Artificial Intelligence or Artificial Insurance?: District of Minnesota Allows Putative Class Action Against UnitedHealth Group to Proceed

On February 13, 2025, the United States District Court for the District of Minnesota allowed a putative class action lawsuit to proceed on two counts against Defendants UnitedHealth Group, Inc., UnitedHealthcare, Inc., and naviHealth, Inc. (collectively, “UnitedHealth”) for alleged wrongful conduct in the use of AI to systematically deny claims for Medicare Advantage consumers.

The plaintiffs in the case sought coverage for post-acute care that was subsequently denied, resulting in further injuries and even death. The plaintiffs filed a class action, alleging that UnitedHealth unreasonably substituted humans for nH Predict AI Model, an artificial intelligence program, to make coverage determinations and ultimately deny coverage.

UnitedHealth filed a motion to dismiss, stating that the plaintiffs failed to exhaust administrative remedies pursuant to the Medicare Act. Additionally, UnitedHealth sought to dismiss the plaintiffs’ state law claims on preemption grounds. The court found that while the plaintiffs did not exhaust their administrative remedies, the court would waive exhaustion on futility grounds. Further, while preemption prompted the court to dismiss the majority of the plaintiffs’ claims, the court allowed the plaintiffs’ claims for breach of contract and breach of the implied covenant of good faith and fair dealing to move forward. The court reasoned that these two state law claims do not regulate the same subject matter as the federal standards. Put simply, the court stated that it “need only review insurance documents to resolve these claims.” Est. of Lokken v. UnitedHealth Grp., Inc., et al., No. 23-3514 (JRT/DJF), 2025 U.S. Dist. LEXIS 27262 , at *2 (D. Minn. Feb. 13, 2025).

The case is significant not only because of the advent and utilization of AI technology in the insurance industry, but also because of the court’s determination that the breach of contract claim and breach of the implied covenant of good faith and fair dealing were not preempted by federal law.

The case is Est. of Lokken v. UnitedHealth Grp., Inc., et al., No. 23-3514 (JRT/DJF), 2025 U.S. Dist. LEXIS 27262 (D. Minn. Feb. 13, 2025).