Insurors Systematically Cheat Older Americans Out Of Medicare Benefits
A class action lawsuit alleges UnitedHealthcare knowingly uses a flawed artificial intelligence algorithm to deny seniors rehabilitation services to which they are entitled under Medicare.
UnitedHealthcare, the nation’s largest healthcare insurer, is accused of refusing to pay for rehabilitation services provided under Medicare because it knows that fewer than one percent of policy holders will appeal denied claims.
The lawsuit says UnitedHealthcare uses an artificial intelligence algorithm to deny claims brought under Medicare Advantage Plans for “post-acute” care, including stays in skilled nursing home facilities and in-home care.
The AARP, which claims to be the nation’s premier advocate for older Americans, heavily markets products by UnitedHealthcare, Inc., which provides health insurance plans for 52.9 million Americans.
This is the second class action lawsuit accusing a major American insurer of using artificial intelligence to systematically cheat older Americans.
A class action lawsuit was filed in July in a California federal court against Cigna Corp. and Cigna Health and Life Insurance Co., which cover about 18 million people in the U.S. It alleges Cigna also uses artificial intelligence to wrongly deny patient claims without even opening their files.
Both lawsuits were filed by the public interest law firm, Clarkson Law Firm of Malibu, CA, which has asked Open AI and Google to pause commercial use of AI products to allow for “responsible deployment of this powerful technology.”
Too Sick To Appeal
The United Healthcare lawsuit states the insurer uses an AI algorithm that has a 90% error rate because it knows the policy holders, many of whom are in nursing homes due to a debilitating illness, are unlikely to appeal a claim denial.
“Defendants bank on the patients’ impaired conditions, lack of knowledge, and lack of resources to appeal the erroneous AI-powered decisions,” states the lawsuit.
When claim denials are appealed, the lawsuit states, more than 90% are reversed through an internal appeals process or by a U.S. District Court Magistrate.
The algorithm was developed by NaviHealth, Inc., also a defendant, which is a wholly owned subsidiary of UnitedHealthcare Group.
The lawsuit was filed in U.S. District Court of Minnesota by the families of the late Gene B. Lokken, 91, and the late Dale Henry Tetzloff, 74, whose claims for medically necessary care were denied by UnitedHealthcare, forcing their families to pay.
According to the lawsuit:
“The fraudulent scheme affords [UnitedHealthcare] a clear financial windfall in the form of policy premiums without having to pay for promised care, while the elderly are prematurely kicked out of care facilities nationwide or forced to deplete family savings to continue receiving necessary medical care, all because an AI model ‘disagrees’ with their real live doctors’ determinations.”
The STAT Investigation
The allegedly unsavory insurer practices came to light in a powerful March, 2023 investigation by STAT, which reports on health and medicine.
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STAT chronicled the struggle of an 85-year-old Wisconsin woman who was denied nursing home care by Security Health Plan, pursuant to the NaviHealth algorithm. She could not dress herself, go to the bathroom or push a walker without help. She was forced to spend down her savings to get continued care and eventually went into Medicaid, the poverty program for seniors in need of health care. She has since died.
The STAT investigation concluded “artificial intelligence is now driving [insurer] denials to new heights in Medicare Advantage, the taxpayer-funded alternative to traditional Medicare that covers more than 31 million people.
The black box of the AI has become a blanket excuse for denials - STAT
STAT quoted Chris Comfort, chief operating officer of Calvary Hospital, a palliative and hospice facility in the Bronx, N.Y. Comfort said: “We take patients who are going to die of their diseases within a three-month period of time, and we force them into a denial and appeals process that lasts up to 2.5 years… So what happens is the appeal outlasts the beneficiary.”
In addition to UnitedHealthcare, STAT reported the algorithms are used by Elevance, Cigna, and CVS Health, which owns insurance giant Aetna.
NaviHealth Responds
At the time, NaviHealth issued the following statement to STAT:
“The NaviHealth predict tool is not used to make coverage determinations… The tool is used as a guide to help us inform providers, families and other caregivers about what sort of assistance and care the patient may need both in the facility and after returning home.”
According to the lawsuit, NaviHealth’s nH Predict AI Model compares a patient’s diagnosis, age, living situation, and physical function to similar patients in a database of six million patients it compiled over the years of working with providers to predict patients’ medical needs, estimated length of stay, and target discharge date.
The lawsuit states that patients who have a three-day hospital state are typically entitled up to 100 days in a nursing home but insurers use the algorithm to start cutting off payment after 14 days.
Ryan Clarkson, managing partner at Clarkson Law, said in a statement that UnitedHealthcare is “effectively using AI to throw the elderly—our parents or grandparents—out onto the street.”
The lawsuit is Estate of Gene B. Lokken and The Estate of Dale Henry Tetzloff individually and on behalf of all others similarly situated v. UnitedHealth Group, Inc., UnitedHealthcare, Inc., Navihealth, Inc., and Does 1-50, inclusive, #23-cv-03514 (11/114/23).