Maryland Sues UnitedHealthcare Over Faulty Medicaid System
UnitedHealth Group and Optum, its subsidiary, are facing a lawsuit from the Maryland Attorney General's office over the delivery of a faulty computer system for the state's Medicaid program.
The system, which was supposed to manage claims and payments for behavioral health services, crashed on its first day in 2020 and never fully functioned as intended.
According to the lawsuit, Optum swapped out its own proprietary software with a subcontractor's product just before launch, despite not adequately testing it.
The system failed to distinguish between legitimate and frivolous claims, denied payments to providers, and even allowed multi-million-dollar fraud to occur in areas like substance abuse treatment and laboratory urine testing.
As a result of the crash, the state had to take its system offline for eight months, leading to tens of millions of dollars in losses.
The lawsuit alleges that Optum's actions constituted a violation of the state False Claims Act and seeks up to triple the contract price in damages, approximately $380 million.