The Minnesota attorney general sued Allina Health System, alleging that it charged illegally high interest rates of up to 18% on medical debts.
Attorney General Lori Swanson said in a prepared statement that state usury laws cap interest rates on such debts at 8%. The lawsuit in Hennepin County District Court seeks to block Allina from any further violations and to get refunds for overcharged patients.
In a written statement, Allina said it had told Swanson in December 2008 it had decided to cap interest rates at 8%, but the company believed its sliding-scale structure prior to that was fully consistent with Minnesota law.
Swanson alleged that Allina typically presented patients with medical debts three options, including paying quickly or spreading payments over time through Allinas MedCredit subsidiary. She claims MedCredit charged interest of 18% on debts up to $4,999 and 12% on debts from $5,000 up to $9,999. The lawsuit also alleges that, in some cases, Allina didnt fully disclose the terms of MedCredit financing to patients.
The high cost of healthcare is one of the biggest financial obstacles faced by many Minnesota families, Swanson said. Allina has dug a deeper financial hole for patients facing tough economic times by charging usurious interest rates.