UnitedHealth is once again in hot water over its practice of pushing the cost of payment disputes onto its employer-group clients. A new class-action lawsuit accuses the health insurance giant of passing on more than $1 billion in costs to employers each year through a practice called "cross-plan offsetting."

The company faced a similar lawsuit last year, when the 8th U.S. Circuit Court of Appeals ruled the practice was in violation of the Employee Retirement Income Security Act (ERISA).

The new suit, Scott v. UnitedHealth Group, was brought by an employee at AT&T as well as an employee at CenturyLink, arguing on behalf of thousands of their fellow employees. "By engaging in cross-plan offsetting, United treats the thousands of Plans it administers as one extremely large piggybank, moving more than $1.2 billion among its Plans each year to suit its own interests," the complaint states. "Each cross-plan offset violates ERISA, and in most cases, the money ends up in United's own pocket."

"It's inexcusable that the UnitedHealth Group would shave money off my hard-earned paycheck to line its own pockets," said plantiff Royce Klein. " 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."

Through the practice of cross-plan offsets, UnitedHealth allegedly has been overcharging self-funded health plans and using the excess funds to cover the costs of other plans' disputed payments.

"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," Karen Handorf, a partner at law firm Cohen Milstein Sellers and Toll, said in an email. "We are confident that our approach will be successful in finally bringing United's blatantly unlawful practice to an end."

Read more:

Instant Insights /

UnitedHealth accused of bilking employer plans in latest class-action suit

More From HR Executive

Related Stories

Recommended For You