Labor Department sues UnitedHealth’s UMR over denied claims

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A UnitedHealth Group unit denied thousands of emergency department and drug screening claims without reviewing them for medical necessity, the Labor Department alleges in a lawsuit initiated on Monday.

The complaint filed in the U.S. District Court for the Western District of Wisconsin targets UMR, a third-party administrator within the company’s UnitedHealthcare subsidiary, and accuses it of violating the Employee Retirement Income Security Act of 1974. The Labor Department alleges UMR “simply denied” claims without assessing their merit.

UnitedHealth Group, which touts UMR as the largest third-party administrator of group health plans covering more than 5 million employees and dependents, did not immediately respond to a request for comment. The Labor Department likewise did not immediately respond to a request for comment.

The Labor Department asserts that UMR violated the Affordable Care Act’s “prudent layperson” standard by denying emergency department claims for members of 371 self-funded plans. The company “failed to consider what a person with average knowledge of health and medicine would think at the time the symptoms present themselves” and refused to pay claims that did not include specific codes indicating “True ER” or “Sudden and Severe” diagnoses, according to the lawsuit.

“UMR considers no additional information and conducts no further analysis or review of the claim before the initial denial,” the Labor Department alleges.

From August 2015 to August 2018, UMR denied all urine drug screening claims without conducting medically necessity reviews, the complaint says. UMR subsequently modified its claims review process to allow coverage of some urine drug screenings performed in emergency settings, according to the Labor Department.

In October 2019, UMR also changed its practices by demanding additional medical records from providers rather than deeming claims medically unnecessary without spelling out what kind of information it needed for appeals or why, the government alleges.

The Labor Department wants the court to order UMR to reprocess all of the claims in question, formulate new processes for reviewing emergency department and urine drug screening claims, provide and any additional relief the judge deems equitable.

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