices in India. (Ex. 8, p. 3.) A majority of its employees are located in India. (Ex. 9.) 

The work of Accretive’s India staff includes insurance authorizations, medical coding, 

transcription services, cash posting, correspondence, Medicaid eligibility, small balance 

collections, secondary billing, and posting of late charges. (Ex. 8, p. 3.) In management 

meetings, Accretive states that the function of the India office is to “[l]ower labor factor costs 

[and] allow for more incremental functions to be performed and lower dollar thresholds to be 

worked” (as a collection agency). (Id., p. 4.) In December, 2011, Accretive prepared an 

overview of its work, noting that Fairview receives a portion of the 25% in cost savings that are 

produced from outsourcing or slashing the Fairview workforce. (Ex. 10, p. 5.) 

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In late 2010, Accretive announced to its investors that it entered into an “inaugural” 

“Quality and Total Cost of Care” (“QTCC”) contract with Fairview. (Ex. 11, p. 2.) The QTCC 

contract has not been accepted by any other hospital. Up until the time Fairview hired Accretive 

to perform QTCC services, Accretive had only performed the über-collections-type revenue 

cycle functions. 

1.3 The Revenue Cycle Agreement (“RCA”). Accretive generated approximately 

$826 million of revenue in 2011. (Ex. 12, p. 49.) About 12%, or approximately $100 million, 

was from the Fairview RCA. (Id., p. 23.) Approximately $ million of the $100 million paid 

by Fairview is for “round tripped” payroll. Fairview pays Accretive in advance for the quarterly 

payroll of Fairview “revenue cycle” employees. Accretive then repays Fairview its payroll cost 

before each pay period. (Page 7 of exhibits to Ex. 4.) 

Accretive describes its role as a managed-service contractor of hospitals in this way: 

“[W]e assume responsibility for the management and cost of the customer’s 

revenue cycle or population health management operations....” 

(Ex. 6, p. 19.) 

Pursuant to the RCA, Fairview pays Accretive: 

 a base technology fee of $ million per year, which increases each year thereafter, 

up to $ million per year. (Page 17 of exhibits to Ex. 4.) 

 of the “dormant receivables” (e.g., patient bills older than one year) 

collected. (Page 20 of exhibits to Ex. 4.) 

 a fee for Accretive’s Physician Advisory Service (PAS), which consults with 

physicians regarding the characterization of treatment. (Pages 19-20 of exhibits 

to Ex. 4.) 

 savings realized from reduced payroll and expenditures. Fairview pays an annual 

base fee (prepaid on a quarterly basis), which is equivalent to Fairview’s baseline 

expenditures for revenue cycle operations, such as costs related to labor, 

technology, and third-party services. (Page 21 of the exhibits to Ex. 4.) Accretive 

takes control of these functions, and earns % of any reduction in payroll and 

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% of any reduction in expenditures. (Id.) This total base fee is about $ 

million, of which approximately $ million is payroll. 

Accretive told its investors that it would receive over $100 million from Fairview in 2011 

from just the RCA. (Ex. 12, p. 23.) 

Under the RCA, Fairview delegates to Accretive the authority to manage all day-to-day 

aspects of the revenue cycle operations, going so far as to execute a power of attorney to fully 

empower Accretive to make billing decisions for the hospital as it relates to Medicaid, Medicare, 

and third-party insurers. (Page 6 of exhibits to Ex. 4.) Accretive emphasizes in its financial 

reports that it directs the work of its client hospitals’ “revenue cycle [operations] teams.” (Ex. 6, 

pp. 11-12.) For example, Fairview delegates management authority to Accretive as it relates to 

patient scheduling, preregistration, eligibility verification, patient registration, authorization, 

admitting, coding, transcription, medical record retention, chart analysis, billing, secondary 

billing, underpayment review, denial management, third-party collections, collection of dormant 

receivables, lost charge capture, and analytical support. (Pages 1, 7 of exhibits to Ex. 4.) 

Accretive also manages clinical documentation, patient records, insurance, benefit verification, 

medical records documentation, and billing follow-up. (Id.) 

The RCA recognizes that the contract poses regulatory risks. The RCA may be 

terminated if a nationally recognized law firm determines that its continuation would violate any 

laws or regulations, or jeopardize the hospital’s non-profit status. (Ex. 4, p. 21.) 

II. The Revenue Cycle Agreement Unnecessarily Places at Risk the Assets of a 

Minnesota Charitable Organization and Place the Interests of Accretive, a 

For-Profit Company, Ahead of the Mission of Fairview as a Charitable 

Organization. 

 1.4 The Revenue Cycle Agreement Inappropriately Places at Risk Tens of 

Millions of Dollars of Fairview Assets. The RCA requires Fairview to pay its base fees on a 

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quarterly basis. (Ex. 4, p. 6.) As noted above, the base fees include “round tripped” payroll of 

the hospital. In Fairview’s case, Accretive has stated that the annual base fee is approximately 

$ million, of which about $ million, or %, is “round tripped” payroll. The quarterly 

payment is made at the beginning of the quarter. (Id.) This means that Fairview prepays 

approximately $ million in advance to Accretive, of which about $ million is for Fairview’s 

payroll. 

Thus, if Accretive files for bankruptcy, becomes insolvent, or has a regulatory or civil 

lien filed against its assets, the hospitals may place at risk tens of millions of dollars. 

Under the terms of the “round trip” payroll provision between Accretive and Fairview, 

the charitable organization entrusts up to $ million each quarter in advance payroll costs. 

Accretive appears not to deposit these funds in an escrow or trust account. Rather, it appears that 

Accretive simply records the base fees as deferred income. (Ex. 6, p. F-8, n. 2.) 

As a matter of prudent business practice, employers who advance payroll, as sometimes 

occurs in the employee leasing industry, generally require the advance payments to be deposited 

in an escrow or trust account in order to be secure from creditors. 

Accretive has RCAs with over 60 hospitals. (Ex. 6, p. 4.) Fairview represents about 

twelve percent of Accretive’s 2011 revenue, according to its 2011 Annual Report. (Ex. 12, p. 

23.) Assuming that Accretive has revenue cycle relationships with the other 60 hospitals that are 

similar to Fairview, and Fairview’s “round tripped” advance fees are paid by the other hospitals, 

it is conceivable that Accretive has custody of up to $150 million in advanced fees (for payroll) 

from charitable organizations at the beginning of each quarter. It appears that this money is not 

deposited in an escrow or trust account, and there is an issue of how much of this prepayment is 

identified as a liability on Accretive’s balance sheet. (Ex. 12.) 

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Simply put, the RCA entered into with Accretive by Fairview appears to unnecessarily 

put at risk significant assets of a large Minnesota charitable organization. 

 1.5 The Revenue Cycle Agreement Inappropriately Places at Risk Tens of 

Millions of Minnesota Charitable Dollars by Requiring that Incentive Payments be 

Advanced to Accretive on a Quarterly Basis Even Though the Parties Have Not Yet Agreed 

that Accretive Has Earned These Incentive Payments. The RCA also requires Fairview to 

pay an incentive fee (called a “gain-sharing fee”) to Accretive each quarter, before the fee is 

even earned. (Pages 13-16 of exhibits to Ex. 4.) Fairview must pay an advance incentive fee, or 

bonus, of $ million in each quarter during the first year of operation, which increases to $ 

million per quarter in the third contract year. (Page 16 of exhibits to Ex. 4.) The pre-pay 

amounts were apparently based on what Accretive alleges to be its historical performance with 

other hospitals. 

The RCA also provide that, at the end of each contract year, Fairview and Accretive will 

“true-up” the incentive fees for the year. (Pages 15-16 of exhibits to Ex. 4.) That is, the parties 

will analyze Accretive’s actual performance to ensure that Accretive has actually earned the prepaid incentive payments. By the time the Fairview RCA was entering its third year, it did not 

appear that Accretive had yet attempted to “true-up” the incentive fees. Rather, Accretive 

appears to simply accept the quarterly advance bonuses and deposit them in its general accounts. 

Fairview has noted that Accretive has been paid $ million in gain share fees (bonuses). 

Fairview has questioned whether Accretive’s performance under the RCA has resulted in any 

gain-share. Accretive disputes this and believes that it has earned the gain-share fees. 

A footnote to Accretive’s Annual Statement indicates that incentive fees are not 

recognized as revenue unless the parties agree to the amount of the gain-share. (Ex. 6, pp. F-8-9, 

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n. 2.) Even though Fairview has not yet agreed that Accretive earned the incentive payments, 

Accretive’s financial statements (Ex. 12, p. 49) do not appear to make reference to “reserving” 

the $ million in advance gain share fees paid by Fairview. Assuming that the other hospitals 

have similar arrangements and incentive pre-payments, the accounts payable of Accretive for 

pre-paid gain share fees could be as high as $150 million. There does not appear to be a 

reference to such a category on Accretive’s 2011 financial statements. 

A charitable organization should not put millions of dollars of charitable assets at risk by 

pre-paying advance bonuses to a for-profit company, particularly when it questions whether the 

fees have been earned. 

 1.6 The Revenue Cycle Agreement Undermines the Reciprocity of the State of 

Minnesota and Its Citizens with Its Charitable Organization by Outsourcing Portions of Its 

Administration to Another Country. Under the RCA, Accretive has the authority to control 

and direct the activities of the hospital employees. (Ex. 4, p. 5.) As stated in Accretive’s 

financial reports: “We have the right to control and direct the work activities of the[] staff 

persons and are responsible for paying their compensation out of the base fees....” (Ex. 12, p. 

22.) Accretive acknowledges its control over management of the Fairview functions as follows: 

“We refer to our management and staff employees that we devote on-site to 

customer operations as infused management.” 

“Under our contracts with customers, we directly manage our customers’ 

employees engaged in the activities we have contracted to manage for our 

customers.” 

(Id., pp. 42, 26.) 

Accretive may fire or reassign a hospital employee, determine whether a departing 

employee will be replaced, and determine if her pay is increased. (Ex. 4, p. 5.) Accretive has the 

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authority to hire Fairview employees and to promote them. (Id.) The only restriction (required 

by personnel laws) is that the hospital must give its approval. (Id.) 

Accretive is aware that this arrangement exposes Fairview to considerable regulatory 

review. In its security prospectus, Accretive acknowledges: 

“Under our contracts...we directly manage our customers’ employees engaged in 

revenue cycle activities. Our management service contracts establish the division 

of responsibilities between us and our customers for various personnel 

management matters, including compliance with and liability under various 

employment laws and regulations. We could...have liability...under various 

employment laws and regulations....” 

(Ex. 14, p. 15.) 

Accretive’s control over Fairview is breathtaking. For instance, in 2011, Accretive 

advised Fairview that it would charge an additional $3 million in base fees because Fairview did 

not obtain prior approval to hire more than 20 mental health and home and other health care 

employees. (Ex. 15.) 

Accretive’s control over Fairview personnel appears to be one of the most significant 

profit centers for Accretive. Accretive earns profits in part by down-sizing Fairview staff and by 

out-sourcing work to Accretive’s operations in India. Over one-half of Accretive’s employees 

are in India. (Ex. 9.) Accretive’s India staff appears to be the fastest growing segment in the 

company. (Id.) For various hospitals, Accretive staff in India perform medical transcription, 

medical coding, medical billing, and pre-registration of patients; obtain insurance pre-approvals; 

calculate deductibles, co-pays, and patient shares of bills; register patients; maintain accounts 

receivable; conduct underpayment analytics (collections); audit; and develop software and 

perform other analytics. (Ex. 13.) Accretive notes in its Annual Report that: 

 “[W]e are able to reduce operating costs further by transferring selected 

internal operations to our centralized shared services centers located in the 

United States and India.” (Ex. 6, p. 8.) 

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 “Any slowdown or reversal of existing industry trends towards offshore 

outsourcing would increase the cost of delivering our services if we had to 

relocate aspects of our services from India to the United States where 

operating costs are higher.” (Id., p. 36.) 

As a for-profit, private corporation, Accretive may boost its stock value by off-shoring 

jobs to India. It is troubling, however, for Accretive to do so with the assets of a Minnesota 

charitable organization. As discussed in Section 1.10, Minnesota taxpayers significantly 

subsidize charitable organizations by paying their share of property taxes, sales taxes, and 

income taxes. Minnesota taxpayers also subsidize the tax-exempt status of the bonds which fund 

a hospital’s capital infrastructure. The effect of the Accretive RCA is that Minnesota taxpayers 

end up subsidizing a for-profit corporation that makes substantial sums of money by reducing 

Minnesota employment, including by outsourcing it to India. This does not seem consistent with 

the mission of a Minnesota charitable organization. 

III. The “Quality and Total Cost of Care” Contract Empowers a Wall Street Company 

to Improperly Assert Control over Fairview’s Health Care Delivery. 

 As set forth below, Accretive, a for-profit company whose executives appear to mostly be 

business types without training in the healing arts, entered into a “cost of care” contract with 

Fairview to profit from cutbacks to health care and potentially the corporate opportunities of 

Fairview. 

1.7 The “Quality and Total Cost of Care” Contract and Risk Scoring. On 

November 11, 2010, Accretive heavily touted to its investors that it entered an “inaugural” 

contract with Fairview relating to the “Quality and Total Cost of Care.” (Ex. 11, p. 2.) No other 

hospital anywhere in the country has entered into a QTCC contract with Accretive. Under the 

QTCC contract, Accretive works with Fairview to negotiate contracts with HMOs and insurance 

companies. (Ex. 5, pp. 7-9.) Pursuant to the terms of the QTCC contract, under these negotiated 

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managed-care agreements, Fairview receives incentive pay of % of all cost reductions in 

treatment from the prior year. The insurer or HMO, in turn, keeps % of the cost reductions. 

Fairview divides up its %, with % going to Accretive, % to Fairview, and % to the 

physicians. (Ex. 16, p. 5.) 

The history of the QTCC program is brief. One of the earliest conferences between 

Accretive and Fairview regarding the QTCC contract occurred on December 9, 2009. (Ex. 17.) 

The meeting notes indicate that the participants concluded that non-profit health systems like 

Fairview are hesitant to talk about “cost savings” because of concern that it affects quality. (Id., 

p. 1.) The attendees accordingly determined that on any occasion that Accretive brings up “cost 

savings,” it must also use the term “quality”: 

“At all times, in both discussions and written materials, quality and cost should be 

linked and any discussion of cost should always be conjoined with quality.” 

(Id., p. 1, emphasis in original.) 

 From this discussion, the name of the program was created: “Quality and Total Cost of 

Care.” The attendees primarily discussed whether AccretiveQ, a computer program prepared by 

Accretive to analyze patient data, could assist physicians to manage health care costs. (Id., pp. 3-

4.) The attendees discussed how AccretiveQ could assess the problem of “patient leakage,” or 

the referral by Fairview-affiliated physicians of patients to specialists outside Fairview’s 

network. (Id., p. 5.) After the meeting, it was concluded that there was division between the 

University of Minnesota physicians and the Fairview physicians and that AccretiveQ might be 

able to contain the “leakage.” (Id., p. 8.) 

By March 11, 2010, the national debate on the Patient Protection and Affordable Care 

Act highlighted the concept of hospital-based “Accountable Care Organizations.” (Ex. 18, p. 8.) 

With this debate as a backdrop, Accretive presented AccretiveQ to Fairview as the infrastructure 

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of an Accountable Care Organization, or ACO. (Id., p. 13.) The ACO would have the goal of 

reducing emergency care usage, increasing formulary care compliance, providing incentives for 

alternative care, and keeping treatment inside the Fairview provider network. (Id., pp. 14-15.) 

Accretive represented to Fairview that its analytics would apply a Six Sigma approach to 

processing data to analyze the scheduling, treatment, and referral data of physicians and patients. 

(Id., p. 22.) The administration of the analytics would be undertaken by Accretive. (Id.) 

Accretive continued to refine its presentation to Fairview about the purpose of the QTCC. 

For instance, it represented that AccretiveQ develops “risk scores” on individual patients and 

develops or manages health risk assessments, automated care plans, care and pharmacy 

management, and duration of hospital stays. (Ex. 19, pp. 6-8.) The “risk score” is developed by 

feeding the patient’s health data into a computer program that purportedly predicts each patient’s 

risk, or cost of care, for the year. (Id., p. 9.) An average patient is assigned a risk score of 1.0. 

(Id.) A higher risk patient is assigned a risk score above 1.0, and a lower risk patient is assigned 

a risk score below 1.0. (Id., p. 6.) The computer model is supposed to identify “high priority” 

patients, who Accretive states are the sickest 5% of the population that cause 50% of the costs. 

(Id., p. 7; Ex. 26.) 

Accretive also planned for its “risk modeling” management system to address “patient 

leakage” and measure the efficiency of each Fairview primary care physician (“PCP”). (Ex. 19, 

pp. 3-6.) PCPs—such as family practitioners, internists, pediatricians, and OB/GYNS—would 

be measured by the “efficiency” of their referrals to specialists in and out of the Fairview 

network. Their rankings would be modified by the risk score of each patient treated by the PCP. 

(Id., p. 5.) In the end, the “efficiency” of the PCP would define the outcome of any “gain-share” 

to be paid to the PCP. 

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While a risk modeling score may seem benign in the abstract, the application of the 

system has troubling implications. In July of 2011, an Accretive employee had a laptop stolen 

with data on over 23,000 Minnesota patients. There was detailed information about patients’ 

diagnostics and treatment costs. The screen shot below was provided to a Fairview patient after 

she demanded to know what information was disclosed about her: 

 The screen shot indicates that the patient has four chronic conditions, including diabetes, 

a seizure disorder, bipolar disorder, and a metabolic disorder. It indicates that she has a 

complexity score of 2.287, a probability of an inpatient stay of 0.6, and that the total “allowed” 

to the provider is $4,984.90. 

 1.8 Accretive May Want to Gain Advantage from Fairview’s Business 

Opportunities and Transfer Them to . On 

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October 21, 2010, Fairview agreed to sign the QTCC contract, becoming Accretive’s 

“inaugural” QTCC client. (Ex. 5.) 

Within two weeks, on November 2, 2010, Accretive’s Board of Directors was told that 

Accretive would receive a $ million annual administrative fee, plus % of the cost savings 

attributed to the QTCC contract. (Ex. 20, p. 3.) The Accretive Board was told that the QTCC 

contract would reduce Fairview treatment costs by $ million in 2011, and that Accretive would 

receive % of the savings, or $ million, in addition to the $ million base fee. (Id., p. 5.) 

 

 

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 1.9 Accretive Has a Strategy to, by 2015, Reduce Health Care Costs by Almost 

$500 Million as it Relates to Treatment of Fairview Patients. On January 18, 2011, the 

QTCC program was presented to Fairview as a means to have “shared distribution” savings, 

where physicians (Ex. 22, p. 8) and patients (id., p. 7) are individually and collectively measured 

on treatment utilization. Any cost savings would then be divided among the physicians, with a 

5% reduction in treatment costs resulting in a distribution to each provider of approximately 

$26,000 (id., p. 15), or ultimately, $60,000. (Id., p. 16.) If a 20% savings were attained on a 

system-wide basis, the distribution to each provider would vary between $94,000 and $241,000. 

(Id., pp. 15-16.) 

Accretive projected a potential reduction of $482 million in treatment costs at Fairview 

by 2015, of which Accretive would receive $ million. (Ex. 20, p. 6.) Accretive CEO Mary 

Tolan claimed at an investor conference in August of 2011 that Accretive’s QTCC program will 

reduce health care treatment costs by 25% over a three-year period. (Ex. 23, p. 4.) In August of 

2011, Accretive advised the Fairview physicians that the target for reduced treatment costs is 

10% for 2011. (Ex. 16, p. 9.) 

Accretive has alternatively described various measures that would be taken to reduce 

heath care treatment costs: 

 On February 9, 2012, Accretive prepared a major QTCC initiative to 

reduce Emergency Room admissions by 20%. (Ex. 24, p. 8.) The 

reduction would be made by distributing a registry of “frequent flyer” 

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patients by name and thereafter devising a protocol that “improve[s] care 

planning” for the frequent flyer patients. (Id.) 

 On November 29, 2010, it was claimed that patients who called for 

physician appointments would be offered a telephone consultation with a 

nurse practitioner. (Ex. 25.) 

 On May 4, 2011, an Accretive memorandum states that Accretive would 

identify the 5% of the population that consumes 50% of the health care 

and then target efforts on that population to reduce health care costs. (Ex. 

26.) 

 On August 10, 2011, Mary Tolan, the CEO of Accretive, told Wall Street 

investors that Accretive has reduced re-admission rates at Fairview by 

30% and that total charges were reduced by 8%. (Ex. 23, p. 11.) 

While it appears that Accretive’s QTCC program has not yielded any profits to 

Accretive,1

 Accretive’s Board was told that the company would receive $ million per year 

from Fairview to maintain the project. (Ex. 20, p. 3.) Similarly, in its 2011 Annual Report, 

Accretive told Wall Street that it expected to make $60 million per year off the Fairview QTCC 

contract, including up to $10 million in base fees. (Ex. 12, p. 41.) 

Fairview may terminate the QTCC contract for any number of reasons. For example, 

Fairview may terminate the QTCC contract if a national law firm opines that the contract would 

violate any laws or regulations or would jeopardize Fairview’s nonprofit tax-exempt status. (Ex. 

5, pp. 25-26.) Fairview may also terminate the QTCC agreement if Accretive is sanctioned or 

under investigation by a government agency for material violations of law that would impact 

Fairview’s reputation. (Id., p. 25.) 

1.10 Charitable Organizations. Fairview is a 501(c)(3) tax-exempt public charity 

and is registered with the Minnesota Attorney General as a charitable organization under 

Minnesota Statutes section 309.52. Fairview has benefited from significant tax exemptions from 

 

1 See, e.g., Accretive Q4 2011 Earnings Conference Call, p. 10. 

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the State of Minnesota and its citizens. Fairview does not pay income taxes (Minn. Const. Art. 

X, § 1), property taxes (Minn. Stat. § 272.02, subd. 7), or sales taxes on its purchases (Minn. 

Stat. § 397A.70, subd. 7). Fairview does not pay federal income tax and donations to it are taxdeductible. 26 U.S.C. § 501(a) and (c); 26 U.S.C. § 170. Fairview may issue tax-exempt bonds. 

26 U.S.C. § 145 (qualified 501(c)(3) bonds); 26 U.S.C. § 103(a) (tax-exempt bonds). 

In exchange for these benefits, Fairview has strict obligations regarding the 

administration and use of its charitable assets under Minnesota and federal law. A hospital is not 

automatically eligible for tax-exempt status. Sonora Cmty. Hosp. v. IRS, 46 T.C. 519, 525 

(1966). The United States Supreme Court has held that qualification for tax-exempt status 

“depends on meeting certain common law standards of charity—namely, that an institution 

seeking tax-exempt status must serve a public purpose and not be contrary to established public 

policy.” Bob Jones Univ. v. United States, 461 U.S. 574, 586 (1983). In other words, “charities 

were to be given preferential treatment because they provide a benefit to society.” Id. at 589. As 

one court has explained: “[C]haritable exemptions from income taxation constitute a quid pro 

quo: the public is willing to relieve an organization from paying income taxes because the 

organization is providing a benefit to the public.” Geisinger Health Plan v. Comm’r of Internal 

Revenue, 985 F.2d 1210, 1215 (3rd Cir. 1993). Or, as another court recently put it in upholding 

the denial of a nonprofit hospital’s property tax exemption: “[E]ach tax dollar lost to a charitable 

exemption is one less dollar affected governmental bodies will have to meet their obligations 

directly. If a charitable institution wishes to avail itself of funds which would otherwise flow 

into a public treasury, it is only fitting that the institution provide some compensatory benefit in 

exchange.” Provena Covenant Med. Ctr. v. Dep’t of Revenue, 925 N.E.2d 1131, 1148 (Ill. 

2010). 

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The assets of Fairview are held in charitable trust under Minnesota law. Minn. Stat. § 

501B.35, subd. 3; In re Peterson’s Estate, 277 N.W. 529, 532 (Minn. 1938) (charity takes a 

charitable devise “not beneficially, but as trustee, to use the funds in furtherance of [its] 

charitable purpose.”); In re Quinlan’s Estate, 45 N.W.2d 807, 810 (Minn. 1951) (gift to “an 

institution whose sole reason for existence is charitable is a charitable trust”); People v. Orange

County Charitable Servs., 87 Cal. Rptr. 2d 253, 268 (Cal. Dist Ct. App. 1999) (impressing 

charitable trust upon charitable corporation’s assets). All assets held in charitable trust, 

including all revenue generated from fees for services, must be used for charitable purposes. 

Minn. Stat. § 501B.35, subd. 3. 

 The Attorney General’s broad common law authority to regulate charitable organizations 

and charitable trusts, including the authority to seek appropriate relief to redress their improper 

administration, has a long history. As one court stated: 

“In England the records show that even before the enactment of the Statute of 

Charitable Uses in 1601 suits were brought by the Attorney General to enforce 

charitable trusts. The community has an interest in the enforcement of such trusts 

and the Attorney General represents the community is seeing that the trusts are 

properly performed. [citations omitted.] The state, as parens patriae, 

superintends the management of all public charities or trusts, and in these matters 

acts through her attorney general.” 

Brown v. Mem’l Nat’l Home Found., 329 P.2d 118, 132 (Cal. Dist. Ct. App. 1958), cert. denied, 

358 U.S. 943 (1959). See also, Longcor v. City of Red Wing, 289 N.W. 570, 574 (Minn. 1940) 

(“purpose of vesting in some public official like the Attorney General the exclusive power to 

begin proceedings to enforce charitable trusts is obvious”); In re Quinlan’s Estate, 45 N.W.2d at 

812 (“attorney general has not only the right but the duty to enforce charitable trusts”); Schaeffer 

v. Newberry, 35 N.W.2d 287, 288 (Minn. 1948) (“attorney general is entrusted with the duty of 

representing the beneficiaries of a charitable trust, and it is his duty to enforce such trusts”). 

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 The Attorney General also has extensive statutory authority to regulate charitable 

organizations and trusts under Chapters 309 and 501B of the Minnesota Statutes. Under 

Minnesota Statutes section 501B.40, subd. 1, the Attorney General may conduct investigations 

for purposes of “determining whether property held for charitable trust is properly administered.” 

The Attorney General may pursue an action for breach of trust to secure compliance with 

Minnesota law, including injunctive relief, recovery of damages, removal of trustees, and other 

remedies. Minn. Stat. § 501B.4l. Under Minnesota Statutes section 309.57, the Attorney 

General may petition the district court for relief to restrain, enjoin, and redress violations, 

including injunctions, restitution, appointment of a receiver, and suspension of an organization’s 

registration. The failure to “administer and manage property held for charitable purposes in 

accordance with the law or consistent with fiduciary obligations constitutes a breach of trust.” 

Minn. Stat. § 501B.41, subd. 6. 

 Fairview must operate exclusively for charitable purposes to maintain its tax-exempt 

status. Fairview must have charity care programs for needy patients, see Rev. Rul. 56-185, and 

these programs must be advertised and promoted to patients. Allina Med. Clinics v. County of 

Meeker, 2005 WL 473908 at *10 (Minn. T.C. Feb. 18, 2005) (no charitable purpose where the 

charity care program was not advertised in the local paper or radio, a majority of patients pay for 

services, all patients are asked to pay, and charity care not available until all other avenues of 

payment are exhausted); see also, Riverside Med. Ctr. v. Dep’t of Revenue, 795 N.E.2d 361, 365-

366 (Ill. Ct. App. 2003) (nonprofit clinic not entitled to property tax exemption where 97 percent 

of revenues came from patients and clinic did not advertise charity care). As the Illinois Court of 

Appeals in Provena Covenant Medical Center v. Dep’t of Revenue said: “Charity is more than 

rhetoric. The term ‘charitable purpose’ signifies ‘concrete, practical, objective charity, 

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manifested by things actually done for the relief of the unfortunate and the alleviation of 

suffering or in some work of practical philanthropy.’” Provena Covenant Med. Ctr. v. Dep’t of 

Revenue, 894 N.E.2d 452, 470 (Ill. Ct. App. 2008), aff’d by Provena Covenant Med. Ctr. v. 

Dep’t of Revenue, 925 N.E.2d 1131 (Ill. 2010) (citing In re Estate of Schureman, 8 Ill.2d 125, 

132-133 (Ill. 1956)). 

 A charitable organization may jeopardize its tax-exempt status by entering into ventures 

with for-profit corporations that cause the charitable organization not to operate exclusively for a 

charitable purpose. A charity can lose its tax-exempt status if it becomes part of a for-profit 

“franchise system which is operated for private benefit in [that] its affiliation with this system 

taints it with a substantial commercial purpose.” Est. of Hawaii v. IRS, 71 T.C. 1067, 1080 

(1979). A charity may not be an “instrument to subsidize” a for-profit corporation, nor may a 

for-profit corporation “trad[e] on such [non-profit] status.” Id. at 1081-82. A joint venture with 

a for-profit company that allows a for-profit company to control a hospital may put the hospital’s 

tax-exempt status at risk. See, e.g., St. David’s Health Care Sys. v. United States, 349 F.3d 232 

(5th Cir. 2003). In St. David’s, a tax-exempt healthcare organization partnered with a for-profit 

company that operated hundreds of hospitals nationwide. The IRS revoked St. David’s taxexempt status, claiming its partnership with the for-profit caused it to no longer exist for a 

charitable purpose. Id. at 234-235. The Fifth Circuit held that providing a community benefit 

alone is not sufficient, stating: 

“It is important to keep in mind that § 501(c)(3) confers tax-exempt status only on 

those organizations that operate exclusively in furtherance of exempt purposes. As 

a result...we do not simply consider whether the organization’s activities further 

its charitable purpose, we must also ensure that those activities do not

substantially further other (non-charitable) purposes.” 

Id. at 236-237 (emphasis in original). The court further stated, “St. David’s cannot qualify for 

tax-exempt status under § 501(c)(3) if its activities via the partnership substantially further the 

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20 

private, profit-seeking interests of [the for-profit partner].” Id. at 237. The court also noted that 

a for-profit which manages the day-to-day operations of the facilities is not likely to serve the 

nonprofit’s charitable interests. Id. at 242. 

Conclusion. The RCA and QTCC contracts go to great lengths to try to make their terms 

confidential and hidden from public scrutiny. Both contracts recognize that their terms and 

existence could draw adverse regulatory scrutiny and may be terminated if they jeopardize the 

status and/or reputation of Fairview. As noted in this and subsequent volumes, the activities of 

Accretive have not been undertaken in a manner that is consistent with the mission of a 

charitable hospital. 

AG: #2991497-v1 

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STATE OF MINNESOTA

OFFICE OF THE ATTORNEY GENERAL

Compliance Review of Fairview Health Services’ 

Management Contracts with Accretive Health, Inc. 

Volume 2

Culture Wars 

LORI SWANSON

ATTORNEY GENERAL

April 2012 

Review Conducted Pursuant to Minnesota Statutes Chapters 309, 501B, and 317A 

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VOLUME TWO 

CULTURE WARS 

Executive Summary.........................................................................................................................1 

2.1 Introduction .........................................................................................................................1 

2.2 The Fairview Mission..........................................................................................................1 

2.3 A “Numbers Driven” Culture with “Bedside Collections” .................................................2 

2.4 Prior Balance Collections ....................................................................................................3 

2.5 Pre-Service Collections; Point of Service (POS) Collections; Bedside Collections...........4 

2.6 Carrots and Sticks..............................................................................................................10 

2.7 Emergency Room Tactics: Viewpoint of a Patient Advocate ...........................................12 

2.8 Boiler-Room Tactics .........................................................................................................12 

2.9 Operation Blue Balls .........................................................................................................12 

2.10 GOMER.............................................................................................................................13 

2.11 Patient Access and Stop Lists............................................................................................14 

2.12 Pre-Registration Blue Balls ...............................................................................................17 

2.13 Fairview’s Staff Perspective..............................................................................................18 

2.14 Patient Perspective.............................................................................................................19 

Conclusion .....................................................................................................................................20 

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VOLUME TWO 

CULTURE WARS: 

THE EMERGENCY ROOM MEETS GLENGARRY GLEN ROSS

“I’ve been doin’ this job for 17 years, honey. Doctors come and go, but nurses 

make this place run. We don’t get much credit or pay. We see a lot of misery, a 

lot of dyin’, but we come back every day. I’ve given up bein’ appreciated, but I 

sure as hell won’t let any of us be taken for granted.” 

Nurse Haleh Adams, The television show “E.R.” 

“We’re adding a little something to this month’s sales contest. As you all know, 

first prize is a Cadillac Eldorado. Anybody want to see second prize? [Holds up 

prize.] Second prize is a set of steak knives. Third prize is you’re fired.” 

Blake, The movie “Glengarry Glen Ross”

“There are some attorneys who aren’t skilled enough for an actual practice that 

work for these stupid fricken non-profit organizations who help the poor in 

Detroit. Now we have to waste our time with this low life patient and some 

dumbass attorney all because the patient didn’t show up to the DHS office to 

renew her benefits.” 

Accretive debt collector: August 16, 2011 

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1

VOLUME TWO 

CULTURE WARS 

Executive Summary: Accretive Health, Inc. (“Accretive”) engages in aggressive 

collection of hospital bills. Accretive imposes quotas on hospital personnel to collect money 

before treatment is sometimes provided, even in the Emergency Room. The imposition of 

collection quotas on hospital employees through chalk talks, prizes, and other tactics, 

which are commonly utilized in high-pressure boiler-room-style sales atmospheres, is in 

conflict with the purpose of a charitable health care organization, whose mission is to 

provide treatment to its patients. Hospital employees are required to participate in what 

they call a “Blue Balls” computer program, where a patient cannot be fully registered 

unless the employee collects money from the patient or enters a written explanation as to 

why money was not collected. 

 2.1 Introduction. Several other volumes describe a variety of laws violated by 

Accretive and Fairview Health Services. These include the Minnesota Debt Collection Agency 

Act, the federal Fair Debt Collection Practices Act (FDCPA), the Health Insurance Portability 

and Accountability Act (HIPAA), and the Minnesota charitable organization laws, among others. 

This volume is about the changes in Fairview’s culture as a result of Accretive’s activities. The 

following describes the scope and depth of the culture change imposed by Accretive. Perhaps 

the most damaging act by Accretive was to undermine the basic premise that a hospital is a 

sanctuary to treat the sick and infirm. 

 2.2 The Fairview Mission. Hospitals should be sanctuaries that welcome and care 

for those in the dawn of life, the eve of life, and the shadows of life. Over 20 percent of 

American families encounter a life-changing event in a hospital. The people who work in 

hospitals necessarily must maintain a culture that above all else respects human dignity. 

 Fairview was formed when several Norwegian citizens organized the Norwegian Hospital 

Association in 1905. It later changed its name to the United Christian Hospital Association and, 

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by 1908, opened the Thomas Hospital, thereafter changing its name to Fairview in 1916. (Ex. 1.) 

Fairview lists the following as its cultural values: 

“Dignity: We value the uniqueness of each person and work to ensure everyone’s 

right to privacy. We respect the cultures, values, beliefs and traditions of others 

and honor their talents and contributions.” 

“Integrity: We say what we mean and do what we say. We communicate openly 

and honestly and behave ethically. We demand the best of ourselves and accept 

shared accountability for our actions.” 

“Service: We work to make a difference in people’s lives and in our 

communities. We strive for excellence by anticipating, meeting and exceeding 

expectations. We continually improve our programs and skills through learning 

and innovation. We responsibly manage our resources.” 

“Compassion: We recognize and respond to the emotional, spiritual and physical 

needs of all the people we serve. We create a caring environment, conducive to 

healing, growth and well-being for all.” 

(Ex. 2, emphasis added.) 

 2.3 A “Numbers Driven” Culture with “Bedside Collections.” After landing the 

Fairview revenue cycle agreement (“RCA”) in 2010, Accretive decided to make Fairview’s 

culture “numbers driven.” (Ex. 3.) Accretive used “Chalk Talks” to change the Fairview 

culture. A “Chalk Talk” is a “daily operational meeting designed to develop, energize, and 

engage a work team.” (Ex. 4.) At the daily “Chalk Talks” (Ex. 5), Fairview’s emergency room 

and patient registration staff were required to talk about their collection quotas, tossing a ball 

around to each speaker as they discussed their collection performance. (Ex. 6.) Accretive’s 

revenue cycle work for Fairview was led by an individual Accretive calls “Andrew ‘I Am Not A’ 

Crook.” (Ex. 7.) As early as September, 2010, Mr. Crook reported to the Accretive home office 

in Chicago (in preparation for an upcoming presentation to the Fairview CEO), “We’ve started 

firing people that aren’t getting with the program.” (Ex. 8.) Fairview emergency room workers 

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state that they got the message that if they don’t collect money in the ER, they would be fired. 

(Ex. 9.) 

 Once it landed the Fairview RCA, Accretive set up a 100-day plan, to aggressively focus 

on collecting money from patients. (Ex. 10.) The Fairview pre-registration team was to take an 

“assertive collections approach.” (Ex. 11.) 

 2.4 Prior Balance Collections. Accretive and Fairview attempt to collect prior 

balances at three separate stages at the front end of the revenue cycle: 

 Scheduled patients during pre-registration; 

 Unscheduled patients during registration; and 

 Customer service during inbound calls (account inquiries). 

(Ex. 12.) 

Accretive emphasizes that the primary role of a hospital employee is to collect money: 

“Addressing the patient’s balance is an imperative part of your role.” 

(Ex. 13, emphasis on original.) 

To create a Glengarry Glen Ross-type hospital culture, Accretive engages in a number of 

different methods to change the sanctuary culture of a hospital to that of a “numbers driven” 

collection agency. Accretive induces Fairview emergency room and “front end” personnel 

(pre-registration and registration staff) with prizes for collecting the most money in daily, weekly 

and quarterly contests. (Ex. 14.) Accretive assigns the names of NFL teams (Chargers, Jaguars, 

Steelers, Giants, etc.) to Fairview hospital shift teams, instilling a competitive effort to raise 

more money. (Ex. 15.) In September of 2010, an employee at Fairview Ridges noted that the 

competition became quite intense, with employees claiming that the “Steelers” were so named 

because they “steal” wins. (Ex. 16.) Accretive managers exhort the Fairview teams to victory 

by promising that, if they make their quotas, the Accretive leaders will wear a clown outfit 

(Ex. 17), a Colonel Sanders outfit, or a Waldo outfit to the hospital. (Ex. 18.) Another Accretive 

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manager promises that, if a quota is attained, he will shave his head. (Ex. 19.) Another 

Accretive team leader said he will dress up like a turkey if Fairview employees reach their 

collection quotas. (Ex. 20.) Many Fairview employees blanched at the inducements. On one 

occasion, the emergency room staff at the University of Minnesota Medical Center filed a 

complaint with the Attorney General, asking her to “save” the staff. On another occasion, an 

employee apparently wrote: 

“Patients are harassed mercilessly until their Community Care is finally approved, 

and one can only speculate on the heartache, mental anguish and worse that these 

kinds of practices cause.” 

(Ex. 21.) 

 2.5 Pre-Service Collections; Point of Service (POS) Collections; Bedside 

Collections. If the patient makes it through the “prior balance” stage, she faces the “pre-service 

collections”/point of service (POS) gauntlet, where hospital personnel are told by Accretive to 

collect from patients the likely fee that will be incurred prior to treatment being rendered. (Ex. 

22.) The pre-service, or POS, phase begins with the so-called “Blue Balls” computer program, 

which estimates the total amount of the patient’s likely deductible and co-payment under the 

patient’s health insurance policy. If the patient is uninsured (self-pay), the patient will also be 

advised of the likely cost of the hospitalization. This pre-service, or POS, collection effort is 

undertaken at the pre-registration office for scheduled visits, the Emergency Room for 

unscheduled visits, and at the registration office, with the object being that the patient pays 

his/her estimated share before treatment is provided. (Ex. 23.) Accretive rigorously tracks each 

Fairview employee’s pre-service or POS collections performance on a daily basis. (Id.) For 

example, each day they track the “[t]otal remaining days we have to collect” and “[h]ow much is 

needed per day for the remaining part of the month for us to meet our goal.” (Ex. 24.) By June, 

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2011, Accretive began to post the point-of-service collections of Fairview’s emergency room 

workers each day. (Ex. 25.) 

One of the self-described “innovative” techniques of Accretive is to instruct hospital 

attendants to engage in collection efforts at the patient’s bedside. Calling bedside collections a 

“‘Front’ Future Initiative” (Ex. 26), Accretive describes bedside collection efforts as “Bedside 

financial counseling for patient liability” (id.) or as “Bedside collection for unscheduled inpatient 

visits.” (Ex. 27.) When the University of Minnesota Medical Center (UMMC) fell behind on 

patient collection efforts, Accretive cracked down by dedicating specific personnel to collections 

in both the emergency department (ED) and at the bedside. (Ex. 28.) Fairview acute care intake 

workers at the University of Minnesota Medical Center were told they must “identify and ask for 

residual and prior balance[s] 100% of the time” and that their job performance would be 

measured by whether they did so. (Ex. 29.) 

The Pre-service/POS and Prior-balance collection efforts are carefully tracked in a 

“rack and stack” weekly presentation (Ex. 30), where each Fairview employee is listed and 

graded by Accretive. The chart does not evaluate them on medical knowledge, humanitarian 

work, compassion, or successful treatment parameters. Rather, the scorecards list employees by 

the “residuals” (the patient’s estimated share of the bill) they collect each week. (Id.) The areas 

of gradation are listed as follows, sorting each employee by: 

 PB [prior balance] collection knowledge 

 Adaption to change in culture 

 Team influence on collection efforts 

 Response to collection coaching 

 Average PB [prior balance] accounts touched per day 

 Total $ collected 

(Id.) Staff Productivity Results are prepared on a weekly basis to gauge the improvement in 

collection efforts. (Ex 31.) The Fairview staff is expected to respond to these charts by 

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preparing their “OWN PERSONAL Yearly – Monthly – and Weekly GOAL for prior balance and 

point of service collections....” (Ex. 32, emphasis in original.) 

In early 2010, at Accretive’s 45-day “milestone” review, the Accretive team leaders 

reported upstream to other Accretive executives, saying that they have implemented the 

following: 

 Individual and team incentive programs; 

 Required 100 percent “asks” for payment by Fairview staff on patients with prior 

balances; 

 A rigorous “dashboard” to measure each employee’s performance in each 

collections zone; and 

 An exception-based registration process to decrease “low yield touches” and 

increase the higher yield ones. 

(Ex. 33.) 

By July 16, 2010, the “numbers driven” culture of Accretive appeared to be gaining 

ground, with Brandon Webb, an Accretive manager, telling Fairview staff that, in terms of 

driving up collection numbers, “OB [obstetrics] is probably going to help us a lot.” (Ex. 34.) 

Fairview’s response was twofold: “We need to get cracking on labor and delivery. There is a 

good chunk to be collected there...,” and “I don’t believe we have hardwired the fact that staff 

need to look at prior balances for EVERY patient, especially in the ED [Emergency 

Department]. That needs more work.” (Ex. 35.) Mr. Webb’s response is reaffirming: “Great 

ideas and points...!” (Ex. 36.) 

It appears that the University of Minnesota Medical Center was slow in implementing 

Accretive’s collection quotas. Accretive created a “heat map” of delinquent collections activity, 

with the University’s “heat map” declaring that each Fairview employee at the University must 

be “monitored” to make 100% “asks” on patients and “incentivized” to make point of service 

collections. (Ex. 37.) 

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Accretive not only prepares a weekly “dashboard” of collections by each Fairview 

employee (Ex. 38), it also prepares a weekly “dashboard” of collections on certain patient 

categories, including for the emergency room, outpatient surgery, inpatient surgery, high-dollar 

diagnostic, and unscheduled inpatient admissions. (Ex. 39.) Other Accretive charts determine 

which Fairview divisions perform “in scope,” dividing the collection efforts on each of 

Fairview’s seven campuses. (Ex. 40.) 

The daily collections are tracked, with individual Fairview employees recognized in 

e-mails and provided with gifts if they are aggressive collectors. (Ex. 41.) On June 3, 2011, 

Accretive sent an e-mail to Southdale Hospital employees after one of them collected a past-due 

balance from a patient. Accretive wrote: “I witnessed the entire event and it was like poetry.” 

(Ex. 42.) The publication of employee collection tallies was so demeaning that Accretive and 

Fairview personnel jointly noted the negative impact on staff morale and the marginal impact it 

had on collection efforts. (Ex. 43.) 

The response from Accretive management to this concern was as follows: 

“...we’ll continue with it as-is. Our experience is that collections performance 

just doesn’t get to target performance without this level of rigor.” 

(Id.) 

A Fairview employee expressed concern that the Accretive collection goals are 

“extremely aggressive.” (Ex. 44.) Another, however, having embraced the Accretive “numbers 

driven” culture, responds: 

“Our goals should be the first thing you think about every day. All the other 

work comes after that.” 

(Id., emphasis added.) 

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 At the beginning, Accretive hit some bumps when it encountered the Fairview culture. In 

August of 2010, Mr. Webb, the Accretive manager at Fairview, announced that: “These 

numbers look awful this month.” (Ex. 45.) In September, Fairview announced: “Staff is 

struggling with prior balance collections.” (Id.) Mr. Webb followed this up with an e-mail: 

“[T]hese numbers do not look very good.” (Id.) On September 20, he noted to Fairview staff: 

“I have not heard one word from anyone today regarding whether we collected any additional 

prior balances last week. I hope everyone understands these are not my numbers, Accretive’s 

numbers, or Jena’s numbers, these are our numbers....” (Id.) 

Finally, on September 20, 2010, Mr. Webb sent out an e-mail to Fairview employees: 

“OUCH! Prior balance numbers looked BAD last week....Before I have a minor 

panic attack about the numbers can everyone please let me know if you had any 

accounts last week that you assisted in a rebill situation, etc., that we can count in 

our PB [prior balance] numbers?” 

(Ex. 46.) 

Hearing no response, on September 21, 2010, a memo was sent to all management 

personnel with the following instruction: “Any free time...should be spent rounding with staff 

and making sure they are...asking for money from EVERY patient they can!” (Ex. 47.) The 

memo also demanded that the daily surgery and services schedules be scoured to highlight any 

patient who has a balance due. (Id.) On October 6, 2010, Mr. Webb sent this e-mail to Fairview 

staff: 

“Very disappointing results. What do you plan to do to make October a better 

month?” 

(Ex. 48.) 

On October 11, 2010, a Fairview manager parroted Mr. Webb’s e-mail by sending out the 

following demand to her staff: 

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“It’s noon and we are only at $5,000...not so very good for where we are 

typically.” 

(Ex. 49.) The Fairview staff responded to Accretive’s demand to book numbers. By 7:00 p.m., 

the Fairview manager reported back to Mr. Webb that: 

“Prior balance collections have increased in all areas. The biggest improvement 

has been the Main Admitting and ED [Emergency Department].” 

(Ex. 50.) 

In order to reward aggressive collections, on October 28, 2010, Accretive sent a mass 

e-mail which advised Fairview employees that the top collectors are posted on a white board 

near the business office. (Ex. 51.) The Accretive manager also declared that the “top collectors” 

are in a close race for the top collector award for October. (Id.) The next day, an e-mail went 

out recognizing particular employees for their collections and telling them to come by the 

business office to pick out a gift from the “kudos box.” (Ex. 52.) The competition ended on 

November 1, 2010, when a mass e-mail from Accretive was distributed to the Fairview staff 

proclaiming: 

“We had an UNBELIEVABLE October....Great work. Here is where we closed 

the month: GRAND TOTAL POS Collections of $353,797.17 and Prior 

Balance Collections of $27,291.57 

This blows all prior records Out Of The Water!!! Nice work!” 

(Ex. 53, emphasis in original.) The e-mail promises a “thank you” for the employees and then 

sets out the November collection-goal quotas. (Id.) The e-mail concludes by noting that: “the 

highest collector in each area on each shift will win a gift card.” (Id.) 

The Fairview and Accretive staff also intensified their collection efforts by training 

birthplace registrars on how to collect off newborns and their mothers. (Ex. 54.) One chart 

dated November 11, 2010 is entitled: 

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“Opportunity: Labor and Delivery represents excellent opportunity to 

increase cash collections”

(Ex. 55, emphasis in original.) 

On January 17, 2011, Mr. Webb chastised Fairview employees with this threat: “Do we 

need to look at having all of the PB’s [patients with prior balances] that can’t pay to start seeing 

Bruce [an Accretive employee] again?” (Ex. 56.) On January 25, 2011, Mr. Webb chastised 

another Accretive employee: 

“You guys collected $60 in PB [prior balance] yesterday. Unacceptable. How 

are you going to fix this?” 

(Ex. 57.) 

On January 27, 2011, the Fairview and Accretive staff exchanged mass e-mails which 

recognized the biggest collectors for November and December and promised to provide a 

“recognition reward.” The e-mail’s author wanted “to CONGRATULATE the ENTIRE ED 

[Emergency Department] team” for “a RECORD month,” collecting $62,501. (Ex. 58, 

emphasis in original.) 

Another example of the Glengarry Glen Ross culture is the agenda for a “Patient Share 

Engagement” meeting sent on August 9, 2011. The agenda states that the “focus area” for 

Fairview employees is as follows: 

“Are your focus areas the entity’s highest opportunity areas (opportunities in 

dollars and ease of collections)?” 

“Are the following Best Practices implemented in these focus areas?” 

(Ex. 59.) The agenda then itemizes the “best practices” as incentives, chalk talks, and “100% 

ask” rates. (Id.) 

 2.6 Carrots and Sticks. Accretive was very creative in implementing a contest and 

prize strategy. These strategies included pizza parties (Ex. 60), gift cards (Ex. 61), movie tickets 

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(Ex. 62), candy, wearing jeans to work (Ex. 63), free lunch, parking space, fake flowers (Ex. 64), 

putting makeup on a manager (id.), throwing a pie in a manager’s face (id.), painting a manager 

with a fake tattoo (id.), and a Golden Gopher collections competition (Ex. 65), as well as cash 

payments (Ex. 66). 

To underscore its incentive program, on November 12, 2010, Accretive sent out a mass 

e-mail with the heading: 

“Cliffs notes: You can receive between $130 - $280 per month by meeting your 

collections and PFA goals, starting now!” 

(Id., emphasis in original.) The e-mail describes a variety of prizes, including $25 per pay period 

for screening patients for pre-service/POS collections, $40 per pay period for meeting the 

employee’s collection goal, and $150 for being the top collector. (Id.; Ex. 67.) 

 Daniel Fromm, the Chief Financial Officer of Fairview, responded to the e-mail, telling 

Accretive that the gifts violated Fairview’s corporate policy. (Ex. 68.) In response, on January 

7, 2011, an employee sent out an e-mail stating that: 

“We need to get the incentives out asap. That would include the $150 ones for 

Radiology, Riverside ER and UER.” 

(Ex. 69.) At the same time, in November of 2010, an Accretive manager sent an e-mail to 

Fairview stating that the “carrots” aren’t good enough and that Fairview needed to start using the 

“stick”: 

“I hope the ‘carrot’ of the gift cards gets things moving a bit more – but I think 

we’ll need to institute the ‘stick’ as well – can Colin and Colleen start writing 

folks up for not screening accounts when they’re the registrar.” 

(Ex. 70.) 

It is apparent that the prizes were still being offered in the four months after the Fairview 

CFO said that the gifts violated corporate policy. On March 2, 2011, a Fairview employee 

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confronted an Accretive employee and said that the Fairview staff thought the prizes were a 

“slap in the face.” (Ex. 71.) 

 Finally, on February 20, 2012, after the Attorney General filed a lawsuit against 

Accretive, Accretive drafted a statement which failed to disclose the team dinners and 

recognitions. (Ex. 72.) 

 2.7 Emergency Room Tactics: Viewpoint of a Patient Advocate. The impact of 

the Accretive philosophy on Fairview is perhaps best stated by an employee at Fairview Ridges 

Hospital. She described her Fairview experience prior to Accretive as fulfilling. She considered 

herself an advocate for patients, trying to give some comfort at a time of a medical crisis. Prior 

to the appearance of Accretive, she had never heard of “chalk talks” and never attended a “boiler 

room” meeting. 

 2.8 Boiler-Room Tactics. The hospital employee states that, after Accretive arrived 

on the scene, she was required to attend “chalk talk” meetings where Accretive “team leaders” 

engaged in high pressure tactics to induce emergency room personnel to view their primary 

mission to be the collection of money as opposed to the well-being of the patient. Groups of 

workers in the Fairview hospital emergency rooms were given team names, and each week the 

person and team who collected the most money from emergency room patients would be 

recognized, sometimes with a raffle prize, sometimes a cake, sometimes an e-mail “shout out.” 

Those who performed poorly on collections were ignored. 

 2.9 Operation Blue Balls. The Ridges emergency room worker said that Accretive 

told her the “cue” to collect money from the patient was after the physician entered the vestibule, 

made an introduction, and left to attend to another patient, even if treatment was not yet fully 

rendered or completed. Accretive established an electronic data system where a patient’s 

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registration was not complete until the patient advocate made an attempt at collection. Accretive 

installed on the EPIC hospital software its own software program known as AHtoAccess, or 

A2A, derisively described by hospital personnel as “Operation Blue Balls.” 

Under the Blue Balls program, a Fairview registration employee could not process a 

patient electronic record (all patient records are now electronic) unless she completed four 

informational “blue balls” that popped up on the screen. The first ball demands that she fill out 

patient demographic data, such as name, address, contact numbers, and the like. Not until this 

“ball” is completed may the employee go to the second “ball,” where the employee must 

undertake a “real time” validation of the patient’s insurance coverage and description of the 

insurance benefits. Employees are also required to screen “self-pay” patients (a euphemism for 

the uninsured) for alternative types of coverage, such as Medicaid. Once the second ball is 

completed, a third ball appears, where the employee must enter the health care services to be 

provided as well as predict the corresponding diagnosis codes so that the software can generate a 

bill. After this “ball” is completed, a fourth ball appears, in which the employee must determine 

the amount of the likely financial responsibility for the insured patient (as it relates to co-pays, 

deductibles, and any residual amount owed after insurance is applied), or the total cost to the 

uninsured patient, and try to collect the amount owed from the patient. The employee had to 

report on the computer how much money she collected and, if she didn’t collect any money, she 

had to explain the effort she made to get money and why it was not successful. 

 2.10 GOMER. Before the enactment of the federal anti-patient dumping statute, 

called the Emergency Medical Treatment and Active Labor Act, or EMTALA, “GOMER” was 

an acronym used in hospitals. It stands for “Get Out of My Emergency Room.” Accretive 

prepared a variety of scripts for emergency room attendants, and employees were told to follow 

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the scripts. The scripts can lead a patient or her family to believe the patient will not receive 

treatment until payment is made. The fourth blue ball prints an invoice that tells the family that 

they are responsible for a deductible, co-payment, or residual amount based on the likely 

treatment code for the patient. The Fairview Emergency Room workers are told to request 

payment on the balance by requesting a credit card. If someone says they don’t have a credit 

card, the employee is choreographed to say: “[I]f you have your check book in your car I will be 

happy to wait for you....” (Ex. 73.) If the patient says she doesn’t have cash, the employee is 

scripted to say: “[I]f you want to make a call we will accept credit card over the phone.” (Id.) If 

the patient’s family questions the amount of the charge, states that they already have paid the 

deductible, or questions why they were never asked about a pre-payment in the past, the hospital 

employee is instructed to say that the policies of the hospital have changed. If the patient says 

that she doesn’t have time to negotiate the likely fee, the hospital employee is instructed to say: 

“I understand that you are running late for your test but this will not take more than 5 

minutes....” (Id.) Finally, if the patient says that she can’t pay, the hospital employee is 

supposed to remind the patient that “once the account is with [a] collection agency that can affect 

your credit score....” (Id.) 

 2.11 Patient Access and Stop Lists. In 2011, Accretive rolled out a “Patient Access 

Strategic Roadmap” with six “patient access” initiatives for the year. (Ex. 74.) The six 

initiatives underscore that “patient access” is a euphemism for “restricted access,” with the 

principal initiatives being to achieve a pre-service/POS (point of service) target of 30% 

collections and a higher target for prior balance (PB) collections. (Id.) The “patient access” 

restrictions are outlined in an Accretive “Solution Overview” presentation, which brands the 

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restrictions as the “Accretive Secret Sauce,” or “ASS.” (Ex. 75.) The cover of the Solution 

Overview has a slogan perhaps fitting for a collections agency but not so much for a hospital: 

“You’ve never seen ASS like ours!” 

(Id.) 

The “Patient Access” strategy appears to have succeeded, not just with increased 

collections but in chasing patients away from the hospital. At least one memorandum says that 

“stop lists” have been successful. (Ex. 76.) A “stop list” is described as a “front end” denial, 

where the patient is essentially stalled by “financial counselors” into paying a prior balance or a 

“POS” treatment. (Ex. 22.) Accretive’s guidelines indicate that registration personnel should: 

“Pull together PB [prior balance] stop list [the] night before for patients 

appointments [the] next day.” 

(Ex. 77.) On April 19, 2011, Accretive added “stop lists” for breast cancer patients. (Ex. 78.) 

 On November 5, 2010, the Accretive managers were advised that Fairview staff desired 

to change the registration process in the Emergency Room so that it occurred after treatment was 

rendered to the emergency patient. (Ex. 79.) A Fairview employee trained by Accretive 

criticized the proposal, claiming that they would lose “hundreds of thousands of dollars in 

patients walking out the front door.” (Id.) She also reported that Radiology was unhappy with 

the collection process and that the Neonatal Intensive Care Unit (NICU) complained about the 

aggressive collection activities. (Id.) 

The “stop list” strategy continued throughout the year. On March 31, 2011, three 

University of Minnesota physicians complained that patients were foregoing treatment because 

of the Accretive collection practices. (Ex. 80.) Accretive dismissed the doctors’ complaints as 

“country club” talk. (Id.) 

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On April 1, 2011, a Fairview employee suggested that a meeting be held to discuss 

complaints about patients being asked for “co-pays, deductibles, etc.” by the financial service 

counselors prior to procedures being performed. (Ex. 81.) 

In March, 2011, Accretive described 22 Fairview emergency room patients who left the 

emergency room without being registered or who were uncooperative with the “Patient Access” 

process. (Ex. 82.) On April 8, 2011, Accretive noted that two patients left the Southdale 

emergency room without being registered and that three patients were uncooperative with the 

“Patient Access” process at the Ridges emergency room. (Ex. 83.) On June 16, 2011, Accretive 

noted that three emergency room patients in Fairview’s North Region were “uncooperative” with 

the process. (Ex. 84.) In November of 2011, a Twin Cities spine surgeon complained that 

Accretive’s financial clearance process was delaying treatment for patients at Ridges Hospital. 

(Ex. 85.) 

Finally, in December of 2011, an incident at the University of Minnesota Amplatz 

Emergency Room caused the Risk Management team at Fairview to question whether Accretive 

was violating the federal Emergency Medical Treatment and Active Labor Act (42 U.S.C. 

§1395dd), or EMTALA, by withholding treatment and seeking to collect money from emergency 

room patients prior to completion of a medical screening. (Ex. 86.) EMTALA, the anti-patientdumping statute, requires hospitals that receive federal benefits to provide medical treatment to 

stabilize a patient in the emergency room. The incident apparently involved the child of 

uninsured parents, and the parents awaited treatment of their child while the Accretive “financial 

counselor” explained the opportunity of the parents to enroll in a COBRA program, which the 

parents said they could not afford. The Accretive “financial counselor” then told the family that 

treatment of more than an hour in an emergency room was more expensive. (Ex. 87.) The father 

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apparently complained about the “stop list” effort. The Fairview Risk Manager, an attorney 

named Bonnie Johnson, told the Fairview and Accretive “financial counselors” that EMTALA 

requires that medical screening must be provided before any discussion about payment, and that 

emergency stabilizing treatment, if any, must be provided before payment options are discussed. 

(Ex. 86.) A front end collector at the University of Minnesota’s Acute Care and Transplant 

Office who works closely with Accretive, “lost her composure” at the attorney, labeling her the 

“EMTALA police.” (Ex. 88.) The collector e-mailed Peter Van Riper, a Vice President at 

Accretive, and said that the attorney’s advice on EMTALA is “a bunch of bull....” (Id.) Mr. 

Van Riper agreed, and volunteered to talk to the Fairview staff. (Id.) 

 2.12 Pre-Registration Blue Balls. “Operation Blue Balls” not only takes place in the 

Emergency Room, but also in the pre-registration process for patients whose physicians are 

admitting a patient to the hospital. The pre-registration process is generally undertaken by 

telephone prior to the patient being admitted to the hospital, and generally occurs at the Stinson 

Boulevard office of Fairview or at Accretive’s collection center in Kalamazoo, Michigan. The 

pre-registration process is common for planned pregnancy deliveries, orthopedic surgeries, back 

surgeries, cancer surgeries, and the like. 

One Fairview employee, who considers herself a professional, works with patients to 

navigate the financial process prior to being admitted to the hospital. She says that in many 

cases, the patient and her family are worried about the upcoming treatment, and the burden of 

working through a financial pre-registration telephone call can be stressful. 

She states that, after Accretive came on the scene, she was told to attend the “chalk talk” 

meetings and implement Operation Blue Balls on new patients. She described the process as 

tense, where an Accretive manager walks behind pre-registration personnel with a stop watch, 

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demanding that they complete a registration within five to eight minutes. During this period of 

time, employees are expected to work through Operation Blue Balls and get the credit card 

information from the patient. The Fairview pre-registration personnel are graded on how many 

patients they can talk to in an hour, with personnel rewarded if they achieve a six patient perhour production and penalized if they only have a four person per-hour production. 

During the pre-registration process, the Blue Balls program appears, and the patient again 

goes through the “stop list” script about pre-payment/POS and prior balance collections. The 

patient must make it through 14 levels of inquiry before being told that she can still get 

“emergent” treatment even if she has to pay for it on an installment basis. (Ex. 73; see also, 

Ex. 89.) 

 2.13 Fairview’s Staff Perspective. Accretive took a survey of Fairview employees to 

determine their acceptance of the Accretive culture. The survey indicated that 40% of Fairview 

staff were uncomfortable with the collection activity. (Ex. 90.) Some of the employee 

comments in the survey included the following: 

“PB [prior balance] collections should be done at the backend not the front. We 

are giving the image that we are money hungry and that we don’t care about the 

overall person.” 

“As far as the Accretive initiatives, all we really know is that it is about money 

and how much we can collect.” 

“In fact I am greatly distressed when I think about coming to a FV [Fairview] 

hospital and if I have a past due being presented with it multiple times until I pay 

the bill or make payment arrangements etc. Let’s face it sometime[s] when 

people are in crisis the last thing they are thinking about [is] the cost that they will 

eventually owe.” 

“But we are pushing that envelope too much when we are focusing on collecting 

it all up front.” 

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“I have encountered patients that are very upset with calls from previous 

teammates regarding how they were approached about copay/prior payments. I 

think we need to listen to the patient more carefully.” 

(Ex. 91.) 

An agenda for an Accretive/Fairview management meeting in November of 2011 noted 

that “Front End employees” are concerned that they will be investigated for patient collections 

due to a Star Tribune article regarding the collections process. (Ex. 92.) As recently as January 

25, 2012, Mr. Barry, the president of Accretive Quality, was advised by Mr. Crook, the head of 

Fairview operations for Accretive, that: 

“Fairview line staff has expressed concerns regarding collecting patient share at 

the time of registration....The impact has been most felt at the Fairview 

management level - there have been some emotional responses.” 

(Ex. 93.) 

This underscores the culture clash between the Accretive Glengarry Glen Ross culture 

and the culture normally embraced by a charitable, non-profit hospital. 

 2.14 Patient Perspective. Accretive distributes scripts to its employees which make it 

clear that the objective of patient contact is to get money, and that to get the money, the 

Accretive employee should be aggressive in prodding the money out of the patient. For instance, 

a multi-page memorandum entitled “Collections Call Flow” instructs the Accretive callers to 

learn from the “heavy hitters” at the company. (Ex. 94.) The memorandum tells the callers to 

never take an answer of “no” from the responsible party (“RP”), to threaten that collection calls 

will continue unless payment is made, and that the company will report the RP to the credit 

bureau and have their credit score lowered. (Id.) The memorandum instructs the collector to pry 

into whether the RP gets child support, unemployment, welfare, or other supplements and that, if 

so, the collector should tell the RP to direct that supplemental payment to them. (Id.) The 

memorandum instructs the caller to ask if the RP can get help from a relative. (Id.) The 

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memorandum is silent about one aspect of medical debt, however: the patient is not told that 

Fairview is required by law and by an agreement with the Minnesota Attorney General to have a 

charitable giving policy. Indeed, it appears that Accretive was even contemplating requiring 

patients who qualified for charity care to set up credit card payment plans. (Ex. 95.) 

An example of deceptive patient contact is Ms. Marcia Newton’s experience with 

Accretive. Ms. Newton filed a complaint with the Attorney General’s Office, stating that her 

physician scheduled a surgery to install ear tubes in her child, who was at risk to have a ruptured 

ear drum if the surgery was not performed. She appeared at the hospital with her child on the 

day of the scheduled surgery. She states that the admissions (registration) employee looked her 

up on the computer and advised her that the hospital charge for the surgery was going to be about 

$9,000, and that she would be obligated to pay $876 before the surgery could take place as the 

patient’s share under her policy. Because she had the balance available on her credit card, she 

charged it. As it turns out, the actual cost of the procedure was about $4,200, and her 

responsibility under her insurance was only $200. She couldn’t get the hospital to give her 

overpayment back. (Ex. 96.) 

Accretive and Fairview claim that if the treatment is “emergent,” they don’t demand prepayment. The term “emergent,” however, seems to be narrowly defined by Accretive and 

Fairview. In the above case, the need of a child to have ear tubes inserted to avoid a ruptured ear 

drum was apparently not determined “emergent.” 

These practices can lead patients to believe that they will not get access to necessary 

treatment if they have to pay on an installment basis. 

Conclusion. Accretive and its “numbers driven” culture have undermined Fairview’s 

mission-driven culture. The Accretive culture has converted the hospital culture from that of a 

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charitable organization to that of a collection agency. Perhaps more important than the 

description of legal violations identified in other volumes, it is the Glengarry Glen Ross culture 

that necessitates remedial action. 

AG: #2986875-v1 

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STATE OF MINNESOTA

OFFICE OF THE ATTORNEY GENERAL

Compliance Review of Fairview Health Services’ 

Management Contracts with Accretive Health, Inc. 

Volume 3

The Attorney General Agreement 

LORI SWANSON

ATTORNEY GENERAL

April 2012 

Review Conducted Pursuant to Minnesota Statutes Chapters 309, 501B, and 317A 

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VOLUME THREE 

THE ATTORNEY GENERAL AGREEMENT 

Executive Summary.........................................................................................................................1 

3.1 The Attorney General Agreement........................................................................................1 

3.2 Fairview Contracts with Accretive Health, Inc., a Licensed Debt Collector, to Manage 

Its “Revenue Cycle”.............................................................................................................2 

3.3 Requirements of the Attorney General Agreement .............................................................3 

3.4 Accretive Incorrectly Summarizes the Attorney General Agreement, and then Ignores 

Its Own Summary ................................................................................................................4 

3.5 Medical Financial Solutions Gets Engaged .........................................................................5 

3.6 Multiple Violations of the Attorney General Agreement ....................................................8 

3.7 May, 2011 Negative Fairview Audit Report........................................................................9 

3.8 Fairview Distances Itself from Accretive and MFS ..........................................................10 

3.9 December, 2011 Audit of Accretive ..................................................................................12 

3.10 Termination of Accretive by Fairview...............................................................................13 

Conclusion .....................................................................................................................................14 

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VOLUME THREE 

THE ATTORNEY GENERAL AGREEMENT 

Executive Summary: A compliance review by the Minnesota Attorney General in 

2005 found that the collection activities and expenditures of Fairview Health Services were 

not consistent with the mission and responsibilities of a Minnesota charitable organization. 

Fairview entered into a remediation agreement with the Attorney General in 2005, and the 

agreement was renewed in 2007. Since May, 2010, Accretive Health, Inc. has been the 

“revenue cycle” manager in charge of collections for Fairview. Accretive has repeatedly 

violated the Attorney General Agreement, displaying willful indifference to its 

requirements. 

3.1 The Attorney General Agreement. In 2005, the Office of the Minnesota 

Attorney General undertook a compliance review of Fairview Health Services (“Fairview”) 

pursuant to Minnesota Statutes sections 317A.821, et seq., 309.533, et seq., and 501B.35, et seq. 

The compliance review found numerous problems with and deficiencies in Fairview’s collection 

activities, billing practices for uninsured patients, and the administration of charity care. In an 

effort to avoid litigation under the above statutes, Fairview and the Minnesota Attorney General 

entered into a two-year remedial agreement, which was filed with the Ramsey County District 

Court (“Attorney General Agreement”). 

 The Attorney General Agreement between Fairview and the Attorney General was 

reviewed by the Minnesota Hospital Association and, by the end of 2005, all 125 hospitals in 

Minnesota, had executed similar agreements with the Attorney General relating to their debt 

collection, charity care, and uninsured billing practices (collectively, “Attorney General 

Agreements”). The Attorney General Agreements were all for a duration of two years. 

In 2007, the Attorney General and all 125 Minnesota hospitals renewed the Attorney 

General Agreements, this time for a duration of five years. Fairview signed the Attorney 

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General Agreement in 2007. (Ex. 1.) The Attorney General Agreements were filed in the 

Ramsey County District Court, with their terms constituting a court order. 

 In the recitals to the Attorney General Agreement, the hospitals acknowledge their 

obligations as charitable organizations to meet certain standards of conduct imposed by their 

charitable mission and that the Attorney General Agreement sets forth appropriate standards for 

a non-profit hospital. (Ex. 1.) Among other things, the Attorney General Agreements require 

the hospitals’ boards of directors to establish policies regarding and ensure compliance with the 

following: 

1. The boards of directors must monitor the hospitals’ debt collection activity and 

ensure that they abide by the directives of the Attorney General Agreement. 

2. The hospitals may not charge an uninsured patient for a particular treatment more 

than they charge the insurance company that delivers the most revenue to the 

hospital (and thus receives the steepest discounts). 

3. The boards of directors must establish a charity-care program that fulfills the 

hospitals’ charitable mandate by giving patients who lack the ability to pay a 

reasonable opportunity to receive free or discounted care. 

The Attorney General Agreements have been in effect for seven years. They reflect a 

standard of commercial reasonableness for the collection conduct of a non-profit hospital. 

3.2 Fairview Contracts with Accretive Health, Inc., a Licensed Debt Collector, to 

Manage Its “Revenue Cycle.” Accretive Health, Inc. (“Accretive”) became licensed with the 

Minnesota Department of Commerce as a debt collector on January 20, 2011, listing “Medical 

Financial Solutions” as an assumed name. (State of Minnesota v. Accretive Health, Inc., No. 12-

145-RHK-JJK (D. Minn. 2012), First Amended Complaint, ¶ 11.) It became registered as a 

foreign corporation with the Minnesota Secretary of State in December, 2010. (Id.) 

Nine months earlier, on March 29, 2010, Accretive entered into a Revenue Cycle 

Operations Agreement (“RCA”) with Fairview. (Ex. 2.) Under the RCA, Fairview provided 

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Accretive with a copy of the Attorney General Agreement, and Accretive agreed to abide by the 

Attorney General Agreement in its collection activity. (Id., pp. 2, 14.) The RCA provides that: 

“Accretive Health shall deliver all Services in accordance with all applicable laws, rules and 

regulations, including, but not limited to, [Fairview’s] agreement with the Minnesota Attorney 

General....” (Id., p. 2, emphasis added.) 

3.3 Requirements of the Attorney General Agreement. The Attorney General 

Agreement requires the hospitals to adhere to numerous collection requirements and to establish 

detailed collection policies. The Attorney General Agreement makes it clear that the hospital 

cannot delegate authority or responsibility for its collection activity. Indeed, the Attorney 

General Agreement requires a hospital employee designated by the Board of Directors of the 

hospital—not a collection agency—to administer the collection process. (See, e.g., Ex. 1, ¶¶ 2, 6, 

8, 10, 11, 14, 18.) The standards imposed by the Attorney General Agreement include the 

following: 

1. The hospital cannot collect debt from a patient unless the applicable insurance 

company has first been billed and given an opportunity to pay the claim and there 

is a reasonable basis to believe the patient owes the bill. (Ex. 1, ¶ 17(a) and (b).) 

2. The hospital must offer a reasonable payment plan to patients who express an 

inability to pay the full amount in one payment. (Id., ¶ 17(c).) 

3. The patient must be given a reasonable opportunity to submit an application for 

charity care. (Id., ¶ 17(d).) 

4. The hospital employees empowered to carry out the above functions must be so 

designated by the Board of Directors. (Id., ¶ 18.) 

5. A hospital employee must authorize any individual garnishment proceeding and 

make sure that the above steps have been met. (Id., ¶ 10.) 

6. The CEO (id., ¶ 15) and board of directors (id., ¶ 38) of the hospital must 

determine on an annual basis whether to renew a debt collection agency 

contract, and may only do so if the agency has complied with the Attorney 

General Agreement and the mission of the hospital. 

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7. Contracts with debt collection agencies must be in writing and must require the 

agency to operate in compliance with the Attorney General Agreement. (Id., ¶ 

16.) 

8. Contingency fee arrangements with collection agencies are permitted only if the 

hospital has established sufficient controls to monitor the collection agency. (Id., 

¶ 21.) 

9. The hospital must require its collection agency to log all complaints made by 

patients, and failure to do so may result in termination of the agency’s contract. 

(Id., ¶ 22.) 

10. The hospital must require its collection agency to forward all patients who object 

to the collections activity to the hospital and must include a disclosure notice of 

this right in all of its bills and collection letters. (Id., ¶ 24, 26.) 

11. The hospital must advise patients of their right to contact the Attorney General if 

they encounter any problems with billings or the collection agency. (Id., ¶ 26.) 

12. The hospital must train outside collectors on the principles of the hospital’s 

charity-care policy. (Id., ¶ 25.) 

13. Patients may not be reported to a credit reporting agency for failure to pay a bill. 

(Id., ¶ 27.) 

14. The collector must cease collection efforts if the patient states that: 1) she 

doesn’t owe the bill; 2) a third party payer is obligated to pay the bill, or 3) a 

patient needs documentation of the bill. (Id., ¶ 30.) 

15. The hospital may not refer debt to a collection agency if the patient has made 

payments in accordance with a payment plan agreed to by the hospital. (Id., 

¶ 19.) 

16. The hospital must suspend all collection activity if a patient submits a charity-care 

application until the application has been processed and the patient notified of the 

decision. (Id., ¶ 20.) 

17. The hospital board of directors must adopt a zero tolerance policy for false, 

deceptive, or misleading collections conduct. (Id., ¶ 37(a).) 

3.4 Accretive Incorrectly Summarizes the Attorney General Agreement, and 

then Ignores Its Own Summary. In April of 2010, Accretive prepared a summary of the 

Attorney General Agreement. (Ex. 3.) The summary is incomplete and riddled with errors. 

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Four obvious points required by the Attorney General Agreement, but omitted from the 

summary, are: 

 that a hospital is prohibited from forwarding a patient account to a third-party 

collector until the applicable insurance policy has provided coverage and paid for 

its share of the treatment. (See Ex. 1, ¶ 17(a) and (b).) 

 that if the patient indicates an inability to pay, the hospital must offer a reasonable 

payment plan. (Id., ¶ 17(c).) 

 that the patient must be given a reasonable opportunity to submit an application 

for charity care. (Id., ¶ 17(d).) 

 that the hospital itself must decide whether to refer an account to a third-party 

debt collector. (Id., ¶ 17.) 

 Accretive’s summary also contains several provisions from the Attorney General 

Agreement that have nevertheless been ignored by Accretive. For instance, the Attorney General 

Agreement requires: (1) the collection agency to log all communications made to patients; (2) the 

collection agency to include a disclosure notice in all patient communications; (3) the hospital to 

train outside collectors on the principles of the hospital’s charity-care policy; (4) the hospital not 

to report patients to a credit reporting agency for failure to pay a bill; and (5) a collector to cease 

collection activities if the patient states that she does not owe the bill, that a third-party is 

obligated to pay the bill or that the patient needs documentation of the bill. (Ex. 3.) 

3.5 Medical Financial Solutions Gets Engaged. In July of 2010, Accretive 

prepared a chart entitled “MFS Overview.” (Ex. 4.) “MFS” stands for Medical Financial 

Solutions, an assumed name for Accretive. The chart contains a variety of collection letters. 

The letters notify the patient that Fairview believes the patient’s bill is past due and that the debt 

has been assigned to MFS. The letter also states that, if the patient does not contact MFS within 

30 days, the collection agency will assume the debt to be valid. The chart includes a variety of 

scripts in which the collector is told to leave a dunning message on the patient’s voicemail.

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The chart is problematic in several respects. First, it appears that MFS, not a hospital 

employee, is determining whether the patient owes a debt. Second, while the MFS letters 

attached to Exhibit 4 include the federally required “Mini-Miranda” notice (namely, that the 

letter is an attempt to collect a debt), letters actually utilized by MFS do not contain the “MiniMiranda” warning. (Ex. 5.) Third, debt collection activity should not be discussed with third 

parties, something that is likely to occur when a dunning message is left on a voicemail.

The scripts also direct the collector to make the following misstatements: 

 “In the long term this account could be passed to an agency that could report to 

credit bureaus.” (The Attorney General Agreement prohibits the reporting of a 

medical debt to credit bureaus. (Ex. 1, ¶ 27.)) 

 “[B]y not paying, this account could possibly go to further collection activity.” 

(Ex. 4.) (The debt is already in debt “collection activity” by the time Medical 

Financial Solutions is involved.) 

 The scripts indicate that Medical Financial Solutions will continue to send bills 

even if there is an insurance claim pending. (Ex. 4.) (The Attorney General 

Agreement restricts collection activity while an insurance claim is being 

processed. (Ex. 1, ¶ 17(b).)) 

 The scripts indicate that if the patient applies for charity care, the collection 

agency will continue to dun the account. (The Attorney General Agreement 

restricts collections activity while a charity-care application is being processed.) 

Another Accretive chart indicates that MFS will begin calling patients within 17 days 

after referral (Ex. 6, p. 2), and that, after completion of collection attempts, it will send the 

patient account to a legal team if the patient’s FICO score (a credit score) exceeds 595. (Id.) 

The chart also indicates that MFS will make the determination of the “validation of the debt and 

review of [the] guarantor’s credit information....” (Id., p. 4.) The Attorney General Agreement 

requires a hospital employee appointed by the board of directors—not a collection agency—to 

make this determination. (Ex. 1, ¶¶ 1, 2, 37.) 

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On September 2, 2010, Accretive prepared and distributed sample scripts to respond to 

patient questions. (Ex. 7.) The scripts contain a number of proposed replies for collectors which 

are in violation of the terms and spirit of the Attorney General Agreement. For instance: 

 If the patient says, “I don’t have any money on me,” the collector is directed to 

say: “We do accept credit card and checks, if you have your checkbook in your 

car I will be happy to wait for you....” (Id., p. 1.) This statement is often made at 

a time that the patient is in the emergency room or waiting for treatment. 

 If the patient says, “Go ahead and send me to collections,” the collector is directed 

to say: “we do not want our patients to receive letters / calls from [a] collection 

agency. I hope you understand that once the account is with [a] collection agency 

that can affect your credit score as well.” (Id.) The Attorney General Agreement 

prohibits reporting to a credit bureau. 

 If the patient has no insurance, the collector is directed to offer a “cash flat rate” 

or discount. (Id., p. 2.) The script states: “Mrs. Smith, my name is ___ and I’m 

the Financial Counselor (Admitting Rep) at [Fairview]. As a courtesy, we can 

offer you a discounted rate of $____ for today’s services. We accept cash, check, 

debit or credit card. How would you like to pay for that?” (Id.) The script then 

indicates: “The discounted rate is only available today and that it is hospital 

policy that the amount is paid in full prior to receiving services.” (Id.) This 

violates the Attorney General Agreement. Uninsured patients are to receive the 

same discount available to the hospital’s “most favored insurer” (e.g., the 

insurance company that delivers the most revenue to the hospital and therefore 

has the steepest discounts). The discount rate for uninsured patients under the 

Attorney General Agreement is not contingent upon same-day payment. 

 The script indicates that the offer of a hospital payment arrangement should be the 

last option, and that a collector should never offer a hospital payment plan unless 

the patient does not have credit or debit cards. (Id., p. 4.) This violates the 

Attorney General Agreement, which requires the hospital to offer and enter into a 

reasonable payment plan with patients who indicate an inability to pay the full 

amount in one payment. 

In November of 2010, Accretive modified the chart, including several additional 

references to the Attorney General Agreement. (Ex. 8.) The chart states that MFS will closely 

monitor compliance with the Attorney General Agreement. (Id., p. 9.) The chart again notes 

that the MFS legal team will complete the initial scoring and debt validation of all accounts for 

attorney placement. (Id., p. 10.) As noted above, the Attorney General Agreement requires that 

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a hospital employee designated by the hospital’s board of directors make the determination as to 

debt validation and referral of a patient’s account to a collections attorney. 

3.6 Multiple Violations of the Attorney General Agreement. Five months later, on 

March 28, 2011, Fairview notified Accretive that the Minnesota Hospital Association had met 

with the Attorney General, who indicated that there were increased complaints about collection 

attempts in violation of the Attorney General Agreement. (Ex. 9.) The notice emphasized that: 

“We need to make sure that our processes are following the AG agreement to the 

letter.” 

(Id.) 

 Thereafter, on April 5, 2011, Fairview asked the Accretive collectors to execute a form 

attesting that they read and understood the Attorney General Agreement. (Ex. 10.) The next 

day, Thomas Merritt, an Accretive manager, doused cold water on the attestation by telling the 

collectors: 

“Very little of this will drive collector behavior – it’s just so we can say we have 

it.” 

(Ex. 11.) 

 Approximately one month later, Fairview prepared a “Partnership Issues Log” that 

delineated problems with Accretive. (Ex. 12.) The “log” notes the following problems: 

 MFS statements do not mention Fairview’s financial assistance and payment 

arrangement programs. 

 MFS statements do not include the required contact information for the Attorney 

General’s Office. 

 Patients with active payment arrangements with Fairview have received collection 

calls from MFS threatening to send the patient to bad debt collections. 

 Patients with active payment arrangements have erroneously been sent to bad debt 

collections. 

 MFS refuses patients’ requests for itemized statements. 

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 MFS waited three months before sending Fairview a backlog of patient requests 

for itemized statements. 

 MFS referred 6,000 accounts to bad debt collections without ever having sent the 

patients a letter for collection. 

 Another 4,500 accounts were sent to bad debt collections after the patients 

received only one “welcome” letter. 

 MFS sat on 300 payments and did not advise Fairview of the payments, resulting 

in artificially high statements sent to patients. 

 MFS does not send patient disputes and complaints to Fairview and does not 

maintain a complaint log. 

 The Attorney General Agreement is not understood by the MFS staff. 

(Id.) 

3.7 May, 2011 Negative Fairview Audit Report. On May 5, 2011, Fairview issued 

an audit report of Accretive’s compliance with the Attorney General Agreement. (Ex. 13.) The 

audit indicates that the following issues were identified: 

 MFS staff, including the manager, stated that they were not familiar with the 

Attorney General Agreement. 

 MFS staff, including the manager, stated that they were not familiar with 

Fairview’s charity-care policy. 

 MFS did not maintain a patient complaint log. 

 MFS did not cease collection efforts when insurance claims were pending. 

 Patients were referred to bad debt without proper patient identification. 

 MFS collection notices did not contain disclosure language required by the 

Attorney General Agreement. 

 MFS did not forward patient complaints to Fairview. 

(Id.) While the above items were highlighted in the audit report, several other deficiencies were 

noted in its attached schedule. (Id.) 

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On May 10, 2011, an Accretive employee perhaps best exemplified the attitude of 

Accretive about the Attorney General Agreement. His response: 

 “What is the Attorney General Agreement?” 

(Ex. 14.) He followed up this e-mail with another question: 

“Could you please explain what is meant by ‘violation of attorney general 

agreement?’ What is/is not happening and how does it affect the client?” 

(Ex. 15.) 

 On the same day, Andrew Crook, the Accretive executive in charge of the Fairview 

revenue cycle, noted that Fairview was upset about MFS’s conduct and that Accretive was at risk 

of having the contract terminated. (Ex. 16.) He specifically referred to Accretive’s violations of 

the Attorney General Agreement. (Id.) 

3.8 Fairview Distances Itself from Accretive and MFS. On September 23, 2011, 

Fairview notified Mr. Crook that MFS continued not to follow the checklist of items required by 

the Attorney General Agreement. (Ex. 17.)

 On September 30, 2011, Fairview warned Mr. Crook that the vendor who undertook 

collection efforts prior to MFS was terminated for performance issues, and that the problems 

with MFS were substantially worse. (Ex. 18.) The memorandum notes that MFS failed to 

comply with the Attorney General Agreement or with the hospital’s community (charity) care 

policies. Fairview again advised Accretive that patients in active payment arrangements 

continued to improperly receive collection notices and phone calls. (Id.) 

In November, 2011, Accretive prepared a presentation concerning the complaints by 

Fairview. (Ex. 19.) It noted the following problems: 

 MFS does not respond with appropriate diligence. 

 MFS has not been open with complaints, as evidenced by patient lawsuits against 

MFS for Fairview collection activity that it did not disclose to Fairview. 

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 MFS placed Fairview at risk for Attorney General-related complaints due to its 

ignorance of the Attorney General Agreement. 

 MFS has contacted patients in active payment arrangements, through calls and 

letters. 

 MFS is unable to find a viable solution to fulfill the requirements of the Attorney 

General checklist. 

 Fairview employees are concerned that they will be investigated for their patient 

collections activity due to Star Tribune articles about debt collection practices. 

 Unions representing Fairview employees posted items critical of Accretive. 

 Fairview employees are dissatisfied with the degradation in the revenue cycle. 

 Theft of the Accretive laptop continues to cause ripples in the Fairview 

community. 

 Matt Doyle (the Accretive employee whose laptop was stolen) should not have 

had access to patient data. 

 The stolen laptop of another Accretive employee (Brandon Webb) was not 

reported to Fairview. 

(Id.) 

Again, on October 3, 2011, Accretive sent to Mr. Crook a performance chart which noted 

that: 

 MFS continues to call and send letters to patients who have active payment 

arrangements with Fairview. 

 MFS fails to timely notify Fairview of disputes from patients. 

 MFS’s practices are viewed by Fairview as those of a “bad debt collection 

agency” and that MFS needs to refine its scripts. 

(Ex. 20.) 

 On October 10, 2011, Mr. Crook was notified of another patient current on a payment 

arrangement who received a letter from Accretive requesting payment. (Ex. 21.) Fairview noted 

that “no breach or lapse in the payment arrangement...would create a reason for MFS to generate 

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a letter to the patient requesting payment.” (Id.) The same day, Mr. Merritt of Accretive 

received another notice from Fairview that a patient making regular payments on a payment 

arrangement had received a collection letter from MFS that the patient found to be 

“embarrassing, a slap in the face” and that “he did not appreciate the letter in the least.” (Ex. 

22.) 

 On October 11, 2011, Accretive received yet another memo from Fairview noting that 

MFS had demanded payment from a patient even though no payments had been missed on his 

account. (Ex. 23.) The Fairview staff noted: “I have to call this gentleman back and apologize. 

No payments have been missed....” (Id.) 

 In late October of 2011, another chart was prepared noting the following Fairview 

concerns: 

 Any deviation from the Attorney General guidelines will result in strict sanctions 

from the Attorney General. 

 MFS continues to call and send letters to patients with active payment 

arrangements with Fairview. 

 Consistent reminders are needed to have MFS notify Fairview of disputes from 

patients. 

(Ex. 24, p. 3.) 

On October 24, 2011, an exchange between Fairview and Accretive let it be known that 

some of the Accretive collection procedures should not be set out in charts because they might be 

picked up as a violation of the Attorney General Agreement. (Ex. 25.) What is noteworthy 

about the e-mail is that the issue wasn’t whether anyone should follow the Attorney General 

Agreement; the issue was how to avoid it. 

3.9 December, 2011 Audit of Accretive. On December 30, 2011, Fairview issued 

another audit report concerning Accretive’s compliance with the Attorney General Agreement. 

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(Ex. 26.) The draft states that “[w]e identified potential violations, on the part of MFS, of 

various regulatory standards including Health Insurance Portability and Accountability Act 

(HIPAA), Fair Debt Collections Practices Act (FDPA), Payment Card Industry (PCI), and 

Minnesota State Statutes.” (Id., p. 2.) The draft stated that the control over the collection 

process was unsatisfactory, and that Accretive employee dissemination of patient health and 

credit card information over the internet was conducted in an unsecure manner. (Id., p. 3.)

3.10 Termination of Accretive by Fairview. On January 6, 2012, Fairview notified 

Accretive of the December 31, 2011 audit results, which were “not favorable.” (Ex. 27.) On 

January 10, 2012, Fairview notified Accretive that the audit revealed poor customer satisfaction, 

inappropriate handling of accounts, potential regulatory violations, and noncompliance with 

multiple regulatory standards. (Ex. 28.) The notice stated that Fairview was transitioning the 

business away from Accretive effective January 31, 2012. (Id.) On February 23, 2012, Mr. 

Crook, who was involved in almost all of the substantive correspondence described in this 

volume, responded to a report about the Attorney General Agreement on February 23, 2012, by 

saying: 

“Here is the audit from earlier this year – by the way, I wish I had this earlier this 

year.” 

(Ex. 29.) 

After the Attorney General filed a lawsuit against Accretive on January 19, 2012, the 

collection office of Accretive, located in Kalamazoo, Michigan, ceased any further collection 

activity with Fairview. (Ex. 30.) Accretive was in violation of Minnesota debt collection laws 

for, among other things, engaging in unlicensed activity. Accretive signed a Consent Order in 

February of 2012 in which it agreed to cease any further collection efforts in Minnesota. 

(Ex. 31.) 

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Conclusion. The conduct of Accretive constitutes multiple separate violations of the 

Attorney General Agreement, whose terms are ordered by a court of law. Accretive engaged in a 

series of willful and deceptive acts in violation of the terms of the Attorney General Agreement. 

The cavalier and indifferent actions of Accretive, repeated time and again over a two-year 

period, show a blatant disregard for the law. 

AG: #2991480-v1 

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