UnitedHealth Settles Class Action Lawsuit with Doctor Group

Seattle – UnitedHealth Group Inc., the second largest health insurer in the nation, agreed Thursday to pay a record $350 million settlement in order to resolve all allegations that the firm rigged a database which is used to calculate insurance payments for customers who use doctors outside the insurance company’s network. The class action lawsuit was brought by the American Medical Association in response to claims made by patients and doctors alike that UnitedHealth was engaged in fraudulent practices with regard to services which were provided outside its network. Though it’s the largest settlement involving a health insurance agency to date, a spokesperson for UnitedHealth stated adamantly that it “contains no admission of wrongdoing.”

According to allegations made by the class action lawsuit Ingenix, UnitedHealth’s database, was fixed in such a way that UnitedHealth was able to underpay doctors outside the insurer’s network, resulting in higher payments for patients as the physicians were forced to increase the bill for services rendered in order to make up the difference. In typical non-network situations, insurance companies pay between 70 and 80 percent of what is determined to be the normal rate charged by doctors, and if the individual doctor’s rate is higher than that the patient pays the difference; by manipulating data to lower that rate, Ingenix was able to reduce insurance payments and thereby saddle the consumer with monetary difference. “The Ingenix database has corrupted the system for paying out-of-network medical bills, resulting in patients and physicians being cheated by health insurers,” said Dr. Nancy Nielson, a high-ranking member of the American Medical Association.

The settlement is based upon almost 15 years of fraudulent action with regard to out-of-network medical payments, covering the period between March 15, 1994 and the date on which the settlement is approved in a court of law. “By using a flawed database to determine reimbursement rates for out-of-network care, insurers have increased profits at the expense of patients and physicians,” said Nielson. “By agreeing to the settlement, UnitedHealth Group has recognized the importance of restoring its relationship with patients and physicians by ending use of the rigged database.”

This comes only days after UnitedHealth agreed to contribute $50 million to the development of a new independent database which will be able to provide a more accurate assessment of health claims for patients and physicians. “We are pleased to put these issues behind us so we can focus on the important work of assisting physicians in their effort to provide the best-possible-quality health care to their patients,” said UnitedHealth’s chief medical officer Reed Tuckson. Aetna has also agreed to contribute $20 million to help fund the new system.