In a class-action lawsuit filed Dec. 21, health insurance beneficiaries accused UnitedHealthcare of a “self-serving scheme … to fuel its own profits at the expense of the members” (Popovchak et al. v. UnitedHealth Group Inc., No. 1:22-cv-10756 (S.D.N.Y. Dec. 21, 2022)).
According to the complaint, UHC uses “repricer” data — based on discounted rates insurance companies have paid for services — rather than competitive fees in a provider’s geographic area to determine how much to pay for out-of-network charges. Because the provider is not obligated to accept the discounted rate as full payment, the complaint alleges, the plan member becomes liable for the unpaid portion of the bill.
UHC subsequently collects a “savings fee” from the plan, the complaint alleges — up to one-third the difference between the provider’s billed charge and UHC’s reimbursed amount.
The lawsuit alleges the scheme violates the terms of members’ plans and the Employee Retirement Income Security Act of 1974.
UnitedHealth Group has faced a number of similar lawsuits and investigations in the past.
In April 2020, a group of behavioral health providers and patients in California charged UnitedHealth — along with Cigna — with systematically underpaying out-of-network providers for mental health and substance abuse treatment (L.D. et al. v. United Behavioral Health et al., No. 4:20-cv-02254 (N.D. Calif. April 2, 2020)). That case remains tied up in court, according to an update from law firm Hall Benefits Law, which specializes in ERISA cases.
Separately, in August 2021, UnitedHealth settled for $15.6 million after a U.S. Department of Labor investigation into reduced reimbursement rates for out-of-network mental health services.
ERISA requires that healthcare providers meet certain fiduciary obligations to plan participants. The law “imposes a strict fiduciary duty of loyalty on administrators like United, requiring it to discharge its duties with respect to the plan solely in the interests of plan participants and beneficiaries, and for the exclusive purpose of providing benefits to plan members and defraying reasonable expenses of plan administration,” the Dec. 21 lawsuit said. “ERISA fiduciaries must scrupulously avoid all self-interest, duplicity, and deceit; and must fully disclose to, and inform plan members of, all material information, and may not make misrepresentations to plans or plan members.”
UnitedHealthcare did not respond to a request for comment by press time.