Stony Brook Hospital sues UnitedHealthcare, affiliate for $4 million over failure to pay

Stony Brook University Hospital is suing UnitedHealthcare and an affiliated company for over $4 million, claiming the insurance giant has refused to pay for medical observation services over a three-year period between 2020 and 2023, according to court papers filed late Thursday in state Supreme  Court.

The lawsuit, filed by the state Attorney General’s office on behalf of Stony Brook on Thursday, names UnitedHealthcare and Oxford Health Plans, which United bought in 2004 and which the complaint says are under common ownership and operated collectively.  Stony Brook said it first entered into a contract with Oxford in 2002 and UnitedHealthcare in 2007 to provide medical services and treatment to its members.

Those services included staff monitoring of outpatients to determine if they needed to be admitted, according to the suit. But starting Nov. 30, 2020, the companies started denying insurance claims for observation services that were less than eight hours long — a breach of contract, according to Stony Brook.

UnitedHealthcare didn't respond to a request for comment. A spokeswoman for Stony Brook said they do not comment on pending litigation.

Critics say UnitedHealthcare has a long history of denying insurance claims. Those issues were in this spotlight this week after the firm’s chief executive, Brian Thompson, was shot and killed on a Manhattan street. Newsday has reported that police have said the shell casings from the gun used to shoot Thompson had the words "delay," "deny" and "defend" written on them, but it has not been determined if those phrases refer to insurance claim practices. A 2010 book on insurance company practices is titled "Delay, Deny, Defend."

In September, Oxford and UnitedHealthcare agreed to pay for observation services less than eight hours between Dec. 15, 2023 and Dec. 15, 2026, but "continue to deny the claims submitted by Stony Brook" for observation services between Nov. 30, 2020 and Dec. 14, 2023, according to the suit.

Reimbursement for those services comes to over $4 million, according to Stony Brook. In addition, Stony Brook said it is entitled under state law to a collection fee of $897,465 from Oxford and UnitedHealthcare.

By Lisa L. Colangelo

lisa.colangelo@newsday.com@lisalcolangelo

Lisa joined Newsday as a staff writer in 2019. She previously worked at amNewYork, the New York Daily News and the Asbury Park Press covering politics, government and general assignment.