Class Action Claims UnitedHealthcare ‘Strategically’ Kicked Providers Out of Network, Refused to Reimburse Patients

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A proposed class action claims UnitedHealthcare Insurance Company has run afoul of a North Carolina state law by refusing to reimburse certain out-of-network medical expenses the insurer has “artificially created” by “purposefully” terminating certain providers from its network. 

The 27-page lawsuit alleges North Carolina residents who have or have had health insurance through United Health have received “balance bills” from anesthesia provider Providence Anesthesiology Associates, a plaintiff in the case with whom the defendants are alleged to have unilaterally terminated their relationship before demanding it “cut its rates by more than 60% to return to the network.” 

The complaint alleges United Health “took these steps knowing it would harm patients and planned to make their own insureds responsible for unplanned medical bills in the thousands of dollars each that they knew would result.” The suit describes United Health’s alleged targeting of certain providers as “unethical and unfair” as the insurer has essentially attempted to strong-arm service providers into better contract terms by “using patients as leverage.” 

The case contends that each plaintiff received medical services at an in-network facility for which Providence’s anesthesia portion of their care was out-of-network “only because UHC unilaterally terminated Providence from its network in 2020.” As a result, the plaintiffs have been saddled with thousands in unexpected bills for care that should have been covered by United Health, the suit argues. 

Since the termination of Providence and many other providers nationwide from United Health’s network, the insurer has refused to reimburse proposed class members at the reasonable, standard rate for medical services performed by those providers, the complaint claims.

“As a result, [United Health’s] insured members are forced to bear medical costs which should be borne by UHC,” the suit alleges, relaying that North Carolina’s Patient Protection Act prohibits insurers who have an insufficient network from “penaliz[ing] an insured or subject[ing] an insured to the out-of-network benefit levels offered under the insured’s approved health benefit plan.” 

According to the lawsuit, Providence and United Health normally negotiated new contract rates as part of the Medical Group Participation Agreement renewal process. The suit claims United Health has had a historic pattern during the contract renewal term to wait until the week before the contract expired to provide a counteroffer to Providence as a means to pressure the provider into accepting lower rates to stay in-network. 

Per the case, United Health, during an ongoing debate of legislation against surprise billing practices at the federal level in September 2019, began to negotiate for lower rates with Providence. On September 30, 2019, United Health allegedly served a notice of termination of its contract and informed Providence that the contract would end, leaving Providence out-of-network, on March 1, 2020. United Health relayed to Providence at the time that it would remain open to negotiating a mutually agreeable participation agreement with competitive rates that would allow Providence to remain in-network, the complaint says. The suit adds that United Health’s September 30 notice was also accompanied by a proposal for Providence to rejoin the network but with its reimbursement reduced by more than 60 percent. 

“The proposed rate reduction was so drastic that it would be impossible for Providence to continue providing patients with the highest quality of care,” the lawsuit says. 

The suit alleges United Health’s termination of Providence’s contract was for no legitimate purpose as the insurer never identified any issues with the provider’s anesthesia services, certificates, licensure or any other problems that would justify contract termination. 

“Instead, UHC deemed Providence an out-of-network provider for the purpose of pressuring Providence to accept a substantially lower reimbursement rate than Providence historically accepted from UHC, and a substantially lower reimbursement rate than allowed by North Carolina’s Patient Protection Act,” the complaint charges. 

According to the case, United Health admitted in January 2020 that its termination of Providence’s contract was part of a negotiation strategy whereby the anesthesia provider was offered the choice to either terminate the contract mutually for all products or have United Health terminate it unilaterally for its commercial line of business only.

The lawsuit alleges United Health knew that its termination of Providence and other service providers’ contracts would harm patients.

“UHC counted on the threat of out-of-network status and resulting hardship to Plaintiff Patients and class members to exert undue pressure on Providence, using patients as leverage in its contract negotiations with Providence,” the case says. 

The case lastly alleges United Health, one of the largest health insurers in the country, has retaliated against certain service providers by “tak[ing] steps to disrupt the relationships” between them and patients. The suit claims United Health, with regard to Providence, has misled patients and interfered with their access to anesthesia services, as some have been forced to cancel scheduled surgeries or otherwise not seek care they would have otherwise sought from Providence. 

The lawsuit demands that United Health reimburse or pay for the out-of-network medical expenses it has created artificially through “its targeted network terminations.”

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