UnitedHealth and Optum Sued by Maryland Over Defective Medicaid Computer System
Maryland Attorney General Anthony Brown has filed a lawsuit against UnitedHealth Group and Optum Inc., alleging they defrauded the state's Medicaid program by supplying a defective computer system. The system, intended for the Maryland Medicaid's behavioral health program, was supposed to go live in 2020 but crashed on its first day of use, causing the program to be offline for eight months.
The crash jeopardized the entire program, which provides mental health and substance abuse care to 1.5 million Maryland residents enrolled in Medicaid. AG Brown said that 'Marylanders in crisis and the providers who care for them rely on Maryland's Medicaid program for essential mental health and substance abuse care.'
Optum was contracted with the state for $126.9 million to manage the Medicaid program's Administrative Services Organization, which processes and pays medical providers for behavioral health services. The lawsuit alleges that Optum installed an inadequately-tested system made by a subcontractor, causing widespread problems including incorrect payments and failure to prevent multi-million-dollar fraud.
The lawsuit seeks to recover approximately $380 million in damages, three times the contract price paid, under the state False Claims Act. It also alleges breach of contract, unjust enrichment, and intentional misrepresentation.