Optum is asking a Baltimore court to throw out Maryland’s $380 million fraud lawsuit over a failed Medicaid behavioral health claims system, calling the state’s allegations “a story that it knows is untrue.”
In its Oct. 19 motion to dismiss, Optum argued the case is a contract dispute dressed up as fraud allegations aimed at generating public pressure against the company and to leverage the threat of triple damages under the state’s False Claims Act.
Maryland Attorney General Anthony Brown sued UnitedHealth and Optum in August, alleging the company provided a defective claims-processing system for the state’s Medicaid behavioral health program that crashed on its first day of use and never worked properly.
“Marylanders in crisis and the providers who care for them rely on Maryland’s Medicaid program for essential mental health and substance abuse care. Optum provided a defective system that failed them for years,” Mr. Brown said in August.
The state contracted with Optum for $126.9 million to run the program from 2019 to 2024. A 2022 state audit found Maryland had overpaid behavioral health providers by more than $223 million under Optum’s administration. The state ended its contract with the company in 2024 and replaced it with Elevance Health’s Carelon.
In the filing, Optum said its 2019 bid disclosed the software platform the state now claims was secretly swapped in, and that the state drafted a transition agreement that adjusted Optum’s pay based on the severity of system defects at launch. The state authorized the system to go live in 2020, knowing it had problems, Optum alleges, and then spent the next five years using contractual tools to withhold payments and assess penalties.
“A disagreement about how a complicated ASO system performed after its launch is not fraud, something the state well knows,” Optum said.
“[Maryland Department of Health] wrote the rules, knew the facts, and set the price,” the company continued. “The State cannot now claim MDH was deceived by the very framework it designed and operated under for five years.”
Optum is also arguing that the state’s breach-of-contract claim should have gone to a state appeals board, and that UnitedHealth should be dismissed as a defendant because it was not a part of the contract.
The Maryland Attorney General’s Office declined to comment.
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