Lawsuit accuses UnitedHealth of 'looting' billions from employer plans through cross-plan offsetting

UnitedHealth has been hit with a class-action suit over "cross-plan offsetting." (jetcityimage/Getty)

A pair of workers enrolled in a UnitedHealthcare insurance plan have filed a class-action suit claiming the healthcare giant took more than $1 billion annually from employer plans for "cross-plan offsetting."

The practice, which has been challenged in court before, takes funds paid by employer plans to cover payment disputes with physicians. The plaintiffs aim to block UnitedHealth from continuing to use cross-plan offsetting "for good."

The plaintiffs in the latest case argue that the practice has been deemed illegal under the Employee Retirement Income Security Act of 1974 (ERISA) by several courts and has come under fire from the Department of Labor.

The suit alleges that UnitedHealth uses money brought in from self-funded employer clients to resolve overpayment disputes in its fully funded employer plans.

“UnitedHealth Group treats all of the plans it administers as one huge piggybank, moving money around as it sees fit,” said Karen Handorf, a partner at Cohen Milstein Sellers & Toll, head of the firm’s ERISA/employee benefits practice and lead counsel in the suit, in a statement.

RELATED: UnitedHealth, AARP hit with another lawsuit over co-branded Medigap plans

“That kind of mixing of plan assets is incompatible with United’s fiduciary duties to each of its separate plans and runs afoul of ERISA at every turn," Handorf said.

The plaintiffs call for the insurer to use funds brought in by a specific plan to "solely and exclusively" cover the benefits for that plan.

UnitedHealthcare said in a statement to Fierce Healthcare that the insurer plans to "vigorously defend ourselves in this matter.”

"UnitedHealthcare is committed to improving affordability and overpayment recovery is an important tool in these efforts. We will continue to enhance this process for our customers, who support our efforts to recover these funds on their behalf," UnitedHealthcare said.

A similar suit against UnitedHealth over cross-plan offsetting was dismissed in 2019. The insurer was not put under any restrictions as a result of that litigation.