Lawsuit accuses UnitedHealthcare Group of underpaying benefits for out-of-network care
United has pocketed billions of dollars in “savings” fees since it began the initiative in 2016, according to the complaint.
A class-action lawsuit accuses UnitedHealthcare Group of systematically underpaying benefits for care received from out-of-network health care providers. This practice violates the terms of their plans and breaches United’s fiduciary obligations under ERISA, according to complaint.
Many self-funded health plans administered by United, including those of the plaintiffs, state that United will base reimbursement amounts for covered out-of-network services on “competitive fees” in a provider’s geographic area. But according to the complaint, United often ignores this promise and instead uses deeply discounted “repricer” rates that make just a fraction of a billed charge eligible for reimbursement. Out-of-network providers are not required to accept this rate, which means plan members are legally obligated to pay the difference.
United has significant motivation to shortchange plan members, plaintiffs say, because doing so directly boosts the insurer’s profits. Under its so-called “shared-savings” program, United charges self-funded plans, including the plaintiffs’ plans, a fee for its purported cost-containment services whenever United decides to recognize less than the provider’s full billed charge as eligible for reimbursement.
“In this profit-motivated scheme, United rewards itself for underpaying consumers’ health claims,” says attorney Caroline E. Reynolds, a partner in Zuckerman Spaeder, which represents the plaintiffs. “The insurer is generating billions in additional profit by forcing plan members to accept pennies on the dollar in benefits for services they thought were covered.”
United has pocketed billions of dollars in “savings” fees since it began the initiative in 2016, according to the complaint, and the repricer has been given a percentage of the fees collected by United, an amount totaling more than $1 billion so far.
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“In boosting profits this way, United is illegally reducing coverage and violating its duty under ERISA to act solely in the interest of plan members,” Zuckerman Spaeder partner D. Brian Hufford says. “By using pricing data that is inconsistent with the terms of its plans, United is effectively denying claims that should rightfully be covered. And because United’s pricing scheme clearly serves its own financial interests, the insurer is failing to live up to its fiduciary obligation to act solely in the interest of the plan and plan members it serves.”