The University of Maryland Medical System is suing a Maryland Medicaid insurer that it claims “unlawfully” denied $15 million in claims for medical care delivered in UMMS emergency rooms over the last three years.
The complaint alleges that Maryland Physicians Care MCO broke legal and contractual obligations by denying payment not as “a reasonable disagreement over medical judgment” but in a “broad, bad-faith refusal to acknowledge the realities of patient care, driven by a pursuit of enhanced profitability.”
The suit, filed Monday in Baltimore City Circuit Court, asks the court to declare that Maryland Physicians Care wrongfully denied claims for certain emergency care and to make it pay the $15 million the medical system believes it is owed. UMMS also wants the court to prohibit the managed care organization’s use of its current automatic claims approval system.
Maryland Physicians Care CEO Jason Rottman said the company believes it has acted lawfully, and it “strongly disputes the University of Maryland Medical System’s unfounded characterizations.”
“We have worked in good faith to address these concerns with the University of Maryland Medical System and have engaged in dialogue to seek resolution,” Rottman said in a statement Monday.
Maryland Physicians Care is one of nine Medicaid managed care organizations (MCOs) in Maryland. Medicaid MCOs receive federal and state tax dollars to cover medical care for those who qualify for Medicaid, including in emergency rooms.
Health systems such as UMMS are supposed to be reimbursed for medical services provided in emergency situations under certain circumstances. But the lawsuit claims that Maryland Physicians Care has unlawfully denied claims that should have been covered.
Federal law uses the “prudent layperson” rule to determine whether or not a claim in an emergency setting is covered. That means that if a person with an average knowledge of health and medicine went to an emergency room because they reasonably believed their symptoms required immediate medical attention, insurers should pay hospitals for that care, regardless of the outcome.
But UMMS alleges that Maryland Physicians Care instead relies on its internal system, called the “Sudden and Serious” list, that automatically approves or denies claims based on diagnosis. The list’s definition of what qualifies as an emergency is more narrow than the prudent layperson standard, the suit says.
It says MPC also regularly denies claims based on the entire medical record of the emergency visit, not the layperson’s initial assessment, which “intentionally ignores” the prudent layperson standard.
As a result,Maryland Physicians Care has improperly denied payment for medical care UMMS provided to more the 15,000 patients, resulting in $15 million in unpaid services, including interest, over the last three years, the lawsuit says.
The suit cites the case where a man was in recovery from a motor vehicle accident who experienced significant abdominal pain. The physician ordered a CT scan for the man’s chest and spine, but Maryland Physicians Care denied payment for the scans, saying the symptoms were not “acute” symptoms of sufficient severity to justify CT scans. UMMS appealed that decision, and a third-party review organization sided with the hospital system.
UMMS also claims that Maryland Physicians Care withheld payment for sustained hospital care, citing the case of a patient with multiple conditions – including a recent stroke, HIV, COVID-19 and sepsis – who was hospitalized for three months. Maryland Physicians Care denied coverage for portions of the hospital stay, “asserting—without any credible clinical basis—that the patient could have been safely discharged,” according to the complaint.
UMMS said denials extended to even “the most fragile newborns,” pointing to an infant born three months prematurely, who weighed about a pound and had been exposed to fentanyl and cocaine in utero. The infant had significant medical need due to “extreme respiratory distress, recurrent apnea, severe feeding intolerance, and numerous other comorbidities associated with extreme prematurity,” the suit said.
“It is hard to conceive of a patient more in need of, and deserving of, intense clinical intervention. And yet, MPC denied significant portions of her treatment—questioning the need for care even during the height of her clinical instability,” the complaint says.
But Rottman said Maryland Physicians Care adheres to state and federal laws for claims.
“Maryland Physicians Care … is committed to the highest standards of integrity and compliance in administering health benefits since 1997 on behalf of our partner, the Maryland Department of Health,” Rottman’s statement said.
“We strictly adhere to all state and federal rules and guidelines as our policies and procedures are regularly reviewed by the MD Department of Health as well as national accrediting bodies,” his statement said. “The rigorous reviews consistently confirm that we meet regulatory requirements.”
by Danielle J. Brown, Maryland Matters
June 18, 2025
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