Maryland Sues UnitedHealth Over Medicaid System Failure

Maryland Attorney General Anthony G. Brown has filed a lawsuit against UnitedHealth Group and its subsidiary Optum Inc., alleging that their computer system for Maryland's Medicaid behavioral health program failed, causing tens of millions of dollars in losses.

The state contracted with Optum for $126.9 million to operate the Administrative Services Organization (ASO) program from 2019 to 2024. The program processes and pays providers for behavioral health services.

According to the lawsuit, Optum replaced its proprietary claims management software shortly before the new system was scheduled to launch with a system developed by a subcontractor. The system crashed on its first day of operation and was later taken offline for eight months in 2020.

The lawsuit alleges that the system denied legitimate claims, paid incorrect amounts to providers, failed to provide receipts to some large providers, and was unable to properly distinguish medically necessary services from other claims. It also allegedly failed to prevent millions of dollars in fraudulent claims involving substance abuse treatment and laboratory urine testing.