Accretive Health Settles

Revenue manager Accretive Health Inc. said it reached a $2.5 million settlement with the Minnesota attorney general's office over an ongoing lawsuit and said it voluntarily decided to cease all its operations in Minnesota.

The company's shares, which have been beaten down partly due to the lawsuit, surged 22% after hours. The stock closed Monday at $10.01, down 56% since the start of the year.

Minnesota Attorney General Lori Swanson in January filed a complaint against Accretive accusing the company of overly aggressive collection tactics in emergency rooms, cancer wards and delivery rooms at hospitals run by Fairview Health Services. The attorney general also was suing the company for alleged violations of U.S. and state patient-privacy and debt-collection laws.

Accretive Health said the settlement won't have a material impact on the company's financial condition, but added the winding down of its business in Minnesota should have a negative impact on adjusted earnings in its second quarter.

In seeking the settlement and exit from Minnesota, Accretive Health said it wanted to "eliminate the distractions caused by the lawsuit." The company said it admitted to no liability or wrongdoing as part of the settlement. Accretive had called for the dismissal of the attorney general's complaint, saying the allegations are "factually baseless and legally indefensible."

The company, which went public in 2010, handles revenue cycle management services for health-care providers. It has posted double-digit revenue growth in recent quarters despite increased competition from software companies and consultants offering services similar to its own.

In May, the company said its first-quarter earnings soared as higher fees and incentive payments contributed to better-than-expected revenue.