July 14, 2020


Despite being condemned by the United States Department of Labor (DOL), the nation’s largest healthcare provider continues seizing approximately $1.3 billion from workers annually

WASHINGTON, D.C. – A groundbreaking lawsuit filed Tuesday by workers who have a health insurance plan with UnitedHealth Group (UHG) alleges that the administrator of employee-funded healthcare plans took more than $1 billion every year from private employer-based health plans to settle unrelated payment disputes with doctors. With UHG keeping the lion's share of the money, this new class-action lawsuit seeks to stop the practice for good and divest UHG of its ill-gotten gains.

The challenged practice, called "cross-plan offsetting," has repeatedly been condemned by the Department of Labor (DOL) and criticized by several courts as illegal under the Employee Retirement Income Security Act of 1974 (ERISA). Previous attempts to stop the practice have failed. “Cross-plan offsetting,” occurs when UHG resolves a disputed overpayment by one of its plans to a healthcare provider by withholding later payments to that same provider, even though those later payments come from separate 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 and Toll, head of the firm’s ERISA/Employee Benefits practice, and lead counsel in the suit. “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. We are confident that our approach will be successful in finally bringing United’s blatantly unlawful practice to an end.”

Rick Scott, an AT&T customer service representative in West Virginia, who contributes more than $1,400 a year in payroll deductions to his AT&T healthcare plan, and Royce Klein, a former 20-year CenturyLink engineer, who contributes more than $2,200 a year to his CenturyLink healthcare plan are the two named plaintiffs in this case. The lawsuit alleges that United takes portions of the contributions made by Mr. Scott and Mr. Klein, and those of thousands of other AT&T and CenturyLink employees, to resolve debts and disputes that have nothing to do with Mr. Scott or AT&T, or Mr. Klein and CenturyLink in violation of ERISA.

“It’s inexcusable that the UnitedHealth Group would shave money off my hard-earned paycheck to line its own pockets,” said Royce Klein, a plaintiff in the suit. “I worked hard and always viewed healthcare as a necessary expense, but my faith in United as a provider has been completely shattered. When I’d see deductions in my paycheck, I trusted them to have my best interest in mind, and instead, they took advantage of my co-workers and me. My hope is by filing this lawsuit that UnitedHealth Group will be exposed for taking advantage of hard-working Americans in a similar situation and be forced to put an end to this diabolical scheme.” 

A prior case, Peterson v. UnitedHealth Group, established that UHG took “cross-plan offsets” against the AT&T plan, the CenturyLink plan, and many other employer-sponsored ERISA plans and that UHG was the recipient of all such money taken. Peterson was voluntarily dismissed in 2019 with no constraints on UHG’s practice.

The new lawsuit (Scott v. UnitedHealth Group) alleges that “cross-plan offsets” violate ERISA’s “fiduciary duty of loyalty” which mandates that one plan’s money be used “solely” and “exclusively” to pay benefits only for that plan. Moreover, the suit claims that UHG uses “cross-plan offsets” to engage in massive self-dealing, taking money from “self-insured” plans funded with employee contributions to resolve disputed overpayments by UHG’s own insurance subsidiary under “fully-insured” plans.

The new case has been filed in federal court in Minnesota, where Peterson was litigated. Karen Handorf and Sarah Holtz of Cohen Milstein are joined as counsel for the plaintiffs and the putative class by solo practitioner William Meyer, and Minnesota counsel June Hoidal of Zimmerman Reed.

Please see a copy of the complaint here.


About Cohen Milstein: 

Cohen Milstein Sellers & Toll PLLC is a national leader in plaintiff-side class action litigation. As one of the premier law firms in the country handling major complex lawsuits, Cohen Milstein, with more than 90 attorneys, has offices in Washington, DC; Chicago, IL; New York, NY; Philadelphia, PA; Palm Beach Gardens, FL; and Raleigh, NC. For more information about the firm, please visit http://www.cohenmilstein.com or call (202) 408-4600.