Maryland Sues UnitedHealth's Optum Over Allegedly Defective Medicaid System
UnitedHealth Group and its Optum subsidiary are facing a lawsuit from Maryland for allegedly providing a defective computer system for the state's Medicaid behavioral health program. The system, which was implemented in 2019, failed to reliably distinguish between medically necessary and potentially improper services, causing problems for providers and leading to tens of millions of dollars in costs for the state.
The lawsuit alleges that Optum replaced its proprietary claims-management software with an inadequately tested platform developed by a subcontractor. The system crashed on its first day in operation and struggled to function properly, resulting in denied legitimate claims, incorrect payments to providers, and difficulties for hospitals and other large providers in managing their finances.
The Maryland Department of Health was forced to take the system offline for eight months in 2020 and use estimated payments to keep providers operating. The state is seeking up to three times the $126.9 million it paid Optum to administer the program, totaling approximately $380 million.