Maryland Sues Optum Over 'Defective' Medicaid Computer System

The Maryland Attorney General's office has filed a lawsuit against UnitedHealth Group, alleging that its Optum unit defrauded the state's Medicaid program by providing a faulty computer system.

The system, which was implemented in the state's Medicaid behavioral health program, crashed on its first day in use and never functioned properly, according to the lawsuit. The contract with the state ran from 2019 to 2024, with Maryland paying $126.9 million for Optum to manage its Administrative Services Organization program.

The system crash was so severe that it forced the program to take it offline in 2020 for eight months, putting access to services in jeopardy for 1.5 million Medicaid enrollees. The issues with the system cost Maryland 'tens of millions of dollars,' according to the AG's office.

The lawsuit claims that Optum switched its own proprietary claims management system for one built by a subcontractor before implementing it, and that this system was 'inadequately tested' and 'inadequately vetted.' As a result, the system denied legitimate claims for care, made incorrect payments to providers, and failed to identify multi-million-dollar fraud.

The state is seeking triple the value of the contract, about $380 million, in damages for the alleged violations of Maryland's False Claims Act. The lawsuit also alleges breach of contract and intentional misrepresentation.