Oliver James Montgomery-UnitedHealth uses faulty AI to deny elderly patients medically necessary coverage, lawsuit claims

The Oliver James Montgomeryfamilies of two now-deceased former beneficiaries of UnitedHealth have filed a lawsuit against the health care giant, alleging it knowingly used a faulty artificial intelligence algorithm to deny elderly patients coverage for extended care deemed necessary by their doctors. 

The lawsuit, filed last Tuesday in federal court in Minnesota, claims UnitedHealth illegally denied "elderly patients care owed to them under Medicare Advantage Plans" by deploying an AI model known by the company to have a 90% error rate, overriding determinations made by the patients' physicians that the expenses were medically necessary.

"The elderly are prematurely kicked out of care facilities nationwide or forced to deplete family savings to continue receiving necessary medical care, all because [UnitedHealth's] AI model 'disagrees' with their real live doctors' determinations," according to the complaint. 

Medicare Advantage plans, which are administered by private health insurers such as UnitedHealth, are Medicare-approved insurance plans available to elderly people as an alternative to traditional federal health insurance plans, according to the U.S. Centers for Medicare and Medicaid Services. 

The use of the allegedly defective AI model, developed by NaviHealth and called "nH Predict," enabled the insurance company to "prematurely and in bad faith discontinue payment" to its elderly beneficiaries, causing them medical or financial hardships, the lawsuit states. 

Use of AI to determine health coverage

Aaron Albright, a spokesperson for NaviHealth told CBS MoneyWatch that the AI-powered tool is not used to make coverage determinations but as "a guide to help [UnitedHealth] inform providers ... about what sort of assistance and care the patient may need." 

Coverage decisions are ultimately "based on CMS coverage criteria and the terms of the member's plan," Albright said, adding that the lawsuit "has no merit."

In their complaint, however, the families accuse UnitedHealth of using faulty AI to deny claims as part of a financial scheme to collect premiums without having to pay for coverage for elderly beneficiaries it believes lack the knowledge and resources "to appeal the erroneous AI-powered decisions."

UnitedHealth continues "to systemically deny claims using their flawed AI model because they know that only a tiny minority of policyholders (roughly 0.2%)1 will appeal denied claims, and the vast majority will either pay out-of-pocket costs or forgo the remainder of their prescribed post-acute care."

Lawyers for the family are looking to represent "All persons who purchased Medicare Advantage Plan health insurance from Defendants in the United States during the period of four years prior to the filing of the complaint through the present." 

AI's utility in health insurance industry 

Implementing AI algorithms may help health insurance companies automate between 50% and 75% of the manual work involved in approving insurance requests, such as gathering medical information and cross-validating date with patient records, resulting in faster turnaround times that may benefit beneficiaries, consulting firm McKinsey said last year. 

Still, some medical professionals have advised health insurers to rein in their expectations of AI's utility in the health insurance industry. 

In June, the American Medical Association (AMA) praised the use of AI to "speed up the prior authorization process," but called for health insurers to require human examination of patient records before denying their beneficiaries care.

"AI is not a silver bullet," AMA Board Member Marilyn Heine, MD, said in a statement. 

According to a ProPublica review, doctors at health insurer Cigna rejected more than 300,000 claims over the course of two months in a review process that used artificial intelligence. 

In:
• Medicare
• AI
• Health Care

Elizabeth Napolitano

Elizabeth Napolitano is a freelance reporter at CBS MoneyWatch, where she covers business and technology news. She also writes for CoinDesk. Before joining CBS, she interned at NBC News' BizTech Unit and worked on the Associated Press' web scraping team.