Maryland Attorney General Anthony Brown has filed suit against UnitedHealth Group’s Optum unit, alleging the company provided a defective computer system for the state’s Medicaid behavioral health program. The complaint accuses Optum of delivering a system that crashed on its first day of use, “never functioned properly,” and required the program to take it offline for eight months in 2020.
The contract at the center of the dispute ran from 2019 to 2024. Maryland paid $126.9 million for Optum to manage its Administrative Services Organization (ASO) program, according to the lawsuit.
Brown’s office claims Optum substituted its own proprietary claims management platform late in the implementation period with a system built by a subcontractor. The state alleges that the subcontractor-built system was “inadequately tested” and “inadequately vetted.”
Because the system did not work as intended, Maryland says it caused several concrete harms: it denied legitimate claims for care, made incorrect payments to providers and failed to detect what the complaint characterizes as “rampant, multi-million-dollar fraud.” The AG’s office states the problems cost the state “tens of millions of dollars.”
The system failure also posed operational and access risks. With the platform taken offline for eight months in 2020, Maryland says access to mental health and substance use services was put in jeopardy for about 1.5 million Medicaid enrollees.
Maryland’s suit invokes the state’s False Claims Act, seeking treble damages—approximately $380 million, or three times the contract value. The complaint also alleges breach of contract and intentional misrepresentation.
In a press release quoted in the complaint, Attorney General Brown emphasized the stakes for vulnerable residents: “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.”
An Optum spokesperson said the company “vehemently disagrees” with the allegations in the lawsuit. The spokesperson noted the contract was directly between Optum and the state and said the case does not pertain to UnitedHealthcare’s Medicaid business in Maryland.
Optum’s statement also argued that the lawsuit “fails to account for the complexities of the program’s implementation” and overlooks the company’s “sizeable commitment and investment to provide a high standard of compliant services for the State,” according to the source.
The complaint frames the dispute around both technical failure and financial harm. The timeline cited in the lawsuit places the contract across 2019–2024, with the system outage and offline period occurring in 2020. The population potentially affected—about 1.5 million Medicaid enrollees—reflects the program’s broad reach for behavioral health services.
Maryland’s claimed financial losses include the original contract payment of $126.9 million and additional damages the state attributes to system failures, improper payments, and undetected fraud. The state is asking for triple the contract value under the False Claims Act, which is the basis for the roughly $380 million figure in the suit.
The lawsuit advances several legal theories—false claims, breach of contract and intentional misrepresentation—and seeks substantial monetary relief tied to the contract and alleged harms. The source does not report on a court schedule, Optum’s planned legal response beyond its public statement, or any negotiations between the parties.
Because the complaint alleges impact on service access for Medicaid enrollees and on provider payments, a resolution could carry operational implications for Maryland’s Medicaid behavioral health program. The source does not provide details on interim measures taken by the state to restore or replace the system, nor does it report specific evidence or court filings beyond the AG’s allegations and Optum’s rebuttal.
While the reporting is focused on Maryland’s case, the allegations—late system substitutions, inadequate testing and major operational outages—illustrate common risks cited in health IT implementations. The suit centers on the interaction between vendor obligations under an ASO contract and the consequences when a critical platform fails to perform.
The source does not discuss related regulatory actions, other state or federal investigations, or any prior disputes between Maryland and Optum beyond the claims in this complaint.
Key developments to monitor include any court filings that provide more detail about the alleged failures, discovery that quantifies the state’s asserted losses, Optum’s formal legal defense in court, and whether the parties pursue settlement talks. The source does not report on scheduled hearings, court deadlines or a timeline for the case.
For now, the lawsuit marks a significant public escalation in tensions between a state Medicaid program and a major managed services vendor, with Maryland seeking roughly $380 million in damages and alleging the company’s system harmed both beneficiaries and providers.
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