Members of self-funded healthcare plans administered by UnitedHealthcare Group (“United”) have filed a class action lawsuit against the company for violating its fiduciary duty under ERISA and their plans’ terms. In their lawsuit, the plaintiffs allege that United has systematically underpaid benefits for claims relating to out-of-network healthcare providers.

Many self-funded healthcare plans that United administers, including those at issue in this lawsuit, contain provisions for the company to base its reimbursement amounts for covered out-of-network services on competitive fees related to the provider’s geographic area. According to the plan members, United ignores this plan provision, instead using highly discounted “repricer” rates that make only a small portion of the billed charge eligible for reimbursement. Since out-of-network providers are not legally bound to accept the discounted rate, plan members are on the hook for the remainder of the billed charges.

According to the lawsuit, United systematically underpays these claims because it directly profits from doing so. Under its “shared savings” program, United charges self-funded plans a fee for its alleged cost-containment services whenever it decides that less than the out-of-network provider’s full bill is eligible for reimbursement. United profits from underpaying the out-of-network claims, and the plan members end up with larger bills for services they thought their insurance plans would cover.

The plaintiffs contend in their lawsuit that United is violating their fiduciary duty under ERISA to act exclusively in the interest of the plan members. By using highly discounted pricing instead of the pricing specified in its plans, United is violating the terms of its plans by not fully covering the medical providers’ billed services.