Maryland sues UnitedHealth for $380M over ‘defective computer system’
UnitedHealth Group and subsidiary Optum are facing a lawsuit, filed by the state of Maryland, accusing the company of “providing a defective computer system” that crashed so completely it allegedly cost taxpayers “tens of millions of dollars.”
Maryland Attorney General Anthony G. Brown said in a statement announcing the lawsuit that the actions by UnitedHealth/Optum were tantamount to fraud, as the computer system the company developed to manage a Medicaid behavioral health program did not work properly from the day it arrived.
According to Brown’s office, Optum was contracted with the state to process claims from the program, which covered 1.5 million people in Maryland. That contract, which began in 2019, ended in 2024. The issue with the computer that was allegedly faulty was said to have occurred in 2020, taking the program offline for eight months until the technical issues were fixed.
Brown added that the entire behavioral health program was put 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,” Brown said. “My Office will hold UnitedHealthcare and Optum accountable and recover the money Maryland taxpayers are owed.”
The state paid Optum $126.9 million for its services, Brown’s office said. Part of its work included developing the IT infrastructure for the operation of the Medicaid program.
The lawsuit alleges that, mere months before the system was rolled out, Optum switched gears and used claims management infrastructure developed by one of its subcontractors. That system was “inadequately-tested, inadequately-vetted,” Brown’s office claims.
Issues with the software allegedly extended beyond the computer crashing. According to the lawsuit, the software platform from the Optum subcontractor was unable to “distinguish between medically necessary and frivolous services,” often denying legitimate claims.
Further, hospitals and providers that relied on reimbursement from plans billing through Medicaid were allegedly not getting money owed because of the faulty system, causing a disruption to business operations.
Maryland is suing UnitedHealth/Optum for $380 million, the amount of the contract plus what the state Department of Health said it suffered in damages.
In a statement, Optum denied claims made in the lawsuit, accusing the state of overlooking investments the company had to make to meet regulatory requirements.
"Optum vehemently disagrees with the Maryland Attorney General's lawsuit, which fails to account for the complexities of the program’s implementation and overlooks our sizeable commitment and investment to provide a high standard of compliant services for the state," a spokesperson wrote.
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