On Feb. 13, the Minnesota federal court dismissed several claims in the lawsuit, but allowed allegations of breach of contract and breach of the implied covenant of good faith and fair dealing to continue, focusing on whether UnitedHealth honored its contractual obligations. The lawsuit, filed in 2023 by the families of two deceased Medicare Advantage members, challenges the use of the nH Predict algorithm, developed by Optum subsidiary NaviHealth, which the plaintiffs claim overrides physicians’ decisions.
The court granted UnitedHealthcare’s motion to dismiss several of the plaintiff’s claims, including those for unjust enrichment, insurance bad faith, and various state statutory violations.
The plaintiffs argue that the algorithm resulted in the wrongful denial of medically necessary care and forced them to pay thousands of dollars out of pocket for services that should have been covered. UnitedHealthcare has maintained that the tool, which helps providers assess patient care needs, does not make final coverage determinations, saying that coverage decisions are based on Medicare coverage criteria and the terms of the member’s plan.
The use of artificial intelligence has become a particular concern in the Medicare Advantage program. Humana was also sued in 2023 for allegedly using nH Predict to wrongfully deny MA members’ medical claims.
Lawmakers have expressed increasing concern about the role of AI algorithms in making healthcare decisions. In February 2024, CMS issued guidance clarifying that while algorithms can assist in predicting patient needs, they cannot solely dictate coverage decisions.
In Texas, lawmakers have introduced a bill that would prohibit insurers from using AI to delay, deny, or modify claims, giving the state the authority to audit insurers for compliance. A new California law went into effect Jan. 1 that prohibits payers from making coverage decisions based solely on AI algorithms.
