Maryland Attorney General Anthony G. Brown has filed a lawsuit against UnitedHealth Group and its subsidiary Optum Inc., alleging a computer system provided for the state’s Medicaid behavioral health program failed and caused tens of millions of dollars in losses.
The lawsuit stems from Optum’s contract with Maryland’s Medicaid behavioral health services program from 2019 to 2024. The state contracted with Optum for $126.9 million to operate the Administrative Services Organization program, which processes and pays providers for behavioral health services.
According to the lawsuit, Optum replaced its proprietary claims management software shortly before the new system was scheduled to launch with a system developed by a subcontractor. The lawsuit alleges the replacement system was inadequately tested and vetted.
The system crashed on its first day of operation and was later taken offline for eight months in 2020. Maryland’s Medicaid program provides mental health and substance abuse services to about 1.5 million residents.
The lawsuit alleges the system denied legitimate claims, paid incorrect amounts to providers, failed to provide receipts to some large providers and was unable to properly distinguish medically necessary services from other claims. It also allegedly failed to prevent millions of dollars in fraudulent claims involving areas including substance abuse treatment and laboratory urine testing.
Maryland Department of Health officials ultimately took the system offline and used estimated payments to providers while the system was unavailable. The lawsuit alleges those measures and other problems caused tens of millions of dollars in losses and additional state expenses.
Brown’s office alleges Optum violated Maryland’s False Claims Act and is seeking damages of up to three times the $126.9 million contract price, or about $380 million.
The lawsuit also includes claims of breach of contract, unjust enrichment and intentional misrepresentation.
The case was filed in Baltimore City Circuit Court.
