Massachusetts Attorney General sues UnitedHealth, alleging fraud in state Medicaid plans for seniors
On 29 May, Massachusetts Attorney General Andrea Campbell announced at a press conference that a lawsuit had been filed against UnitedHealth Group, the largest US health insurer. According to STAT News, the suit alleges that the company received more than $100 million in improper reimbursements through 'medical upcoding' of patients in the state's Medicare Advantage plans, beyond their actual clinical conditions.
The lawsuit puts member enrolment and clinical-coding practices in the Massachusetts MassHealth Senior Care Options programme, in which UnitedHealth participates with its Optum subsidiary, under scrutiny. The complaint alleges that the insertion or downplaying of diagnosis codes in patient medical records artificially inflated the 'risk score' on which the insurer was paid. Federal Department of Justice investigations into similar allegations have been ongoing since 2024.
At the press conference, Andrea Campbell said, 'We believe resources earmarked for our state's most vulnerable seniors have been misdirected. These resources should be spent on real care, not on inflating profit margins.' STAT News reported that Campbell emphasised the $21 billion annual state-budget allocation for the Medicaid programme.
A response came from UnitedHealth Group. Company spokesperson Tyler Mason said in a statement, 'The allegations are baseless; UnitedHealth has maintained MassHealth coding practices over the years within state and federal regulatory frameworks. We will defend the lawsuit vigorously on the ground.' No additional statement was made from Optum.
On the financial-market side, UnitedHealth Group (NYSE:UNH) shares fell 2.8% in pre-market trading following the news. Goldman Sachs healthcare analyst Nathan Rich wrote in a note to investors, 'This lawsuit is the latest in a series of regulatory pressures on UNH over recent months; short-term share-price volatility could continue, but the dollar figure alleged in the complaint ($100 million) equates to 0.025% of the company's annual revenue (about $400 billion).'
The lawsuit also has a federal context. The federal Department of Justice opened an investigation in 2024 under Deputy DOJ Health Fraud Unit director Jenny Allen into UnitedHealth's Medicare Advantage coding practices. According to Wall Street Journal reporting from 2024, the federal investigation has expanded to allegations exceeding $10 billion. While the Massachusetts case is not directly tied to the federal case, state-level evidence could feed into the federal case.
Centers for Medicare and Medicaid Services (CMS) Administrator Mehmet Oz, in a mid-May press statement, said, 'Risk-score manipulation in Medicare Advantage is unacceptable. CMS will announce new rules to strengthen the coding-audit system.' The CMS RADV (Risk Adjustment Data Validation) audit framework announced for 2025 aims to require an additional $4-5 billion in annual reimbursements from insurers.
Kaiser Family Foundation (KFF) health-policy analyst Tricia Neuman told STAT News in her assessment, 'The upcoding problem in Medicare Advantage is a core financial leakage that CMS has been wrestling with for the past 10 years. While state-level lawsuits are increasing, the systemic solution will come at the federal level.' According to KFF estimates, $17 billion in excess payments may have been made through upcoding in Medicare Advantage plans in 2024.
The Massachusetts Hospital Association and state senior-care advocacy groups welcomed the lawsuit. Group spokesperson Brian Cohn said, 'This kind of accountability is needed for Massachusetts seniors to access real care resources.' No short-term changes are expected to how approximately 42,000 members in UnitedHealth's MassHealth Senior Care Options programme will be affected.
The case will go to its first hearings in autumn 2026; it will be heard in the state court of Massachusetts Superior Court. Health-system analysts believe the case outcome could be the start of a broader scrutiny trend in the Medicare Advantage market. This article is not medical, legal or investment advice; individual consultation is advised for decisions about your health-insurance plans.