Lab Loses Round 1 of Reimbursement Lawsuit against Unitedhealth Group

Case: A lab that performed urine drug testing on out-of-network Medicare Advantage and Medicaid patients sued Unitedhealth Group for carrying out bad faith and statistically invalid claims audits and wrongfully withholding over $1 million in reimbursements for lab tests. United contended that the claims were legally invalid. Significance: The Illinois federal court agreed and tossed all of the claims:

• The lab didn’t have standing to sue United for breach of contract because there was no contract between the parties;
• The complaint didn’t allege that patients had assigned their contractual rights to the lab; and
• The claims for bad faith were invalid because they weren’t properly pled under state law.

The good news for the lab was that all of the dismissals were due to how the complaint was written and the judge gave it 21 days to submit an amended complaint [MD Spine Sols., LLC v. Unitedhealth Grp., Inc., 2022 U.S. Dist. LEXIS 6760].