Maryland is suing a former state health department contractor for its allegedly defective software that hobbled regulators’ abilities to fight fraud in the drug and mental health treatment field.
Attorney General Anthony G. Brown announced Thursday his office filed a lawsuit against UnitedHealth Group, the country’s largest healthcare company, and its wholly-owned subsidiary, Optum, Inc. The state accused the companies of costing taxpayers tens of millions of dollars.
The state’s lawsuit is seeking about $380 million in damages, up to triple the contract price it paid to Optum, according to the release.
Between 2019 and 2024, Optum had a $126.9 million contract with the Maryland Department of Health to process Medicaid claims and payments to substance use and mental health treatment programs.
But the computer system used to process claims crashed the day it launched and never functioned properly, jeopardizing care to 1.5 million Marylanders on Medicaid, according to the attorney general’s office.
The state’s lawsuit alleges that Optum had swapped out its own claims management software and installed a subcontractor’s system which had not been adequately tested.
According to the lawsuit, the software platform was riddled with problems. For example, it could not distinguish between services that were medically necessary and frivolous. It also denied legitimate claims and paid incorrect amounts to providers. Other problems included an inability to block “rampant” multimillion-dollar fraud in drug addiction treatment, the release said.
Optum issued a statement responding to the lawsuit, arguing that the state’s claims fail to account for the complexities of the program’s implementation and overlooks the company’s commitment to provide services for the state.
A 2024 Banner and New York Times investigation into an addiction treatment program that housed patients in dilapidated conditions overrun with drugs found that Optum’s broken system and other regulatory shortcomings strained the state’s ability to oversee providers.
Because the state was unable to process Medicaid claims for addiction and mental health services, Maryland was forced to pay treatment providers based on educated guesses for nearly a year. Optum could not monitor or properly audit spending, and fraud investigations stalled, the joint Banner-Times investigation found.
Following an explosive growth in new providers and concerns about poor quality of care, the state health department began a crackdown on suspected fraud, waste and abuse in 2024.
In a statement, Brown wrote that his office hopes to recover money owed to taxpayers after United Healthcare and Optum’s alleged mismanagement.
“Marylanders in crisis and the providers who care for them rely on Maryland’s Medicaid program for essential mental health and substance abuse care,” Brown wrote. “Optum provided a defective system that failed them for years.”
An industry association representing addiction and mental health treatment providers applauded Brown’s move and asked that any money won from the lawsuit be invested back into the state’s behavioral health system.
“Optum’s technology and human failures were profoundly damaging in ways that continue to resonate today,” said Shannon Hall, executive director of the Community Behavioral Health Association of Maryland, in a statement.
She said many providers had to hire new staff to navigate a broken system, which also caused years of financial instability.
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