Lawsuit over UnitedHealthcare claim denials continues

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A federal lawsuit against UnitedHealthcare, in which the estates of decedents alleged that the health insurance company wrongfully cut off care for their loved ones due to “malicious implementation” of an AI algorithm, will continue.

In an order filed Feb. 13, U.S. District Judge John Tunheim of the District of Minnesota granted in part but denied in part the Minnetonka-based health insurance giant’s motion to dismiss.

In a lawsuit filed in November 2023, plaintiffs alleged that relying on the AI model — and overriding what treating doctors determined was medically necessary — led to the denial of health care coverage to elderly patients.

Plaintiffs alleged that UnitedHealthcare denied their claims for post-acute care because of the company’s “illegal deployment of artificial intelligence (AI) in place of real medical professionals to wrongfully deny elderly patients care owed to them under the Medicare Advantage Plans.” Post-acute care helps patients recover from serious illnesses or injuries through services like skilled nursing, therapy and inpatient rehabilitation.

Plaintiffs asserted that UnitedHealthcare used an AI model called “nH Predict,” which allegedly can predict the amount of care that elderly patients require. They claimed that this model uses information such as the patient’s age, diagnosis, living situation and physical function and compares them to a database of 6 million patients that has been compiled. The model then apparently makes determinations about how much care a patient needs and provides a target discharge date.

But the plaintiffs allege that the nH Predict model’s recommendations are unrealistic about what sort of care a patient actually needs. Additionally, the plaintiffs alleged that the AI model has a 90% error rate and maintain that defendants are aware of this. But the plaintiffs asserted that, nevertheless, UnitedHealthcare set targets to restrict employees from deviating from those predictions.

The estates of Gene Lokken and other customers who signed up for UnitedHealthcare’s Medicare Advantage coverage are the plaintiffs in the lawsuit. Lead plaintiff Lokken, age 91, fell while at home, fracturing his leg and ankle. Lokken’s doctor recommended physical therapy, which Lokken received for less than three weeks. However, his coverage was denied, apparently due to the AI model, and he was presented with a safe discharge plan. Lokken paid roughly $12,000 to $14,000 per month out of pocket until he passed away a year later.

Plaintiffs alleged that UnitedHealthcare carried out a “fraudulent scheme” that offered a “clear financial windfall in the form of policy premiums without having to pay for promised care.” They brought seven causes of action under Minnesota law to argue that using nH Predict to deny coverage was unreasonable: breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, insurance bad faith, negligence per se, unfair and deceptive insurance practices, and unfair competition.

“Defendants bank on the patients’ impaired conditions, lack of knowledge, and lack of resources to appeal the erroneous AI-powered decisions,” the plaintiffs alleged in the complaint.

Minnesota Lawyer reached out to UnitedHealthcare for comment on the court’s Feb. 13 order. In 2023, UnitedHealthcare spokesperson Aaron Albright issued a statement via email: “The naviHealth Predict tool is not used to make coverage determinations. The tool is used as a guide to help us inform providers, families and other caregivers about what sort of assistance and care the patient may need both in the facility and after returning home.”

In its motion to dismiss heard by Judge Tunheim, UnitedHealthcare successfully argued that the Medicare Act’s broad preemption provision resulted in most of plaintiff’s claims being preempted, finding that many claims aimed to regulate the same subject matter as the Medicare standards as the court would be required to evaluate standards promulgated by the Medicare Act rather than look at standards articulated in UnitedHealthcare’s written documents.

However, the court found that the breach of contract and breach of the implied covenant of good faith and fair dealing survived preemption.

“These claims thus effectively arise out of UHC’s evidence of coverage documents because the question would be whether UHC complied with its statement that claim decisions would be made by ‘clinical services staff’ and ‘physicians’ when it allegedly used artificial intelligence,” wrote Judge Tunheim in the order. “Thus, in analyzing these claims the Court would only be required to investigate whether UHC complied with its own written documents. Because ruling on these two claims would require the Court to only apply basic contract principles, the breach of contract and breach of the implied covenant of good faith and fair dealing claims do not regulate the same subject matter as the Medicare Act, and thus are not preempted.”