Minnesota judge: lawsuit over UnitedHealth use of AI can continue

A Minnesota judge is allowing a breach-of-contract claim to continue against UnitedHealth Group and its subsidiaries over the use of artificial intelligence.

District Judge John R. Tunheim granted UnitedHealth a partial win by dismissing negligence, unfair and deceptive insurance practices, and similar consumer protection claims.

The lawsuit dates to November 2023, with plaintiffs claiming that UnitedHealth relies on an algorithm to deny rehabilitation care to seriously ill patients, even as UnitedHealth is aware that the algorithm has “a 90% error rate.”

“The fraudulent scheme affords Defendants a clear financial windfall in the form of policy premiums and federal funding without having to pay for promised care,” the lawsuit alleges, “while the elderly are prematurely kicked out of care facilities nationwide or forced to deplete family savings to continue receiving necessary medical care, all because an AI model ‘disagrees’ with their real live doctors’ determinations.”

The class-action lawsuit was filed by past patients or their heirs who had a UnitedHealthcare Medicare Advantage plan. It followed an in-depth investigation by STAT, which covers health and science news, detailing how UnitedHealth allegedly used a computer algorithm to cut off care to older patients.

The STAT report claimed that internal documents show UnitedHealth managers set a goal for clinical employees to keep patients rehab stays within 1% of the days projected by the algorithm.

UnitedHealth Group purchased NaviHealth, an automated care management system, in May of 2020 for over $1 billion. It is behind nH Predict, the AI model that UnitedHealth uses in patient care. The health insurer has said it uses the AI tool merely as “a guide” in making decisions.

In its motion for dismissal, UnitedHealth argued that the patients named in the lawsuit had not completed appeals to their insurance claims being denied.

A spokesperson for UnitedHealth sent InsuranceNewsNet this statement:

"Our number one priority is to ensure patients are receiving the care they need. That’s the purpose of the naviHealth tool – it is used by our clinical care support team to suggest the care and services they should be receiving during their time in the facility or after returning home and to help patients, as well as their families, caregivers and providers, plan for their next step in care. We believe the lawsuit is based on unfounded allegations and mischaracterizes the incredibly valuable work of our experienced and compassionate clinicians. Coverage decisions are only made by medical directors – not by AI - in accordance with CMS Medicare coverage criteria."

The use of AI to deny claims is a popular topic of litigation, including a Cigna class-action lawsuit.

‘Disciplined and terminated’

Plaintiffs claim that employees who deviate from the nH Predict AI projections are “disciplined and terminated, regardless of whether a patient requires more care.”

UnitedHealth relies on the AI model to short-circuit post-acute care because it can, the lawsuit states. The plaintiffs say very few patients appeal denied claims, and there is no accountability for any wrong AI decisions. “In many cases” costs are shifted to the American taxpayers, the lawsuit alleges.

“In their coverage denial letters, Defendants inform patients who qualify for traditional Medicare that their coverage is being denied solely due to their Medicare eligibility,” the lawsuit says. “Defendants direct these patients to enroll in the government-subsidized Medicare program while using AI to make meritless coverage determinations that are not based on the patients’ medical need.”

In October, a Senate investigation into denial rates for coverage via Medicare Advantage concluded that UnitedHealthcare's rates "accelerated significantly once NaviHealth began managing post-acute care," particularly when it came to coverage for patients in skilled nursing facilities.

One plaintiff’s story

The plaintiffs include Carol Clemens. On Dec. 2, 2023, she had a severe medical episode caused by methemoglobinemia, leading to her hospitalization at Mayo Clinic Hospital in Rochester, Minn. Clemens “lost consciousness, collapsed, and displayed life-threateningly low blood oxygen levels, causing her skin to turn blue,” the lawsuit states.

Methemoglobinemia is a blood disorder in which an abnormal form of hemoglobin accumulates in the blood, leading to an oxygen deficiency.

On Dec. 18, Clemens was transferred to a skilled nursing facility, and her doctor prescribed one month of speech, occupational, and physical therapy. After 10 days in the facility, UnitedHealth denied Clemens’ coverage, the lawsuit says, and she appealed.

On Dec. 29, Clemens’ appeal was denied, stating that “the rehab care was not medically necessary,” the lawsuit says. “She was unable to eat solid foods, and her doctor recognized her as being at risk of aspiration. Mrs. Clemens had not yet completed her speech therapy and was unable to speak more than a few words. ... Clemens was also unable to walk without assistance.”

Unable to afford the facility, Clemens returned home on Jan. 3 and suffered a fall at home three days later. Three days after that, she suffered a hemorrhage and was transported to the emergency room. It was determined that Clemens was suffering from a severe brain bleed, the lawsuit says.

She was discharged from the hospital on Jan. 26, 2024, and her doctor ordered rehab until Feb. 29. UnitedHealth covered her rehab stay from Jan. 31 to Feb. 15, the lawsuit states.

At the time plaintiffs filed an amended complaint on April 5, 2024, Clemens remained in the skilled nursing facility and her out-of-pocket expenses totaled $16,768, the lawsuit says.

© Entire contents copyright 2025 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.