Maryland Sues Health Giant Over Botched Medicaid System

Maryland has filed a lawsuit against UnitedHealth Group and its subsidiary Optum Inc. concerning a computer system intended for the state's Medicaid behavioral health services. Attorney General Anthony Brown announced the suit, alleging the companies violated Maryland's False Claims Act.

The state contracted Optum for $126.9 million to manage its Administrative Services Organization program. However, shortly before its scheduled launch, Optum allegedly replaced the original software with an inadequately tested system. This new system immediately failed upon its first day of operation in 2020.

According to the lawsuit, the defective system could not differentiate between necessary and frivolous services, denied legitimate claims, and failed to prevent millions in fraud. These critical issues forced the state to take the system offline for eight months, jeopardizing mental health and substance abuse care for 1.5 million Medicaid recipients.

The state incurred significant financial losses, including tens of millions due to estimated payments to providers. The lawsuit seeks approximately $380 million in damages, which could be up to triple the initial contract price, to recover funds lost due to the system's failures.