Home Health & Hospice Week

One Washington home health agency is reaching deep into a legal bag of tricks to stop what it sees as illegal home care referral practices.

Northwest Healthcare Alliance Inc., known as Assured Home Health & Hospice, filed a lawsuit against Providence Health System -Washington April 11, claiming the health system has violated the Balanced Budget Act of 1997 and the Social Security Act by steering patients discharged from its hospitals to its own home health agency, Providence SoundHomeCare & Hospice.

Seattle-based Providence, which is part of a larger nonprofit organization also operating in Alaska, Oregon and California, owns or manages three hospitals in Lewis, Thurston and Mason counties where both Assured and SoundHomeCare hold certificates of need to operate, according to the complaint filed in Washington federal court (Northwest Healthcare Alliance v. Providence Health System - Washington (CV03-0888L)). Through St. Peter Hospital in Olympia, Centralia Hospital in Centralia and Morton General Hospital in Morton, Providence owns or manages about 80 percent of the available hospital beds in Assured's operating area, the home health agency claims.

Through a combination of activities including failing to give patients discharged to home care "neutral information on alternate home health care and hospice agencies," pressuring physicians, and discrediting and disparaging Assured, Providence and its employees have steered patients to its own HHA, the complaint alleges. Assured CEO Richard Block tells Eli any specific examples of patient steering must be unveiled at trial.

But Assured doesn't stop with accusing Providence of BBA and SSA infractions. The system's referral practices also violated federal and state anti-trust laws such as The Sherman Act, it claims.

Assured estimates 80 percent of an agency's referrals come from hospital discharges and physicians. Because Providence controls the vast majority of hospital beds in the three counties and has influence over the physicians, its alleged conduct constitutes a monopoly and its "conspiracy" aims to eliminate, reduce and restrain competition for home care services, according to the complaint.

The antitrust angle could give the U.S. District Court for the Western District of Washington a powerful enforcement tool. Cases in the early 1990s against hospitals with durable medical equipment businesses saw some success using similar arguments, notes the attorney representing Assured,

Mark Hough with Riddell Williams in Seattle.

Providence maintains its home care referral practices aren't illegal as the lawsuit claims. "We deny the allegations raised by Assured in the complaint," John Whipple, senior attorney, tells Eli.

Whipple and Block agree that St. Peter and Assured met about three years ago to discuss Assured's problems with Providence's home care referral practices. Block says St. Peter changed a document regarding its discharges to make referral to its own HHA only 'strongly suggested' instead of mandatory. "It was a step in the right direction, but not far enough," Block judges. "We believed at the time we had adequately addressed [Assured's] concerns," Whipple says. Therefore the lawsuit "was a surprise to us." But while St. Peter changed its policy, its practices remained the same, Block claims. "Sound receives a disproportionately large number of discharges from hospitals owned or managed by Providence, and Assured receives a disproportionately small number of referrals," the complaint says.

Faced with the allegedly undisrupted patient steering, Assured was forced to go to court, Block says. Now that Assured has filed suit, it also has submitted a complaint to the state survey department. But Assured couldn't rely on surveyors to correct the situation in time, Block maintains.

He points to the recent case of Professional Home Care Inc. and Woodlawn Hospital in Rochester, IN. Indiana surveyors cited Woodlawn for its home care referral practices, but not before Professional was forced to close its doors (see Eli's HCW, Vol. XII, No. 16, Survey & Certification story).

Block hopes the suit will force Providence to mend its ways and make referrals on "a level playing field," he says. The suit also seeks damages.

Providence has requested an extra 30 days to respond to the complaint, according to Hough, who expects a trial date in mid-2004.