Two Fairview executives who helped forge a partnership with a debt collection company under fire for its aggressive tactics have sons who work for the firm, the Star Tribune has learned.

One of the Fairview officials, Dr. Dave Moen, also owned stock in the collection firm, Accretive Health Inc. His son, 24-year-old Sam Moen, works for Accretive and helped implement the high-pressure strategies that Minnesota Attorney General Lori Swanson blasted this week, documents show. Fairview's CEO, Mark Eustis, also has a son who works for Accretive.

Swanson's report thrust Fairview into national notoriety Tuesday. By Friday the nonprofit health care organization notified Accretive that it was cutting all ties with the Chicago-based firm, a publicly traded company that saw its stock price cut in half this week.

Fairview must still contend with questions from the federal agency that runs Medicare and Medicaid, a major source of hospital funding, and which enforces federal patient-access laws. Swanson's report suggested that Accretive's tactics at Fairview may have violated state and federal laws.

Fairview officials now admit that "mistakes were made" by Accretive employees who allegedly hounded patients at its hospitals.

"We're not here to hide anything," Eustis said Friday in an interview. "We want to acknowledge that mistakes were made, and we feel badly about them and we need to repair that damage."

In the midst of the tension, Fairview's board of directors met Thursday night, including a session that was closed to Eustis.

Fairview Board Chairman Charles Mooty told the Star Tribune on Friday that Eustis emerged with full support.

"The board has been very supportive of Mark,'' he said.

The Eustis and Moen family relationships and Moen's ownership of Accretive stock were disclosed to the board of directors and vetted before Fairview signed contracts with Accretive in 2010, Mooty said.

He called Eustis a person of "incredibly high integrity'' who is deeply loyal to Fairview. The CEO wouldn't let his son's job influence his management of the Fairview-Accretive relationship, Mooty said.

However, to Prof. David Shultz, a lawyer and ethicist at Hamline University, the conflicts were severe and not defensible simply because they were disclosed.

"This is a pretty bad one,'' said Shultz, an expert in business ethics and the governance of nonprofits.

He said Moen and Eustis could have been swayed in their support of Accretive out of loyalty to their sons, if only subconsciously. Moen's stock in Accretive, which Fairview didn't disclose in detail, provided another level of bias, Shultz said.

"The relationships color your perceptions,'' he said.

A Fairview spokesman said Moen was not available for comment. As president of Fairview Physician Associates, Moen heads a group of 1,300 doctors employed by the health system. Documents in Attorney General Swanson's report show Moen played a role in the Fairview-Accretive partnership as early as December 2009. The document says Moen was picked by Eustis to "drive'' support among doctors.

According to documents released by the attorney general, Sam Moen was directly involved in exhorting rank-and-file Fairview workers to boost collections from patients.

Also Friday, Sen. Al Franken, D-Minn., formally asked Accretive CEO Mary Tolan to explain her company's tactics at Fairview. One of Franken's concerns centers on allegations that Accretive gave its employees, including debt collectors, full access to Fairview patients' medical records.

"If proved to be true, these activities may have violated federal health, consumer protection and privacy laws,'' said Franken.

Eustis joined Fairview in August 2007 from Ascension Health in St. Louis, where he oversaw hospitals and related health care services in Detroit and other markets. Ascension, a large operator of charitable hospitals, was Accretive's founding customer and became a large shareholder.

'Rife with violations'

Swanson's report accuses Accretive of creating an elaborate system to harass patients for money before, during and after their hospital visits. She said the practices were "rife with violations of Minnesota and federal laws."

Eustis denied that Fairview broke any laws, but acknowledged damage to its reputation. "This isn't what we're about," he said. "We're here to provide great service and treat people with dignity and respect every day, and 99 percent of the time we think we do that."

Previously, Fairview had already ended its contract with Accretive to run "revenue cycle" operations, but still had a contract for other services, including quality and cost analyses. Hours before Fairview said it was ending all contracts with Accretive, Eustis signaled that a complete break was likely.

"Knowing today what we know about Accretive and the implications that has for our own reputation in the community, we're going to take a very serious look at that," he said.

Mooty said the board, which includes three University of Minnesota medical leaders, erred by not monitoring the partnership after it was formed. And in retrospect, Fairview's leaders didn't understand the "tonality and culture'' of Accretive.

"We weren't on top of it as we needed to be,'' Mooty said.

Last summer, Eustis said, Fairview warned the consulting firm that it was violating the hospital's debt collection rules, which were spelled out in a 2005 agreement with the attorney general's office.

Accretive failed to correct the problem, even after "multiple'' communications, Eustis said. As a result, Fairview terminated the debt-collection contract in January.

Last fall, meanwhile, a Fairview employee survey found that dissatisfaction was rising among employees who worked with Accretive. "There's a clear indication that our employees were feeling less positive about the workplace," he said.

At the time Fairview hired Accretive, its hospitals were seeing bad debt rise substantially, said Dan Fromm, Fairview's chief financial officer. Last year, it hit $58 million, out of $2 billion in hospital revenue.

Eustis, who said he never owned stock in Accretive, said he believed that Accretive might be able to do better.

At one point, Accretive had 37 employees at Fairview hospitals or clinics working on debt collections or other revenue issues. Fromm said the last of the Accretive workers would be gone as of noon Friday.

Maura Lerner • 612-673-7384 Tony Kennedy • 612-673-4213