The lawsuit alleged that the subsidiary set physician payments below the doctors' rate, leaving patients to make up the difference.
UnitedHealth Group said Thursday it will pay $350 million to customers and medical providers to settle a class-action lawsuit over the way it determined payments for out-of-network medical services going back nearly 15 years.
It is the biggest monetary settlement over medical payments by a single insurer, said the American Medical Association (AMA), which led the lawsuit.
"By using a flawed database to determine reimbursement rates for out-of-network care, insurers have increased profits at the expense of patients and physicians," AMA president Nancy Nielsen said in a statement. "By agreeing to the settlement, UnitedHealth Group has recognized the importance of restoring its relationship with patients and physicians by ending use of the rigged database."
The database in question contains the nation's largest pool of charges for medical services. Other insurers also depend on it to calculate what to pay doctors when patients seek care outside of an insurer's network.
The suit alleged that the database systematically set physician payments below the amount the physician normally charged, leaving patients with a bill from the physician to make up the difference.
The announcement came two days after another settlement, for $50 million, of a New York investigation into similar allegations.
In Thursday's settlement, UnitedHealth, based in Minnetonka, did not admit wrongdoing.
"We are pleased to put these issues behind us so we can focus on the important work of assisting physicians in their effort to provide the best-possible-quality health care to their patients," UnitedHealth's chief medical officer, Reed Tuckson, said in a statement.
Thursday's settlement covers the period between March 15, 1994, and the time a court approves the agreement.
The potential class includes "hundreds of thousands, if not millions, of health care members over the years and covers all doctors in the country not in [UnitedHealth's] network," said Stanley Grossman, lead attorney in the class action.
Other insurers are sued
Other lawsuits are pending against other big insurers who have used the UnitedHealth database to calculate out-of-network payments, Grossman said.
The database is used by UnitedHealth and other insurers to determine charges for doctors with whom they have no contracts. It is owned by Ingenix, a small but fast-growing technology arm of UnitedHealth. Ingenix does consulting, drug trials, billing and a host of data-crunching services for thousands of physicians, hospitals and insurers.
The database business brought in less than 2 percent of Ingenix's revenue of about $1.5 billion last year.
The previous settlement, with New York Attorney General Andrew Cuomo, requires Ingenix to give up that database and a smaller one to an independent, not-for-profit organization, most likely a university in New York. The not-for-profit agency will revamp the database and make it transparent.
The new database will include a website where consumers can look up in advance how much they may be reimbursed for common out-of-network services.
UnitedHealth will pay $50 million to help set up the new system. On Thursday, another giant insurer, Aetna Inc. of Hartford, Conn., said as part of its own settlement with New York that it will stop using the Ingenix data and pay $20 million toward the new, not-for-profit database.
Chen May Yee • 612-673-7434