UnitedHealthcare settles lawsuit with NC Medical Society

UnitedHealthcare, the nation’s largest health insurer, has agreed to an $11.5 million settlement to resolve accusations of underpaying and cheating doctors in North Carolina and three other states.

The N.C. Medical Society and other doctors groups had accused Untied of devising an elaborate scheme to deprive doctors of millions of dollars in payments by designing software and other processes to reduce, deny and impede claims.

The settlement, announced Monday by the N.C. Medical Society, ends a lawsuit filed in 2004 and not resolved until April 27 this year, nine months after settlement negotiations began.

As part of the settlement, United will pay $2.5 million in legal fees to the medical societies of North Carolina, Tennessee, Connecticut and New York. The insurer will also spend $9 million upgrading its internal website to clearly explain its reimbursement policies, charges and paperwork on file.

“It is gratifying to have reached a settlement after so many years,” said Robert Seligson, CEO of the N.C. Medical Society, in a statement. “We look forward to putting this chapter with United Healthcare behind us and to improved business practices between the company and North Carolina physicians.”

United did not admit any wrongdoing and settled to avoid protracted and expensive litigation, according to the settlement document. The doctors groups sued United and its related companies: UnitedHealthGroup, United Healthcare of North Carolina and Mamsi Life and Health Insurance Co.

“We are pleased to have resolved this nearly 15-year-old litigation and look forward to collaborating in new ways with the North Carolina Medical Society,” United said in a statement. “Physicians will have simpler and more comprehensive access to claims management information through enhancements we are making to our physician website.”

The medical associations maintained their allegations, despite repeated setbacks in the courts. United won summary judgment in 2005 and in 2007 on appeal. After the claims were dismissed in 2008, the medical groups were able to get the case reinstated in 2010, and the lawsuit had languished in the courts for several years before settlement talks got underway.

In the original lawsuit, the medical groups said United had programmed software to automatically downcode medical claims, resulting in reduced payments, and to penalize physicians whose charges fell outside a prescribed range of treatment costs. United would wear down doctors practices making phone inquiries by means of holds, transfers and other stall tactics, the doctors alleged.

The doctors also said years after United paid some doctors, the company brought in third-party reviewers to contact doctors offices and demand refunds for “overpayments.”

The various strategies United used to cheat doctors were known as downcoding, bundling, modifiers and black box edits, the suit said.

This story was originally published May 5, 2015 at 1:55 PM with the headline "UnitedHealthcare settles lawsuit with NC Medical Society."