Allina settles with Minn. AG over medical interest

Associated Press, 04.14.09, 02:45 PM EDT
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Allina Hospitals & Clinics said Tuesday it will credit at least $1.1 million to thousands of patients who paid high interest rates on outstanding bills going back to 2007.

Patients who still owe money will see their debt reduced, while those who have already paid their bills will get a credit against future charges, the Minneapolis-based nonprofit said in a joint announcement with Minnesota Attorney General Lori Swanson.

Refunds will be the difference between the interest they paid and 8 percent, the new cap.

Swanson sued Allina in January, saying the interest rates charged by Allina's MedCredit financing program violated state usury laws designed to cap rates on such debts at 8 percent. The rates went as high as 18 percent, and Swanson's suit alleged that Allina didn't fully disclose the financing terms to patients.

Allina President and Chief Operating Officer Ken Paulus avoided acknowledging any fault at a news conference with Swanson. The health care network earlier had said MedCredit was open-ended, allowing the higher interest rates. Allina cut the rate to 8 percent on Feb. 1.

"What we want to do is continue with open-ended credit, so we allow these options for patients, but try to provide an option that's less costly to them," Paulus said.

The settlement requires Allina to credit patients who paid more than 8 percent on debts from Jan. 22, 2007, to Jan. 31, 2009.

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