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BALTIMORE, MD – Attorney General Anthony G. Brown filed a lawsuit against UnitedHealth Group (also known as United Healthcare) and Optum, Inc., a wholly-owned subsidiary of United Healthcare, for allegedly providing a defective computer system to Maryland Medicaid’s behavioral health program that crashed on its first day of use and never functioned properly, costing state taxpayers tens of millions of dollars. United Healthcare is the nation’s largest healthcare company.
The crash was so severe that the Maryland Medicaid program had to take its system off-line for eight months in 2020, putting the program that provides mental health and substance abuse care to the 1.5 million Marylanders on Medicaid in jeopardy.
“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 provided a defective system that failed them for years,” said Attorney General Brown. “My Office will hold United Healthcare and Optum accountable and recover the money Maryland taxpayers are owed.”
The case arises from Optum’s contract with the state’s Medicaid behavioral services program from 2019 to 2024. The state contracted with Optum for $126.9 million to run the Maryland Medicaid program’s Administrative Services Organization program, which processes and pays medical providers for behavioral health services.
The lawsuit alleges that Optum, just months before its system was slated to go live, swapped out its own proprietary claims management software and installed an inadequately-tested, inadequately-vetted system made by a subcontractor. The software platform immediately crashed and could not distinguish between medically necessary and frivolous services. It also denied legitimate claims, failed to provide receipts to large-scale providers like hospitals that, in turn, struggled to run their businesses, paid incorrect amounts to providers, and failed to block rampant, multi-million-dollar fraud in areas such as substance abuse treatment and laboratory urine testing. The problems threatened the entire system, prompting state Department of Health officials to take it offline and use ad hoc estimates to pay providers and keep the system afloat. This forced measure likely cost the state tens of millions of dollars, according to the lawsuit, which also lists numerous other ways the crash led to state monetary losses and expenditure of resources.
The lawsuit alleges that Optum’s conduct constituted a violation of the state False Claims Act and seeks up to triple the contract price it paid in damages, about $380 million. The lawsuit also alleges a number of common law causes of action, including breach of contract, unjust enrichment, and intentional misrepresentation. The lawsuit was filed in Baltimore City Circuit Court.
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