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Class action lawsuit claims UnitedHealthcare diverts plan funds to settle unrelated disputes

UnitedHealthcare does not deny the practice and claims it makes healthcare more affordable.

Workers who have a health insurance plan with UnitedHealthcare are suing UHC and its parent company UnitedHealth Group in a class-action lawsuit accusing the company of illegally taking more than $1 billion every year from private employer health plans to settle unrelated payment disputes. 

The workers involved in the case want the court to stop United from the practice known as cross-plan offsetting and to order the insurer to return the money to the plan. 

Cross-plan offsetting occurs when an insurer overpays a provider on a disputed claim from one plan by withholding later payments from another plan for the same provider. 

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WHAT'S THE IMPACT?

The lead plaintiffs are Rick Scott and Royce Klein. 

Scott is an AT&T customer service representative in West Virginia who contributes more than $1,400 a year in payroll deductions to his AT&T healthcare plan, the lawsuit said.

Klein is a former 20-year CenturyLink engineer who contributes more than $2,200 a year to his CenturyLink healthcare plan. 

The lawsuit alleges that United takes portions of the contributions made by Scott, Klein and thousands of other AT&T and CenturyLink employees to resolve debts and disputes that have nothing to do with the workers or their companies.

This is in violation of the Employee Retirement Income Security Act of 1974, they said. 

ERISA requires that plan fiduciaries act "solely in the interest of the participants and beneficiaries" and "for the exclusive purpose of providing benefits to participants and their beneficiaries," according to the lawsuit.

Moreover, the suit claims that UHG uses cross-plan offsets to take money from self-insured plans funded with employee contributions to resolve disputed overpayments by UHG's own insurance subsidiary under fully-insured plans.

"By engaging in cross-plan offsetting, United treats the thousands of plans it administers as one extremely large piggy bank, moving more than $1.2 billion among its plans each year to suit its own interests," the lawsuit said. "Each cross-plan offset violates ERISA, and in most cases, the money ends up in United's own pocket."

By statement, UnitedHealthcare does not deny the practice and claims it makes healthcare more affordable.

"UnitedHealthcare is committed to improving affordability and overpayment recovery is an important tool in these efforts," said spokeswoman Maria Gordon Shydlo. "We will continue to enhance this process for our customers, who support our efforts to recover these funds on their behalf. We will vigorously defend ourselves in this matter."

THE LARGER TREND

The practice has been criticized as illegal under the ERISA, although previous attempts to stop it have failed. 

In a previous lawsuit, Peterson v. UnitedHealth Group, which was also litigated in Minnesota, out-of-network providers claimed that United was violating the ERISA with its use of cross-plan offsetting. 

Peterson v. UnitedHealth Group established that UHG took cross-plan offsets against the AT&T plan, the CenturyLink plan, and many other employer-sponsored ERISA plans, and that UHG was the recipient of all such money taken. 

Although the court found that United's actions were in "tension" with the ERISA, it did not rule on whether or not cross-pan offsetting violated the act. Peterson was voluntarily dismissed in 2019 with no constraints on UHG's practice.

ON THE RECORD

"It's inexcusable that the UnitedHealth Group would shave money off my hard-earned paycheck to line its own pockets," Klein said by statement. 

Twitter: @HackettMallory
Email the writer: mhackett@himss.org