UnitedHealthcare being sued yet again for bad faith underpayment

A Pennsylvania woman contends that her insurance company illegally underpaid her mental health counselor, increasing her out-of-pocket medical expenses and jeopardizing her care. Her legal team is seeking class action status on behalf of thousands of other patients and their providers who were hurt by the reimbursement practices.

The lawsuit names UnitedHealthcare, the nation's largest health insurer. The insurance company has long history of lowball reimbursements to medical professionals, which hurts patients as well.

Insurer had different reimbursement rates for non-doctors

The crux of the recent lawsuit against two UnitedHealthcare affiliates is that the insurer had different reimbursement rates for mental health providers, depending on their credentials. The plaintiff said her counselor (who has a master's degree but not a medical degree) was reimbursed 35 percent less than UnitedHealthcare would have paid for comparable treatment from a physician (psychiatrist).

The Employee Retirement Income Security Act (ERISA) specifically prohibits discrimination against psychologists and master's level counselors if they are duly licensed. The plaintiff is seeking certification of a class action on behalf of other mental health patients and their non-doctor counselors.

United Healthcare has a history of insurance underpayment. Short-paying legitimate claims is one form of insurance bad faith.

Short-paying doctors also hurts patients

In 2009, the American Medical Association reached a landmark $350 million settlement with UnitedHealthcare over a long-running underpayment scheme. The insurance company's Ingenix database - either flawed or by design - generated reimbursement rates for out-of-network medical services that were artificially low.

The AMA lawsuit on behalf of thousands of doctors and their patients alleged that the practice violated ERISA and other federal laws. It's a triple whammy for providers and consumers:

  • Low reimbursement rates cut into the bottom line for physicians, clinics and hospitals.
  • When insurers short-pay doctors, patients are forced to pay the difference out of pocket.
  • Medical providers have to raise their prices or cut corners to cover the lost revenue.

UnitedHealthcare has a history of short-paying providers

In a related lawsuit brought by the New York attorney general, UnitedHealthcare agreed in 2009 to discontinue its Ingenix database. In the agreement, insurers UnitedHealthcare and Aetna agreed to contribute $50 million and $20 million toward creating a non-profit alternative.

Smaller offshoot lawsuits have percolated through the legal system:

In 2015, United Healthcare agreed to a $9 million settlement brought by a group of California surgery center physicians who claimed they were short-paid. That lawsuit claimed that the insurer set arbitrarily low reimbursement rates while falsely reporting that the rates were based on the Ingenix database and regional comparisons.

Also in 2015, UnitedHealthcare agreed to a settlement of $11.5 million for systematically underpaying doctors in four states. That case likewise hinged on allegations that software and internal processes were designed to downplay payments or to delay and deny claims.

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