Maryland sues Optum over 'defective' computer system

Maryland's Attorney General, Anthony Brown, has initiated legal action against UnitedHealth Group's Optum unit, accusing the company of defrauding the state's Medicaid program through a faulty computer system. The lawsuit alleges that the system, which was utilized in the state's Medicaid behavioral health program, malfunctioned from the moment it was introduced, never functioning correctly.

The state entered into a contract with Optum from 2019 to 2024, paying $126.9 million for the administration of its Administrative Services Organization program. The lawsuit further claims that the system crash was so grave that it necessitated the shutdown of the program for eight months in 2020, leaving 1.5 million Medicaid recipients without access to their services.

This cost Maryland tens of millions of dollars, according to the AG's office. Maryland residents in crisis and their providers rely on the state's Medicaid program for crucial mental health and substance abuse care. Brown expressed in a press release, "Optum provided a defective system that failed them for years." The lawsuit alleges that Optum switched its own proprietary claims management system for one built by a subcontractor in the final months before the system's rollout, which was inadequately tested and vetted.

This resulted in the denial of valid care claims, incorrect payments to providers, and the failure to detect rampant fraud, costing the state additional billions. Maryland seeks triple the contract's value—approximately $380 million—in damages for the alleged violations of the state's False Claims Act. The lawsuit also charges breach of contract and intentional misrepresentation.

An Optum spokesperson vehemently denies the allegations, emphasizing that the contract was directly between Optum and the state, unrelated to UnitedHealthcare's Medicaid business in Maryland.