UnitedHealth paying $20.25M to settle lawsuit alleging improper denial of certain medical claims

UnitedHealth Group has agreed to pay at least $20.25 million to settle a U.S. Department of Labor lawsuit that alleged a division of the company, called UMR, wrongly denied thousands of claims to pay health care providers for emergency room services and urinary drug screenings.

The proposed consent order and judgment, which was filed Friday in the U.S. District Court of Western Wisconsin, calls on UMR to reimburse out-of-pocket costs that patients incurred when coverage was denied.

In July 2023, the federal government alleged UMR, which administers health plans for large employers, should have applied a medical necessity standard to claims for urinary drug screening but instead "applied no standard and simply denied all the claims," according to the original complaint from the U.S. Department of Labor (DOL).

The lawsuit also alleged UMR didn't use the right standard when deciding whether to pay for certain ER claims.

"This settlement involves administrative processes that are no longer in place," UnitedHealth Group said in a statement. "We have been in ongoing negotiations with the DOL and have now reached a resolution that we believe is in the best interest of the plans and enrollees that we support."

Eden Prairie-based UnitedHealth Group is parent company to UnitedHealthcare, which is the nation's largest health insurer.

UMR is part of the insurance business, managing health plans for self-insured employers who hire the company as a third-party administrator, processing claims and managing a network of health care providers. The U.S. Department of Labor regulates self-insured health plans.

Claims were denied for at least 2,136 self-funded health plans, the Labor Department said when the lawsuit was filed. It sought reimbursement to plan participants whose claims were denied improperly by UMR from January 2015 to the time of the filing.

The U.S. Department of Labor's lawsuit, along with a separate complaint from patients later in 2023 about the company's alleged use of artificial intelligence in denying claims, raised allegations similar to those amplified in public debate over the health insurance industry since the Dec. 4 murder of UnitedHealthcare CEO Brian Thompson.

Under the proposed consent order filed Friday, UMR will reprocess emergency room and urinary drug screening claims, offering payment to patients of $68.85 to $103.27 for the UDS claims and up to $353.22 per ER claim.

The company will also pay a penalty equal to 10% of the total payments issued under the proposed consent order.

"UMR agrees that the court should enter the consent order and judgment, and therefore does not oppose the acting secretary's motion," wrote attorneys for acting Labor Secretary Vincent Micone III. "However, defendant UMR's nonopposition to the motion should not be construed as agreement with all statements in the acting secretary's supporting brief."

The government alleged that UMR's procedures for adjudicating emergency room claims relied solely on diagnosis codes and did not comply with the required "prudent layperson" standard when deciding whether to pay for care. This standard asks companies to consider what a person with average knowledge of health and medicine would think is necessary care at the time of symptoms, rather than basing coverage denials solely on a medical provider's diagnosis at the end of ER treatment.

It was not clear from court filings when a judge in the case might enter a final order and judgment.