United Health Group Sued for Racketeering

United Health Group, its United HealthCare and Oxford subsidiaries and several United and Oxford executives, including former United CEO William Maguire, are accused of violating the U.S. Racketeer Influenced and Corrupt Organizations Act in a law suit filed Tuesday in the U.S. District Court, Eastern District of New York, by Jamaica Hospital Medical Center and Flushing Hospital Medical Center.

The hospitals, in their RICO suit, accuse United Health Group and United HealthCare and other subsidiaries of implementing a “rogue business plan” on a “national level” that, for more than three years, “has contributed to UHG’s profits, which, in turn, have been utilized in attempts to justify outlandish compensation to Maguire and to enhance the value of illegally backdated options for UHG stock” which were given to Maguire, other UHG senior executives and to managers of its business units.

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The suit also accuses UHG and Oxford of fraud, breach of contract and unjust enrichment. “The defendants’ fraudulent business plan relied on their size to overwhelm the New York State Department of Health and numerous other regulatory agencies across the United States, using the claimed ‘complexity’ of their computer systems to excuse and camouflage the purpose of their repeated violations of law, while at the same time committing thousands of ‘little frauds’ against their members, health care consumers and their service providers,” said Michael Brown, attorney for Jamaica Hospital and Flushing Hospital.

The Attorney General of the State of New York, in a recent “consent decree,” concluded that United Health Care of New York had committed both “fraudulent business practices” and “deceptive business practices” in providing inaccurate information about the network status of approximately 141 participating providers. These acts either improperly shift to the health insurer’s members financial obligations properly belonging to the insurer or to deprive service providers of payment for services properly rendered.

***Update***

Here is the story of United Health fining doctors for allowing patients to go to other lab facilities other than LabCorp.

Hat Tip to nyceve of DailyKos. You can see more about this story with commentary and discussion wherein she discusses Murder by Spreadsheet.