Maryland Files Lawsuit Against UnitedHealth Group
The state of Maryland has initiated legal action against UnitedHealth Group and its subsidiary, Optum Inc., concerning a computer system designed to manage the state’s Medicaid behavioral services program.
Maryland Attorney General Anthony Brown claims that the system failed on its very first day, necessitating an extended shutdown period that lasted several months. This disruption resulted in costs amounting to millions of dollars for taxpayers.
The lawsuit, filed in Baltimore City Circuit Court, accuses the companies of breaching Maryland’s False Claims Act. Brown seeks approximately $380 million in damages, which could be up to three times the original contract value.
“Marylanders in crisis and the providers who care for them count on Maryland’s Medicaid program for essential mental health and substance abuse care. Optum delivered a faulty system that let them down for years,” Brown stated when announcing the lawsuit. “My Office will ensure that United Healthcare and Optum are held accountable and will recover the funds owed to Maryland taxpayers.”
It’s worth noting that UnitedHealth Group, also referred to as UnitedHealthcare, stands as the largest healthcare company in the United States.
System Experience Immediate Failure
Brown explained that the state had contracted Optum for a substantial $126.9 million to oversee Maryland Medicaid’s Administrative Services Organization program, which is responsible for processing and remitting payments to medical providers for behavioral health services.
Allegedly, months prior to the system’s launch, Optum replaced its claims management software with a new system from a subcontractor that had not been adequately tested or vetted.
As a result, the system crashed right on its opening day, struggling to differentiate between necessary medical services and those deemed frivolous.
Brown noted that “it also denied legitimate claims, failed to provide receipts to significant providers like hospitals, which subsequently faced operational challenges. The system miscalculated payments to providers and was unable to prevent widespread fraud that racked up millions in areas such as substance abuse treatment and laboratory urine testing,” as detailed in the attorney general’s release.
Extended Downtime Negatively Impacted Services
The complications led the state to deactivate the system for eight months in 2020, jeopardizing crucial services for the 1.5 million Marylanders relying on Medicaid for mental health and substance abuse care, according to the release.
Due to this failure, the state was compelled to resort to temporary estimates for paying healthcare providers. Brown suggested that this workaround likely cost the state tens of millions of dollars and identified multiple other ways the system’s crash resulted in financial losses and resource strain.
Local news outlet CBS News Baltimore is awaiting a response from UnitedHealth Group and Optum Inc. regarding the lawsuit filed by the Attorney General.
