Maryland sues UnitedHealth Group and Optum Inc. over defective Medicaid computer system
Maryland is suing UnitedHealth Group and its subsidiary Optum Inc. over a computer system that was supposed to help administer the state's Medicaid behavioral services program.
According to Maryland Attorney General Anthony Brown, the system crashed on its first day and had to be taken offline for several months, costing tens of millions in taxpayer dollars.
Brown filed the lawsuit in Baltimore City Circuit Court, alleging the companies violated Maryland's False Claims Act. The suit is seeking approximately $380 million in damages — up to triple the initial contract price.
"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," Brown said in a statement announcing the suit. "My Office will hold United Healthcare and Optum accountable and recover the money Maryland taxpayers are owed."
Brown noted UnitedHealth Group, also known as UnitedHealthcare, is the largest healthcare company in the country.
Computer system crashes on first day
According to Brown, the state contracted Optum for $126.9 million to run Maryland Medicaid's Administrative Services Organization program, which processes and pays medical providers for behavioral health services.
Months before the system was scheduled to launch, Optum swapped out its claims management software for an "inadequately-tested, inadequately-vetted system" from a subcontractor, the attorney general alleges.
Brown said the system immediately crashed on its first day of use 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," according to Brown's release.
System had to be taken offline for months
The issues prompted the state to take the system offline 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," the release said.
The state also had to use ad hoc estimates to pay health care providers.
"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 release added.
CBS News Baltimore is reaching out to UnitedHealth Group and Optum Inc. for a response to the AG's suit.
