How Optum is Using AI to Spy on Medical Claims and Steal Injury Settlements
A dystopian, robotic video advertises Optum Insight's "subrogation service" that lets insurers recover billions of dollars off their patients' injuries.
Nathan Vercellino was riding in an all-terrain vehicle when his friend Connor Kenney got a bit reckless in the driver’s seat and crashed. The 15-year-old passenger was hardly left unscathed. Nathan’s injuries were so severe that his health plan doled out nearly $596,000 to pay for his medical expenses. The companies administering and funding the plan — Optum Insight, United Healthcare, and Ameritas Holding — technically could have sued the Kenneys themselves to cover the expenses, as could have Nathan’s parents, though none did.
That was 2013. Flash forward six years to 2019: Nathan’s an adult and decides to sue his friend’s family, the owners of the ATV, for damages from the accident. Informed by Optum that it wanted to be reimbursed for the medical expenses it paid for (known as “subrogation”), Nathan asked a judge to rule that the company couldn’t pluck away the settlement. He argued that the four-year period in which any party could sue to compensate for medical expenses had come to an end but that he was suing for another kind of damage, so Optum wasn’t entitled to a piece. Connor even wrote a statement supporting him.
But the trial court ruled against Nathan in 2020, as did an appeals court two years later. The insurers were entitled to $596,000 from any money Nathan won for the damages he suffered in the ATV accident, even after footing the legal fees himself to see the lawsuit through.
One lawyer referred to the companies’ tactic as the “hyena strategy,” where hyenas will watch another animal stalk and hunt some prey and then snatch it away at the last minute for themselves. “[T]he plan preferred to wait to see what Nathan did after he came of age, and then it would sweep in on his personal injury lawyer's work to snatch away the recovery,” David Martin, the Alabama attorney, wrote in a blog post after the appeals court’s decision. “After all, why do all that work if you can simply sit back and take the recovery obtained by someone else?”
You may be wondering, how do insurers learn that that a patient like Nathan is seeking a settlement that they could swoop in and snatch away? It turns out they have a creepy way of figuring out what their members are up to. Insurers tap companies like Optum (which is also owned by United) to spy on their members’ medical claims, look for signs of an accident that would warrant an injury lawsuit based on machine learning (artificial intelligence) models, and monitor litigation. “The result?” asks a robotic female voice in an advertisement for the service. “Over $1.7 billion recovered for our clients annually.”
Check out the ad here:
The ad boasts that its “automated technology is built on thousands of proprietary subrogation-specific rules to continuously score claims based on recovery potential and our machine learning models continuously update those rules.” It also notes that it will contact members on insurers’ behalf, thereby “reducing abrasion” — a funky way of saying Optum will help insurers avoid pissed-off patients.
It’s unclear how much revenue this generates for Optum, though it claims to be “the leader” in healthcare and disability subrogation, offering services in all 50 states. And if you care to trace its footsteps back a few years to a notable shoutout in the House of Representatives… Optum expanded into the industry in 2019 with a $3.2 billion acquisition of Equian, a private equity-backed data mining company whose former director of legal operations is now Optum’s vice president of subrogation operations. A few years before that, Equian combined with another subrogation provider called Trover Solutions, which was previously known as Health Care Recoveries, Inc. (HRI).
In one long diatribe on the House Floor in July 2000, a John Ganske, Republican Congressman from Iowa, blasted HRI and Optum owner United directly while chastising health plans’ subrogation practices, especially when they demand more money than what they pay, a particularly insidious practice. “Last year,” he said, “Health Care Recoveries, Inc., of Louisville, whose biggest customer, not surprisingly is United Health Care, recovered $226 million from its clients and its usual cut was 27 percent.” Little did he know the two companies would become one.
As the private equity company overseeing the Optum-Equian deal said is widely known in the healthcare industry: “All roads lead back to Optum.”