An executive from Accretive Health Inc. apologized Wednesday to Minnesotans who were offended by aggressive debt-collection tactics at Fairview hospitals but offered the company's first public defense, saying its mission is to help patients pay their bills and help nonprofit hospitals improve their finances.

Accretive Senior Vice President Greg Kazarian came under intense questioning at a field hearing in St. Paul called by U.S. Sen. Al Franken, D-Minn., who said he was troubled not only by the way patients were hounded for payment but by the possibility that Accretive violated the privacy of thousands of Minnesotans who trusted their personal health records to Fairview and North Memorial hospitals.

The two-hour hearing included another revelation from Minnesota Attorney General Lori Swanson's 10-month investigation of the Chicago consulting firm. Swanson said North Memorial Medical Center, which also hired Accretive, gave the firm detailed patient health data without signing a written agreement, as required by a federal privacy law known as HIPAA.

The patient files vanished when an Accretive employee named Matthew Doyle left his company laptop computer in a car that was burglarized last summer in the Seven Corners area of Minneapolis. When Swanson asked North Memorial for a copy of the required "business associate contract," the Robbinsdale hospital and Accretive "concocted" one and backdated it by several months to make it appear that such a deal had been in place, Swanson said.

"That's a pretty explosive charge," Franken said, vowing to investigate further.

Accretive said after the hearing that a lawful agreement with North Memorial was in place but could not be located when Swanson requested a copy. The two companies created a replacement agreement that was accurately signed and dated March 21, 2011, Accretive said in a statement. North Memorial declined to comment due to Swanson's ongoing investigation.

Franken noted that Doyle's laptop also contained private health data of thousands of Fairview patients, even though Doyle was not working on the Fairview account at the time.

Franken said he worries that such privacy breaches will cause patients to be less candid with their doctors, which could undermine their medical care.

"I was shaking''

The bulk of Wednesday's hearing was devoted to testimony about high-pressure bill collecting at Fairview, which surrendered its revenue management to Accretive under a 2010 contract designed to improve hospital finances.

Fairview patient Tom Fuller of New Brighton, for instance, spoke in a broken voice as he recounted being led to a tiny hospital room, away from his wife, by a Fairview "admissions" employee. When the door closed, he was unexpectedly grilled about an alleged unpaid balance on his hospital bill. He said he and his wife had paid about $10,000 of their own funds so he could receive a lung transplant, and he was having serious complications. They were current on their payments as far as he knew, he said.

"I was shaking. I was furious," Fuller said. "Nobody at that point should be going through something like that."

Kazarian, the corporate responsibility officer at Accretive, insisted that the company's practices are lawful, in line with industry practice and helpful to hospitals and patients. "To any patient who experienced any interaction with us or with Fairview employees that lacked compassion and professionalism, we apologize," Kazarian said.

Questioning Kazarian, Franken cited an e-mail from an Accretive call-center employee who used the words "deadbeats," "plebians," "stupid" and "schmuck" in characterizing patients targeted for collection. Kazarian said the employee was fired promptly when the e-mail was discovered, adding that the company invests heavily in training call-center employees and monitoring their conversations.

Franken noted that Accretive bill collectors were trained not to give hospital patients the option of handling their debts at a different time, an apparent violation of fair debt collection law.

Kazarian responded: "If we can make our scripts better, then we will get at that work tomorrow."

Culture change

Wednesday's hearing stemmed from an April report by Swanson that documented collection practices at Fairview hospitals designed to squeeze cash or credit-card payments from patients, sometimes while they writhed in pain before receiving medical treatment.

The report said Accretive imposed a "boiler-room style sales atmosphere" at Fairview that included quotas, inducements and punishments. Several doctors actually complained that such tactics might discourage patients from seeking medical care, the report found.

Swanson's investigation prompted Fairview to cut its ties to Accretive, and last week Fairview's board of directors voted not to renew the contract of CEO Mark Eustis, who had been instrumental in hiring Accretive.

Fairview board chairman Chuck Mooty, who will serve as interim CEO, testified that the company will do a better job of listening and acting when employees and patients raise concerns. He offered a personal apology to Fairview patients and vowed to do his "darndest" to balance legitimate collection needs with fair treatment of patients.

"There's no question there was a culture change ... and that's a troubling situation," Mooty said.

University of Minnesota Law Prof. Michele Goodwin testified that Swanson's allegations outline "a disconcerting pattern of coercion, exploitation, near-extortion, quid pro quo emergency medicine, indifference to patient privacy and abuse of patients."

While other witnesses praised Fairview's doctors and nurses for providing excellent care, Goodwin noted that hospital leaders are ultimately responsible for any violations.

Minnesota Commerce Commissioner Michael Rothman testified that Accretive went to "great lengths" to disguise its role as a collection agency when working with Fairview patients, a potential violation of state law. He said his office is continuing to investigate.

Franken is a member of the Senate Health Committee and chairman of the Senate Judiciary Subcommittee on Privacy, Technology and the Law, which has been studying consumer privacy and protection issues. He said he'll use Wednesday's hearing to consider whether federal laws need to be strengthened.

Tony Kennedy • 612-673-4213