The U.S. Department of Labor is suing a subsidiary of UnitedHealth Group over allegations that the company wrongly denied thousands of claims to pay health care providers for emergency room services and urinary drug screenings.

Denial of the ER claims was based solely on diagnosis codes, the government alleges, rather than a "prudent layperson" standard that's required by health plan documents.

The lawsuit, filed this week in the U.S. District Court for the Western District of Wisconsin, says the UnitedHealth Group division should have applied a medical necessity standard to claims for urinary drug screening, but instead "applied no standard and simply denied all the claims."

It names as defendant UMR Inc., a Wausau-based division of UnitedHealth Group that provides third-party administrator services to more than 2,100 self-insured health plans, the government says in the lawsuit.

UnitedHealth Group, based in Minnetonka, says the government's complaint deals with administrative processes that are no longer in place.

"We have been in ongoing conversations with the [Labor Department] regarding this matter and will continue to defend our position vigorously," the company said in a statement.

Emergency physicians who, two years ago, succeeded in stopping a UnitedHealth Group proposal to halt payments for nonemergency care in ERs said issues raised in the new litigation fit with a broader pattern.

"Large insurance companies continue to do all they can to deny, delay or reduce payments for emergency care," Dr. Christopher Kang, president of the American College of Emergency Physicians, said in a statement. "Immediate action to strengthen enforcement of the prudent layperson standard and other existing laws can help hold insurers responsible for their rampant bad behavior and protect patient access to emergency care."

Self-insured health plans are a common source of coverage for workers in Minnesota and across the United States. They typically are sponsored by employers to cover the cost of medical care that's needed by workers.

In these health plans, employers take financial risk for the cost of medical claims, as opposed to "fully insured" plans where insurers charge higher rates and take the risk.

Third-party administrators such as UMR handle administrative services, the government says, such as making benefit determinations and deciding when a claim should be paid under the terms of the health plan.

"[The] investigation found that UMR denied thousands of participants payment of medically necessary claims," Ruben Chapa, the regional director in Chicago for the Employee Benefits Security Administration, said in a statement.

The Labor Department alleges that UMR used a "True Emergency" policy for 371 health plans and adjudicated ER claims by using one of two diagnosis code lists. When claims were submitted without at least one diagnosis code from one of these lists, UMR did not further analyze or review, the government alleges, and issued an initial denial.

Documents for patients explaining the denial lacked required information, according to the lawsuit, and did not provide information about an informal appeal process.

"At the time UMR initially adjudicated ER claims ... UMR failed to consider what a person with average knowledge of health and medicine would think at the time the symptoms present themselves," the lawsuit states. "UMR relied solely on a medical provider's diagnosis at the end of treatment to deny ER claims."

For urinary drug screening claims, UMR simply denied all claims from August 2015 through Aug. 25, 2018, according to the lawsuit.

The complaint further alleges that from Aug. 26, 2018, to the present, UMR denied all urinary drug screening (UDS) claims that were not from either an ER or urgent care center.

"UMR made the change to its UDS-denial policy in August 2018 because UMR determined 98% of UDS claims in an emergency room setting were overturned on appeal," the lawsuit states. "UMR did not follow any language in the plan documents or other direction from fiduciaries to permit UMR to deny all UDS claims prior to August 2018, or all non-emergency UDS claims after August 2018."

The lawsuit didn't specify the dates for ER claims that the Department of Labor alleges were wrongly denied.