Maryland Attorney General Anthony Brown has filed a lawsuit against UnitedHealth Group and Optum, seeking $380 million in damages stemming from alleged issues administering a Medicaid behavioral health program.
“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 Aug. 27. “My Office will hold UnitedHealthcare and Optum accountable and recover the money Maryland taxpayers are owed.”
The case stems from Optum’s $127 million contract to run the state Medicaid program’s administrative services organization from 2019 to 2024, which processes claims and pays providers for behavioral health services.
According to the complaint, filed in Baltimore City Circuit Court, Optum swapped out its own proprietary claims management software months before the system was set to go live and installed an inadequately tested platform from a subcontractor. The software immediately crashed and could not distinguish between medically necessary and frivolous services, the lawsuit said.
The system also denied legitimate claims, failed to provide receipts to large providers like hospitals, paid incorrect amounts to providers and “failed to block rampant, multimillion-dollar fraud in areas such as substance abuse treatment and laboratory urine testing,” according to the AG’s office.
The crash was severe enough that state health officials took the system offline for eight months in 2020 and used ad hoc estimates to pay providers, a workaround that likely cost the state tens of millions of dollars, according to the complaint.
The state alleges breach of contract, unjust enrichment and intentional misrepresentation, and is seeking up to triple the contract price in damages under Maryland’s False Claims Act.
A 2022 state audit found Maryland had overpaid behavioral health providers by more than $223 million and underpaid others under Optum’s administration. A follow-up audit published in October 2025 found that many of the same problems persisted through the end of the contract and that multiple findings from the earlier audit had not been corrected.
In February 2024, Maryland ended its relationship with Optum and awarded a new behavioral ASO contract to Elevance’s Carelon. That five-year contract, valued at $233 million, took effect at the start of 2025. Idaho also moved away from Optum for its Medicaid behavioral health contract in 2024, replacing the company with Magellan Healthcare.
In May, Massachusetts AG Andrea Joy Campbell filed a separate lawsuit alleging UnitedHealthcare manipulated health assessments of elderly Medicaid members to secure at least $100 million in excess payments from the state.
“Optum vehemently disagrees with the Maryland Attorney General’s lawsuit, which fails to account for the complexities of the program’s implementation and overlooks our sizeable commitment and investment to provide a high standard of compliant services for the State,” an Optum spokesperson told Becker’s.
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