Estate of Gene B. Lokken, The et al v. UnitedHealth Group, Inc. et al Document 1: Complaint

Minnesota District Court
Case No. 0:23-cv-03514-WMW-DTS
Filed November 14, 2023

COMPLAINT against Does, UnitedHealth Group, Inc., UnitedHealthcare, Inc., naviHealth, Inc. (filing fee $ 402, receipt number BMNDC-10659203) filed by Estate of Gene B. Lokken, The, Estate of Dale Henry Tetzloff, The. Filer requests summons issued. (Attachments: # (1) Civil Cover Sheet) (Riebel, Karen)

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Page 1 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 1 of
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
The Estate of Gene B. Lokken and The Estate
of Dale Henry Tetzloff, individually and on
behalf of all others similarly situated,
Civil File No.
CLASS ACTION COMPLAINT
Plaintiffs,
vs.
DEMAND FOR JURY TRIAL
UNITEDHEALTH GROUP, INC.,
UNITEDHEALTHCARE, INC.,
NAVIHEALTH, INC., and DOES 1-50,
inclusive,
Defendants.
PLAINTIFFS’ CLASS ACTION COMPLAINT
Plaintiffs, the Estate of Gene B. Lokken and the Estate of Dale Henry Tetzloff
(“Plaintiffs”), individually and on behalf of all others similarly situated (the “Class” or
“Classes”), by and through their attorneys, bring this class action against Defendants
UnitedHealth Group, Inc., UnitedHealthcare, Inc., naviHealth, Inc., and Does 1-50,
inclusive (collectively, “Defendants” or “UnitedHealthcare”) and allege as follows:
INTRODUCTION
1.
This putative class action arises from Defendants’ illegal deployment of
artificial intelligence (AI) in place of real medical professionals to wrongfully deny elderly
patients care owed to them under Medicare Advantage Plans by overriding their treating
physicians’ determinations as to medically necessary care based on an AI model that
Defendants know has a 90% error rate.
Page 2 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 2 of
2.
Despite the high error rate, Defendants continue to systemically deny claims
using their flawed AI model because they know that only a tiny minority of policyholders
(roughly 0.2%)1 will appeal denied claims, and the vast majority will either pay out-ofpocket costs or forgo the remainder of their prescribed post-acute care. Defendants bank
on the patients’ impaired conditions, lack of knowledge, and lack of resources to appeal
the erroneous AI-powered decisions.
3.
The fraudulent scheme affords Defendants a clear financial windfall in the
form of policy premiums without having to pay for promised care, while the elderly are
prematurely kicked out of care facilities nationwide or forced to deplete family savings to
continue receiving necessary medical care, all because an AI model ‘disagrees’ with their
real live doctors’ determinations.
4.
Defendant UnitedHealth Group, Inc. is the nation’s largest insurance
company.2 UnitedHealthcare, Inc., the insurance arm of UnitedHealth Group, Inc.,
provides health insurance plans for 52.9 million Americans.
Karen Pollitz, et al., Claims Denials and Appeals in ACA Marketplace Plans in 2021,
KFF (Feb. 9, 2023) https://www.kff.org/private-insurance/issue-brief/claims-denials-andappeals-in-aca-marketplace-plans/ (last visited Nov. 13, 2023).
UnitedHealth
Group,
FORTUNE
(Aug.
2,
2023),
https://fortune.com/company/unitedhealth-group/global500/ (last visited Nov. 13, 2023).
Id.
Page 3 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 3 of
5.
Defendants state that their “mission” is “to help people live healthier lives
and make the health system work better for everyone.” 4 In reality, Defendants
systematically deploy an AI algorithm to prematurely and in bad faith discontinue payment
for healthcare services for elderly individuals with serious diseases and injuries. These
healthcare services are known as post-acute care.
6.
Defendants’ AI Model, known as “nH Predict,” determines Medicare
Advantage patients’ coverage criteria in post-acute care settings with rigid and unrealistic
predictions for recovery.5 Relying on the nH Predict AI Model, Defendants purport to
predict how much care an elderly patient ‘should’ require, but overrides real doctors’
determinations as to the amount of care a patient in fact requires to recover. As such,
Defendants make coverage determinations not based on individual patient’s needs, but
based on the outputs of the nH Predict AI Model, resulting in the inappropriate denial of
necessary care prescribed by the patients’ doctors. Defendants’ implementation of the nH
Predict AI Model resulted in a significant increase in the number of post-acute care
coverage denials.
7.
Defendants intentionally limit their employees’ discretion to deviate from the
nH Predict AI Model predication by setting up targets to keep stays at skilled nursing

About us, UNITEDHEALTHCARE. https://www.uhc.com/about-us (last visited Nov. 13,
2023).
Casey Ross and Bob Herman, Denied by AI: How Medicare Advantage plans use
algorithms to cut off care for seniors in need, STAT (Mar. 13, 2023),
https://www.statnews.com/2023/03/13/medicare-advantage-plans-denial-artificialintelligence/ (last visited Nov. 13, 2023).
Page 4 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 4 of
facilities within 1% of the days projected by the AI Model 6. Employees who deviate from
the nH Predict AI Model projections are disciplined and terminated, regardless of whether
a patient requires more care7.
8.
The nH Predict AI Model saves Defendants money by allowing them to deny
claims they are obligated to pay and otherwise would have paid by eliminating the labor
costs associated with paying doctors and other medical professionals for the time needed
to conduct an individualized, manual review of each of its insured’s claims.
9.
Defendants also utilize the nH Predict AI Model to aggressively deny
coverage because they know they will not be held accountable for wrongful denials.
10.
In
many
instances,
Defendants
purposefully
shift
the
financial
responsibilities of funding post-acute care of their insureds to American taxpayers. In their
coverage denial letters, Defendants inform patients who qualify for Medicare that their
coverage is being denied solely due to their Medicare eligibility. Defendants direct these
patients to enroll in the government-subsidized Medicare program while failing to cover
care for which they are contractually and statutorily obligated to cover.
11.
Plaintiffs and Class members had their post-acute care coverage wrongfully
terminated by Defendants using the nH Predict AI Model. Defendants failed to use

UnitedHealth used algorithms to deny care, staff say – STAT Investigation
(statnews.com) (last accessed on Nov. 14, 2023)
Id.
Page 5 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 5 of
reasonable standards in evaluating the individual claims of Plaintiffs and Class members
and instead allowed their coverage needs to be wholly determined by AI.
12.
By engaging in this misconduct, Defendants breached their fiduciary duties,
including their duties of good faith and fair dealing, because their conduct serves
Defendants’ own economic self-interest and elevates Defendants’ interests above the
interests of the insureds.
13.
By bringing this action, Plaintiffs seek to remedy Defendants’ past improper
and unlawful conduct by recovering damages to which Plaintiffs and the Class are
rightfully entitled and enjoin Defendants from continuing to perpetrate its scheme against
its Medicare Advantage insureds.
JURISDICTION AND VENUE
14.
This Court has subject matter jurisdiction over Plaintiffs’ claims pursuant to
28 U.S.C. § 1332(d)(2). This is a class action in which there is a diversity of citizenship
between at least one Plaintiff Class member and one Defendant; the proposed Classes each
exceed one hundred members; and the matter in controversy exceeds the sum of
$5,000,000.00, exclusive of interest and costs.
15.
In addition, under 28 U.S.C. §1367, this Court may exercise supplemental
jurisdiction over the state law claims because all claims are derived from a common
nucleus of operative facts and are such that Plaintiffs would ordinarily expect to try them
in one judicial proceeding.
16.
This Court has personal jurisdiction over Defendants because Defendants are
headquartered in Minnesota, have sufficient minimum contacts with Minnesota, and
Page 6 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 6 of
otherwise purposefully avail themselves of the benefits and protections of Minnesota law,
so as to render the exercise of jurisdiction by this Court proper and consistent with
traditional notion of fair play and substantial justice.
17.
Venue is proper in this Court pursuant to 28 U.S.C. § 1391. Defendants
regularly conduct business in this District, and a substantial part of the events giving rise
to the claims asserted herein occurred in this District. Defendants United Health Group and
United Healthcare are residents of this District, being headquartered at 9800 Health Care
Ln, Minnetonka, MN.
THE PARTIES
18.
Plaintiff, the Estate of Gene B. Lokken. Gene B. Lokken, deceased, was at
all times relevant to this action a citizen of Wisconsin, residing in Lincoln County. At all
relevant times mentioned herein, Mr. Lokken was covered by a Medicare Advantage Plan
policy provided by Defendants.
19.
Plaintiff, the Estate of Dale Henry Tetzloff. Dale Henry Tetzloff, deceased,
was at all times relevant to this action a citizen of Wisconsin, residing in Portage County.
At all relevant times mentioned herein, Mr. Tetzloff was covered by a Medicare Advantage
Plan policy provided by Defendants.
20.
Defendant
UnitedHealth
Group,
Inc.
(“UnitedHealth
Group”).
UnitedHealth Group is a Delaware corporation, headquartered at 9800 Health Care Ln,
Minnetonka, MN 55343. UnitedHealth Group conducts insurance operations throughout
the country, representing to consumers that UnitedHealth Group and its subsidiaries “help
Page 7 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 7 of
people live healthier lives and help make the health system work better for everyone.” UnitedHealth Group has a license to use the federally registered service mark
“UNITEDHEALTH GROUP,” markets and issues health insurance and insures, issues,
administers, and makes coverage and benefit determinations related to the health care
policies nationally through its various wholly owned and controlled subsidiaries, controlled
agents and undisclosed principals and agents, including Defendants UnitedHealthcare, Inc.
and naviHealth, Inc. Defendant UnitedHealth Group is licensed and registered to conduct
business in all 50 states, and does conduct business in all 50 states, and is thereby subject
to the laws and regulations of all 50 states.
21.
Defendant
UnitedHealthcare,
Inc.
(“UnitedHealthcare”).
UnitedHealthcare, incorporated in Delaware, is a wholly owned subsidiary of Defendant
UnitedHealth Group, Inc., with its principal place of business at 9800 Health Care Ln,
Minnetonka, MN 55343. Defendant UnitedHealthcare markets and issues health insurance
and insures, issues, administers, and renders coverage and benefit determinations related
to the health care policies. Defendant UnitedHealthcare is licensed and registered to
conduct business in all 50 states, and does conduct business in all 50 states, and is thereby
subject to the laws and regulations of all 50 states.
22.
Defendant naviHealth, Inc. (“naviHealth”). naviHealth, incorporated in
Delaware, is a wholly owned subsidiary of Defendant UnitedHealth Group, with its

Priorities for advancing a modern health system, UNITEDHEALTH GROUP,
https://www.unitedhealthgroup.com/driven-by-our-mission/what-we-do.html (last visited
Nov. 13, 2023).
Page 8 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 8 of
principal place of business at 210 Westwood Pl #400, Brentwood, TN 37027. naviHealth
developed its algorithm nH Predict in response to the enactment of the Affordable Care
Act in 2010.9 The creator of the nH Predict AI Model specifically intended for it to save
insurance companies money in the post-acute care setting, which had previously been a
highly unprofitable aspect of Medicare services. 10 UnitedHealth Group acquired
naviHealth in 2020 for $2.5 billion.23.
In addition to the Defendants named above, Plaintiffs sue fictitiously named
Defendants Does 1 through 50, inclusive, pursuant to Section 474 of the California Civil
Procedure, because their names, capacities, status, or facts showing them to be liable to
Plaintiffs are not presently known. Plaintiffs are informed and believe, and based upon
allege, that each of the fictitiously named Defendants are responsible in some manner for
the conduct alleged herein. Plaintiffs will amend this complaint to show these Defendants’
true names and capacities, together with appropriate charging language, when such
information has been ascertained.

Casey Ross and Bob Herman, Denied by AI: How Medicare Advantage plans use
algorithms to cut off care for seniors in need, STAT (Mar. 13, 2023),
https://www.statnews.com/2023/03/13/medicare-advantage-plans-denial-artificialintelligence/ (last visited Nov. 13, 2023).
Id.

Id.
Page 9 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 9 of
FACTUAL ALLEGATIONS
A. Background
24.
Defendant UnitedHealthcare offered and sold Medicare Advantage health
insurance plans to consumers, including Plaintiffs and Class members.
25.
A Medicare Advantage plan is a type of health plan offered by private
companies that contract with Medicare. Medicare Advantage is a taxpayer-funded
alternative to traditional Medicare that covers 30.8 million people. 12 Medicare Advantage
accounts for more than half (51 percent) of the eligible Medicare population, and
$454 billion (or 54 percent) of total federal Medicare spending. 26.
Plaintiffs and Class members enrolled with Defendants to receive Medicare
Advantage health insurance coverage. Medicare Advantage Plans must follow the rules set
by Medicare.14 Defendants provided Plaintiffs and members of the Class with written terms
explaining the plan coverage UnitedHealthcare offered to them. According to these terms,
Defendants are obligated to provide benefits for covered health services and must pay all
reasonable and medically necessary expenses incurred by a covered member.
27.
From at least November 14, 2019, to the present (the “Relevant Period”),
Plaintiffs and Class members were referred to and received “post-acute care”—medically
Nancy Ochieng, et al., Medicare Advantage in 2023: Enrollment Update and Key
Trends, KFF (Aug. 9, 2023), https://www.kff.org/medicare/issue-brief/medicareadvantage-in-2023-enrollment-update-and-key-trends/ (last visited Nov. 13, 2023).
Id.

Your health plan options, MEDICARE.GOV, https://www.medicare.gov/health-drugplans/health-plans/your-health-plan-options (last visited Nov. 13, 2023).
Page 10 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 10 of
necessary care for patients recovering from serious illnesses and injuries. Post-acute care
is covered by the terms of their insurance agreements provided by Defendants.
28.
Post-acute care encompasses skilled care, therapy, and other services
provided by home health agencies (HHAs), skilled nursing facilities (SNFs), inpatient
rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs), collectively known
as post-acute care (PAC) providers because they typically furnish care after an inpatient
hospital stay.
29.
Medicare Advantage providers use a prospective payment system for each
type of PAC provider. Under this system, insurers pay PAC providers an upfront fee that
is based on estimates of the national average cost of providing covered care for a specified
period of time.
30.
Due to the nature of the prospective payment system, insurers’ coverage
decisions occur before or during a patient’s post-acute care. When the insurer decides to
end coverage before the doctor’s requested discharge date for the patient, the patients are
left with an impossible choice: to either forgo their post-acute care despite not being well
enough to function without it, or pay out-of-pocket to continue receiving care they were
wrongfully denied.
31.
Defendants have deliberately failed to fulfill their statutory, common law,
and contractual obligations to have a doctor determine individual coverage for post-acute
care in a thorough, fair, and objective manner, instead using the nH Predict AI Model to
supplant real doctors’ recommendations and patients’ medical needs. Defendants’ use of
the nH Predict AI Model, which directs Defendants’ medical review employees to
Page 11 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 11 of
prematurely stop covering care without considering an individual patient’s needs, is
systematic, illegal, malicious, and oppressive. 32.
The nH Predict AI Model attempts to predict the amount of post-acute care
a patient “should” require, pinpointing the precise moment when Defendants will cut off
payment for a patient’s treatment. The nH Predict AI Model compares a patient’s diagnosis,
age, living situation, and physical function to similar patients in a database of six million
patients it compiled over the years of working with providers to predict patients’ medical
needs, estimated length of stay, and target discharge date 16.

Casey Ross and Bob Herman, Denied by AI: How Medicare Advantage plans use
algorithms to cut off care for seniors in need, STAT (Mar. 13, 2023),
https://www.statnews.com/2023/03/13/medicare-advantage-plans-denial-artificialintelligence/ (last visited Nov. 13, 2023).
https://www.statnews.com/2023/03/13/medicare-advantage-plans-denial-artificialintelligence/ (last visited Nov. 13, 2023.)
Page 12 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 12 of
33.
The following is a true and correct representation of a sample nH Predict
Outcome sheet, taken from a naviHealth presentation:
Page 13 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 13 of
34.
Defendants wrongfully delegate their obligation to evaluate and investigate
claims to the nH Predict AI Model. The nH Predict AI Model spits out generic
recommendations that fail to adjust for a patient’s individual circumstances and conflict
with basic rules on what Medicare Advantage plans must cover.
35.
Upon information and belief, the nH Predict AI Model applies rigid criteria
from which Defendants’ employees are instructed not to deviate. The employees who
deviate from the nH Predict AI Model prediction are disciplined and terminated, regardless
of whether the additional care for a patient is justified.
36.
Under Medicare Advantage Plans, patients who have a three-day hospital
stay are typically entitled to up to 100 days in a nursing home. With the use of the nH
Predict AI Model, Defendants cut off payment in a fraction of that time. Patients rarely
stay in a nursing home more than 14 days before they start receiving payment denials. 37.
Upon information and belief, the outcome reports generated by nH Predict
are rarely, if ever, communicated with patients or their doctors. When patients and doctors
request their nH Predict reports, Defendants’ employees deny their requests and tell them
that the information is proprietary.

NaviHealth Guiding the Way – Animated Explainer, ECG PRODUCTIONS
https://www.ecgprod.com/navihealth-guiding-the-way-animated-explainer/ (last visited
Nov. 13, 2023).
Casey Ross and Bob Herman, Denied by AI: How Medicare Advantage plans use
algorithms to cut off care for seniors in need, STAT (Mar. 13, 2023)
https://www.statnews.com/2023/03/13/medicare-advantage-plans-denial-artificialintelligence/ (last visited Nov. 13, 2023).
Page 14 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 14 of
38.
Upon information and belief, over 90 percent of patient claim denials are
reversed through either an internal appeal process or through federal Administrative Law
Judge (ALJ) proceedings. This demonstrates the blatant inaccuracy of the nH Predict AI
Model and the lack of human review involved in the coverage denial process.
39.
Defendants fraudulently misled their insureds into believing that their health
plans would individually assess their claims and pay for medically necessary care.
40.
Had Plaintiffs and Class members known that Defendants would evade the
legally required process for reviewing patient claims and instead delegate that process to
its nH Predict AI Model to review and deny claims, they would not have enrolled with
Defendants and/or would not have paid for their plan the amount they had to pay to be
enrolled.
41.
Defendants’ use of the nH Predict AI Model to deny its insureds’ claims
undermines the principles of fairness and meaningful claim evaluation, which insureds
expect from their insurers.
B. Plaintiff the Estate of Gene B. Lokken
42.
Plaintiff, the Estate of Gene B. Lokken, represents the interests of Gene B.
Lokken, deceased.
43.
During the relevant period, Mr. Lokken was enrolled in the Medicare
Advantage Plan provided by Defendants.
44.
On or around May 5, 2022, 91-year-old Mr. Lokken fell at home and
fractured his leg and ankle. He was admitted to the Aspirus Tomahawk Hospital.
Page 15 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 15 of
45.
Prior to discharge from the hospital, Mr. Lokken’s doctor recommended that
Mr. Lokken be admitted to Aspirus hospice care because his health began to deteriorate.
46.
On or around May 11, 2022, Mr. Lokken was admitted to Tomahawk Health
Services (“THS”) as a hospice resident. Mr. Lokken was very weak, not communicative,
and in constant pain from his fractured leg and ankle.
47.
After a month of skilled nursing care with no physical activity, because his
fractured leg and ankle were still healing, Mr. Lokken began to show signs of mental and
medical improvement.
48.
On or around June 24, 2022, Mr. Lokken’s orthopedic doctor assessed his
fractured leg, removed a splint, and placed him into a removable ankle boot. The doctor
indicated that physical therapy could start working with Mr. Lokken weight bearing as
tolerated for ambulation and transfers as long as the boot was on at all times.
49.
Initial visits to physical therapy began over the next two to three weeks. The
physical therapists indicated that Mr. Lokken was slowly building his strength and
mobility, but continued intensive physical therapy was medically necessary.
50.
From July 1, 2022 to July 20, 2022, Defendants covered the cost of Mr.
Lokken’s post-acute care at THS. However, on or around July 20, 2022, Defendants
terminated Mr. Lokken’s coverage, explaining, “More inpatient days at the skilled nursing
facility are not medically necessary. A safe discharge plan has been recommended.”
51.
Defendants’ denial of coverage dumbfounded Mr. Lokken and his treating
physician because Mr. Lokken was still recovering from the fall and had only been
receiving physical therapy for two and a half weeks. Mr. Lokken’s muscles lacked strength
Page 16 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 16 of
after a month of physical inactivity, and he was learning again to balance while being fully
weight-bearing.
52.
Medical records submitted to Defendants for review indicated that Mr.
Lokken was not ready to go home. Specifically, the physical therapist’s notes stated,
“Neuromuscular: Decreased movement/mobility. Musculoskeletal: Paralysis/Weakness.”
However, Defendants did not review these records when deciding whether Mr. Lokken
required additional post-acute care.
53.
Mr. Lokken and his family immediately appealed the Defendants’ decision
to deny coverage. On or around August 1, 2022, Mr. Lokken received a letter from
Defendants stating that his appeal was rejected. In the letter, Defendants explained that
there were no acute medical issues because the patient was self-feeding and required
minimal help for hygiene and grooming. This determination went against the physical
therapist’s recommendation and notes describing Mr. Lokken muscle functions as
paralyzed and weak.
54.
Mr. Lokken and his family continued to vigorously appeal Defendants’
denial of coverage. But Defendants refused to cover the treatment, repeatedly and
wrongfully denying Mr. Lokken’s coverage for his medically necessary needs.
55.
Mr. Lokken’s family had no choice but to pay out of pocket in order to
continue providing care for Mr. Lokken.
56.
Mr. Lokken’s out-of-pocket expenses during his stay at the skilled nursing
facility amounted to $12,000-$14,000 per month from July 2022 until July 2023.
Page 17 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 17 of
57.
Mr. Lokken remained in the skilled nursing facility until he passed away on
July 17, 2023.
C. Plaintiff the Estate of Dale Henry Tetzloff
58.
Plaintiff, the Estate of Dale Henry Tetzloff, represents the interests of Dale
Henry Tetzloff, deceased.
59.
On or around October 4, 2022, 74-year-old Mr. Tetzloff suffered a stroke and
was admitted to the hospital. At the hospital, his doctor referred Mr. Tetzloff to SNF to
receive post-acute care, determining that he required post-acute care for at least 100 days.
60.
In or around November 2022, Defendant notified Mr. Tetzloff that his
coverage was denied. He had only been at the SNF for 20 days at that point.
61.
Mr. Tetzloff had no choice but to pay for his medical expenses out-of-pocket.
62.
Mr. Tetzloff and his wife, Kathleen Tetzloff, appealed the coverage denial.
After their second appeal, one of the Defendants’ doctors finally reviewed Mr. Tetzloff’s
medical records and agreed with the referring doctor that Mr. Tetzloff required additional
time to recover from his medical condition.
63.
However, after 40 days at the SNF, Defendant again denied Mr. Tetzloff’s
coverage, determining that he was ready for discharge.
64.
Mr. Tetzloff’s doctor contacted Defendants to inform them that Mr. Tetzloff
was not ready for discharge and required additional care, including occupational therapy
and physical therapy, to recover. Nonetheless, Defendants failed to reverse its decision to
deny coverage.
Page 18 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 18 of
65.
Mr. Tetzloff contacted Defendants to inquire about the reason for denying
his claim. Defendant refused to provide any reason, stating that it is confidential.
66.
Mr. Tetzloff and his wife continuously appealed Defendants’ denial of
coverage, but Defendant failed to reinstate Mr. Tetzloff’s coverage.
67.
Mr. Tetzloff’s out-of-pocket expenses exceeded $70,000 over approximately
ten months.
68.
Mr. Tetzloff was discharged in June 2023 to an assisted living facility, where
he passed away on October 11, 2023.
CLASS ALLEGATIONS
69.
Plaintiffs bring this action on their own behalf and on behalf of all other
persons similarly situated pursuant to Rule 23 of the Federal Rules of Civil Procedure. The
Class which Plaintiffs seek to represent comprises:
“All persons who purchased Medicare Advantage Plan health insurance from
Defendants in the United States during the period of four years prior to the
filing of the complaint through the present.”
Said definition may be further defined or amended by additional pleadings, evidentiary
hearings, a class certification hearing, and orders of this Court.
70.
The Multi-State subclass which Plaintiffs seek to represent comprises:
“All persons who purchased Medicare Advantage Plan health insurance from
Defendants during the period of four years prior to the filing of the complaint
through the present in the following states: Arizona, California, Colorado,
Delaware, Hawaii, Iowa, Kentucky, Massachusetts, Nebraska, North
Page 19 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 19 of
Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina,
South Dakota, Vermont, Washington, West Virginia, Wisconsin, and
Wyoming.”
Said definition may be further defined or amended by additional pleadings, evidentiary
hearings, a class certification hearing, and orders of this Court.
71.
The Wisconsin Subclass which Plaintiffs seek to represent comprises:
“All persons who purchased Medicare Advantage Plan health insurance from
Defendants in the state of Wisconsin during the period of four years prior to
the filing of the complaint through the present.”
Said definition may be further defined or amended by additional pleadings, evidentiary
hearings, a class certification hearing, and orders of this Court.
72.
The Class is so numerous that their individual joinder herein is impracticable.
On information and belief, members of the Class number in the thousands throughout the
United States and the named states. The precise number of Class members and their
identities are unknown to Plaintiffs at this time but may be determined through discovery.
Class members may be notified of the pendency of this action by mail and/or publication
through the distribution records of Defendants and third-party retailers and vendors.
73.
Common questions of fact and law predominate over questions that may
affect individual class members, including the following:
a.
Whether Defendants’ delegation of coverage determinations to an
automated procedure resulted in a failure to diligently conduct a thorough,
Page 20 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 20 of
fair, and objective investigation into determinations of claims for medical
expenses submitted by insureds and/or healthcare providers;
b.
Whether Defendants automatically denied coverage for claims
submitted by insureds and/or healthcare providers without adhering to
Medicare’s detailed coverage criteria;
c.
Whether Defendants’ denials of coverage are based on its use of nH
Predict AI Model to determine a patients’ care needs based on Defendants’
internally-generated criteria;
d.
Whether Defendants failed to adopt and implement reasonable
standards for the prompt investigation and processing of claims arising
under insurance policies; and
e.
Whether Defendants have a practice of relying on the nH Predict AI
Model to make coverage denials instead of engaging in good-faith
individual coverage determinations.
74.
Plaintiffs’ claims are typical of the claims of the Class and arise from the
same common practice and scheme used by Defendants to deny coverage for the members
of the Class. In each instance, Defendants used the nH Predict AI Model to review, process,
and reduce coverage without adhering to the coverage determination standards set by
Medicare. Plaintiffs will fairly and adequately represent and protect the interests of the
Class. Plaintiffs have retained competent and experienced counsel in class action and other
complex litigation.
Page 21 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 21 of
75.
Plaintiffs and the Class have suffered injury, in fact, and have lost money as
a result of Defendants’ misconduct. Plaintiffs and the Class had their coverage
automatically and illegally diminished by Defendants’ nH Predict AI Model without
individualized evaluation of their medical records by Defendants’ medical directors.
76.
A class action is superior to other available methods for fair and efficient
adjudication of this controversy. The expense and burden of individual litigation would
make it impracticable or impossible for the Class to prosecute their claims individually.
77.
The trial and litigation of Plaintiffs’ claims are manageable. Individual
litigation of the legal and factual issues raised by Defendants’ conduct would increase delay
and expense to all parties and the court system. The class action device presents far fewer
management difficulties and provides the benefits of a single, uniform adjudication,
economics of scale, and comprehensive supervision by a single court.
78.
Defendants have acted on grounds generally applicable to the entire Class,
thereby making final injunctive relief and/or corresponding declaratory relief appropriate
with respect to the Class as a whole. The prosecution of separate actions by individual
Class members would create the risk of inconsistent or varying adjudications with respect
to individual Class members that would establish incompatible standards of conduct for
Defendants.
79.
Absent a class action, Defendants will likely retain the benefits of their
wrongdoing. Because of the small size of the individual Class members’ claims, few, if
any, Class members could afford to seek legal redress for the wrongs complained of herein.
Absent a representative action, the Class will continue to suffer losses and Defendants will
Page 22 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 22 of
be allowed to continue these violations of law and to retain the proceeds of its ill-gotten
gains.
FIRST CAUSE OF ACTION
BREACH OF CONTRACT—NATIONWIDE
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Nationwide Class)
80.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
81.
Defendants formed an agreement and entered into a contract of insurance
(“insurance agreement”) with Plaintiffs and Class members including offer, acceptance,
and consideration.
82.
Pursuant to that insurance agreement, Plaintiffs and the Class paid money to
Defendants in exchange for Defendants providing a health insurance policy to Plaintiffs
and the Class. Defendants received premiums in exchange for the issuance of a policy of
health insurance.
83.
Each insurance agreement included, without limitation, Defendants’ duty to
exercise its fiduciary duties to policyholders, abide by applicable state laws, and adequately
review and inform policyholders prior to a claim denial.
84.
Plaintiffs and the Class performed their obligations under the contract by
paying the amounts due under the contract timely.
85.
Defendants breached each insurance agreement by, without limitation,
failing to keep its promise to fulfill its fiduciary duties to policyholders, abide by applicable
state laws, provide a thorough, fair, and objective investigation of each submitted claim
Page 23 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 23 of
prior to a claim denial, and provide written statements to Plaintiffs and the Class, accurately
listing all bases for Defendants’ denial of claims and the factual and legal bases for each
reason given for such denial.
86.
By using the nH Predict AI Model to unreasonably deny Plaintiffs’ and Class
members’ claims without an adequate individualized investigation, Defendants breached
the insurance agreement.
87.
As a direct and proximate result of Defendants’ breach of contract, Plaintiffs
and the Class have suffered damages in an amount to be proven at trial.
SECOND CAUSE OF ACTION
BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR
DEALING—NATIONWIDE
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Nationwide Class)
88.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
89.
Plaintiffs and Class members entered into written insurance agreements with
Defendants and that provided for coverage for medical services administered by healthcare
providers.
90.
Pursuant to the contracts, Defendants implied and covenanted that they
would act in good faith and follow the law and the contracts with respect to the prompt and
fair payment of Plaintiffs’ and Class members’ claims.
91.
Defendants have breached their duty of good faith and fair dealing by, among
other things:
Page 24 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 24 of
a. Improperly delegating their claims review function to the nH Predict system
which uses an automated process to improperly deny claims;
b. Failing to require its agents to conduct a thorough, fair, and objective
investigation of each submitted claim, such as examining patient records,
reviewing coverage policies, and using their expertise to decide whether to
approve or deny claims to avoid unfair denials.
92.
Defendants’ practices as described herein violated their duties to Plaintiffs
and Class members under the insurance contracts.
93.
Defendants’ practices as described herein constitute an unreasonable denial
of Plaintiffs’ and Class members’ rights to a thorough, fair, individualized, and objective
investigation of each of their claims in breach of the implied covenant of good faith and
fair dealing arising from Defendants’ insurance agreements.
94.
Defendants’ practices as described herein further constitute an unreasonable
denial to pay benefits due to Plaintiffs and Class members in breach of the implied covenant
of good faith and fair dealing arising from the Defendants’ insurance agreements.
95.
The Defendants’ wrongful denial of Plaintiffs’ and Class members’ right to
a thorough, fair, and objection investigation and a wrongful denial of claims damaged
Plaintiffs and Class members.
96.
As a direct and proximate result of Defendants’ breaches, Plaintiffs and
Class members have suffered and will continue to suffer in the future, economic losses,
including the benefits owned under the health insurance plans in the millions, the
interruption in Plaintiffs’ and Class members’ businesses, and other general, incidental,
Page 25 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 25 of
and consequential damages, in amounts according to proof at trial. Plaintiffs and Class
members are also entitled to recover statutory and prejudgment interest against Defendants.
97.
Defendants’ misconduct was committed intentionally, in a malicious,
fraudulent, despicable, and oppressive manner, entitling Plaintiffs and Class members to
punitive damages against Defendants.
THIRD CAUSE OF ACTION
UNJUST ENRICHMENT—NATIONWIDE
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Nationwide Class)
98.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
99.
By delegating the claims review process to the nH Predict system,
Defendants knowingly charged Plaintiffs and Class members insurance premiums for a
service that Defendants failed to deliver; this was done in a manner that was unfair,
unconscionable, and oppressive.
100.
Defendants knowingly received and retained wrongful benefits and funds
from Plaintiffs and Class members. In so doing, Defendants acted with conscious disregard
for the rights of Plaintiffs and Class members.
101.
As a result of Defendants’ wrongful conduct as alleged herein, Defendants
have been unjustly enriched at the expense of, and to the detriment of, Plaintiffs and
members of the Class.
102.
Defendants’ unjust enrichment is traceable to, and resulted directly and
proximately from, the conduct alleged herein.
Page 26 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 26 of
103.
Under the common law doctrine of unjust enrichment, it is inequitable for
Defendants to be permitted to retain the benefits they received, without justification, from
arbitrarily denying its insureds medical payments owed to them under Defendants’ policies
in an unfair, unconscionable, and oppressive manner. Defendants’ retention of such funds
under such circumstances making it inequitable to retain the funds constitutes unjust
enrichment.
104.
The financial benefits derived by Defendants rightfully belong to Plaintiffs
and Class members. Defendants should be compelled to return in a common fund for the
benefit of Plaintiffs and members of the Class all wrongful or inequitable proceeds received
by Defendants.
105.
Plaintiffs and members of the Class have no adequate remedy at law.
FOURTH CAUSE OF ACTION
VIOLATION OF Wis. Adm. Code Ins. § 6.INSURANCE CLAIM SETTLEMENT PRACTICES
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Wisconsin Class)
106.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
107.
Defendants failed to initiate and conclude a claims investigation into
Plaintiffs’ and Class member’s claims with all reasonable dispatch. Instead, Defendants
relied on the nH Predict AI Model to deny Plaintiffs’ claims in bad faith and without an
individualized investigation.
Page 27 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 27 of
108.
Defendants made no good faith attempt to effectuate a fair and equitable
settlement of Plaintiffs’ and Class members’ claims, for which liability would have been
reasonably clear had Defendants conducted an adequate investigation.
109.
As a direct and proximate result of Defendants’ violation of Wis. Adm. Code
Ins. § 6.11, Plaintiffs and the Class have suffered damages in an amount to be proven at
trial.
FIFTH CAUSE OF ACTION
INSURANCE BAD FAITH—WISCONSIN
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
110.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
111.
Defendants used and continue to use the nH Predict AI Model to
unreasonably refuse coverage for medically necessary post-acute care. The nH Predict AI
Model does not account for individuals’ unique circumstances or the statutorily required
coverage determination criteria. The nH Predict AI Model denies coverage that is legally
guaranteed to Defendants’ insureds.
112.
Defendants lacked a reasonable basis for refusing to cover policyholders’
post-acute care. Defendants’ use of previous patients’ data to determine its insureds’ future
care without regard for individual circumstances, doctors’ recommendations, and patients’
actual conditions is unreasonable.
113.
Defendants’ denials breach the insurance agreement and are made in bad
faith to save money on costly post-acute care coverage. Defendants ignored patients’
Page 28 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 28 of
medical records, individual circumstances, and physicians’ notes while strictly adhering to
whatever recommendations the nH Predict AI Model issued.
114.
Defendants knew or reasonably should have known that the nH Predict AI
Model was not a suitable substitute for individual holistic review of Plaintiffs’ and the
Class members’ claims. Due to the enormous increase in the number of coverage denial
appeals, as well as the 90 percent success rate of those appeals, Defendants have been put
on notice that their nH Predict AI Model wrongly denies coverage in the vast majority of
cases.
115.
By using nH Predict to predict Plaintiffs’ and the Class members’ required
coverage for post-acute care, Defendants failed to conduct an adequate investigation before
denying their claims. Defendants did not consider individual factors that may affect the
recovery period or amount of care a patient requires, and routinely ignored the recovery
time or treatment prescribed by Plaintiffs’ and the Class members’ physicians.
116.
As a direct result of Defendants’ insurance bad faith, Plaintiffs and the Class
have sustained damages in an amount to be determined at trial.
117.
Defendants have engaged in insurance bad faith and are liable to Plaintiffs
and the Class for any and all damages that they sustained as a result of their bad faith
conduct.
118.
Defendants’ bad faith conduct is the actual and proximate cause of the
damages sustained by Plaintiffs and the Class.
119.
As a result of Defendants’ bad faith conduct, Class members suffered severe
emotional distress. Class members did not know whether they would be able to receive
Page 29 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 29 of
necessary care, whether they would be forced to pay out of pocket for said care, or whether
they would be financially able to pay for said care, causing severe emotional distress.
120.
Class members’ emotional distress caused pecuniary loss whereby they had
to pay out of pocket for treatment, by disrupting Class members’ lives and schedules, by
causing Class members to miss work and lose wages, and by other means.
121.
Defendants’ bad faith conduct, as alleged herein, was and continues to be
malicious and intentionally designed to deprive Plaintiffs and the Class of their rights under
the insurance agreement. Defendants knew of the dire consequences of denying elderly
patients’ medical treatment, yet still denied claims without any reasonable or arguable
reason for doing so, recklessly and maliciously disregarding the health and lives of
Plaintiffs and the Class.
122.
Defendants’ misconduct was committed intentionally and willfully, in a
malicious, fraudulent, wanton, and oppressive manner, entitling Plaintiffs and Class
members to punitive damages against Defendants. Defendants acted with an “evil mind”
in wantonly denying Plaintiffs and Class Members necessary care, causing severe physical
and emotional turmoil, to increase their profits.
123.
Plaintiffs and the Class are entitled to an award of punitive damages based
on Defendants’ malicious conduct and their intentional and unreasonable refusal to pay
claims.
124.
By reason of the conduct of Defendants as alleged herein, Plaintiffs have
necessarily retained attorneys to prosecute the present action. Plaintiffs are therefore
Page 30 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 30 of
entitled to reasonable attorneys’ fees and litigation expenses, including expert witness fees
and costs, incurred in bringing this action.
125.
Defendants had no reasonable basis for the denial of coverage.
126.
Defendants knew or should have known that the nH Predict system was an
inadequate method for deciding to deny claims and knew or recklessly disregarded that
there was no reasonable basis for denial of Plaintiffs’ and Class members’ claims.
SIXTH CAUSE OF ACTION
INSURANCE BAD FAITH—ARIZONA
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
127.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
128.
Defendants had no reasonable basis for the denial of coverage.
129.
Defendants knew or should have known that the nH Predict system was an
inadequate method for deciding to deny claims and knew or recklessly disregarded that
there was no reasonable basis for denial of Plaintiffs’ and Class members’ claims.
130.
The validity of Plaintiffs’ and Class members’ claims was readily apparent
on its face and would not have been fairly debatable if an adequate investigation had been
conducted.
131.
As alleged above, Defendants intentionally breached the implied covenant of
good faith and fair dealing by denying Plaintiffs and the Class the security and peace of
mind that is the object of the insurance relationship.
Page 31 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 31 of
132.
A reasonable insurer would not have denied payment of Plaintiffs’ and Class
members’ claims under the facts and circumstances present.
133.
Plaintiffs are entitled to reasonable attorneys’ fees and litigation expenses
incurred with bringing this action, pursuant to A.R.S. § 12–341.01.
SEVENTH CAUSE OF ACTION
INSURANCE BAD FAITH—CALIFORNIA
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
134.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
135.
Defendants withheld benefits due under the insurance agreement by refusing
to pay Plaintiffs’ and Class members’ claims.
136.
Defendants had no reasonable basis for the denial of coverage.
137.
Defendants knew or should have known that the nH Predict system was an
inadequate method for deciding to deny claims and knew or recklessly disregarded that
there was no reasonable basis for denial.
138.
By using nH Predict to determine whether to deny coverage instead of
independent review by physicians, Defendants failed to act reasonably in processing and
handling Plaintiffs’ claims.
139.
By reason of the conduct of Defendants as alleged herein, Plaintiffs are
entitled to consequential damages pursuant to Cal. Civ. Code § 3300.
140.
By reason of the conduct of Defendants as alleged herein, Plaintiffs are
entitled to emotional distress damages pursuant to Cal. Civ. Code § 3333.
Page 32 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 32 of
141.
By reason of the conduct of Defendants as alleged herein, Plaintiffs are
entitled to punitive damages pursuant to Cal Civ. Code § 3294(a).
EIGHTH CAUSE OF ACTION
INSURANCE BAD FAITH—COLORADO
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
142.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
143.
Defendants had no reasonable basis for the denial of coverage.
144.
Defendants knew or should have known that the nH Predict system was an
inadequate method for deciding to deny claims and knew or recklessly disregarded that
there was no reasonable basis for denial.
145.
By using nH Predict to decide to deny coverage, Defendants denied
Plaintiffs’ and Class members’ claims without a reasonable basis.
146.
By reason of the conduct of Defendants as alleged herein, Plaintiffs and
members of the Class are entitled to punitive damages pursuant to C.R.S. § 13–21–
102(3)(a).
NINTH CAUSE OF ACTION
INSURANCE BAD FAITH—DELAWARE
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
147.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
148.
Defendants withheld benefits due under the insurance agreement by refusing
to pay Plaintiffs’ claims.
Page 33 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 33 of
149.
Defendants’ denial of Plaintiffs’ and Class members’ claims was clearly
without any reasonable justification.
150.
By using nH Predict to decide to deny Plaintiffs’ claims, Defendants failed
to conduct an adequate investigation before denying Plaintiffs’ and Class members’ claims.
151.
Defendants’ habitual use of nH Predict to deny insurance claims constitutes
a general business practice of denying insurance claims without a reasonable basis.
TENTH CAUSE OF ACTION
INSURANCE BAD FAITH—HAWAII
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
152.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
153.
Defendants withheld benefits due under the insurance agreement by refusing
to pay Plaintiffs’ claims.
154.
Defendants reason for denying Plaintiffs’ and Class members’ claims was
unreasonable and without proper cause.
155.
By using nH Predict to determine whether to deny coverage, Defendants
failed to act reasonably in processing and handling Plaintiffs’ and Class members’ claims.
156.
By reason of the conduct of Defendants as alleged herein, Plaintiffs are
entitled to attorneys’ fees and costs associated with bringing this litigation, pursuant to
Haw. Rev. Stat. § 431:10–242.
Page 34 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 34 of
ELEVENTH CAUSE OF ACTION
INSURANCE BAD FAITH—IOWA
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
157.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
158.
Defendants had no reasonable basis for the denial of coverage.
159.
Defendants knew or had reason to know that the nH Predict system was an
inadequate method for deciding to deny claims and knew or had reason to know that the
nH Predict AI Model was not a reasonable basis to deny claims.
160.
The validity of Plaintiffs’ and Class members’ claims were not fairly
debatable as a matter of fact or law.
161.
By using nH Predict to determine whether to deny coverage instead of
independent review, Defendants failed to act reasonably in processing and handling
Plaintiffs’ and Class members’ claims.
162.
Defendants’ bad faith conduct caused Plaintiffs and the Class severe mental
suffering.
TWELFTH CAUSE OF ACTION
INSURANCE BAD FAITH—KENTUCKY
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
163.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
164.
Defendants were obligated to pay Plaintiffs’ and Class members’ claims
under the insurance agreement.
Page 35 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 35 of
165.
Defendants had no reasonable basis for the denial of coverage.
166.
Defendants knew or should have known that the nH Predict system was an
inadequate method for deciding to deny claims and knew or recklessly disregarded that
there was no reasonable basis for denial.
THIRTEENTH CAUSE OF ACTION
INSURANCE BAD FAITH—MASSACHUSETTS
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
167.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
168.
Defendants withheld benefits due under the insurance agreement by refusing
to pay Plaintiffs’ claims.
169.
Defendants reason for denying Plaintiffs’ and Class members’ claims was
unreasonable and without proper cause.
170.
By using nH Predict to determine whether to deny coverage, Defendants
failed to act reasonably in processing and handling Plaintiffs’ and Class members’ claims.
FOURTEENTH CAUSE OF ACTION
INSURANCE BAD FAITH—NEBRASKA
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
171.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
172.
Defendants had no reasonable basis for the denial of coverage.
Page 36 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 36 of
173.
Defendants knew or should have known that the nH Predict system was an
inadequate method for deciding to deny claims and knew or recklessly disregarded that
there was no reasonable basis for denial.
FIFTEENTH CAUSE OF ACTION
INSURANCE BAD FAITH—NORTH CAROLINA
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
174.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
175.
Had Defendants conducted a reasonable and adequate investigation of
Plaintiffs’ and Class members’ claims on an individual and holistic basis, they would have
recognized that they were required to pay Plaintiffs’ and Class members’ claims.
176.
Defendants deployed their nH Predict AI Model to unreasonably deny claims
that ought to have not been denied, in bad faith and in violation of the insurance agreement.
177.
Defendants’ denial of Plaintiffs’ and Class members’ claims was based on
the malicious implementation of the nH Predict AI Model intended to enable Defendants
to deny as many claims as possible and to pay out as little as possible. Defendants’ denial
of Plaintiffs’ and Class members’ claims was not the result of an honest disagreement or
an innocent mistake.
178.
Defendants’ conduct constitutes aggravating and outrageous conduct.
179.
By reason of the conduct of Defendants as alleged herein, Plaintiffs are
entitled to attorneys’ fees and costs associated with bringing this litigation, pursuant to
N.C. Gen. Stat. § 75–16.1.
Page 37 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 37 of
SIXTEENTH CAUSE OF ACTION
INSURANCE BAD FAITH—NORTH DAKOTA
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
180.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
181.
The claims that Plaintiffs and Class members submitted to Defendants were
covered by the insurance policy, and ought to have been paid.
182.
Defendants’ reasons for denying Plaintiffs’ and Class members’ claims were
unreasonable and without proper cause.
183.
Defendants’ denials of Plaintiffs’ and Class members’ claims were based on
the malicious implementation of the nH Predict AI Model intended to enable Defendants
to deny as many claims as possible and to pay out as little as possible. The validity of
Plaintiffs’ and Class members’ claims was neither fairly debatable, nor was there a
reasonable basis for denying the claim.
SEVENTEENTH CAUSE OF ACTION
INSURANCE BAD FAITH—OHIO
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
184.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
185.
By using nH Predict to determine whether to deny coverage, Defendants
failed to act reasonably in processing and handling Plaintiffs’ and Class members’ claims.
186.
Defendants’ denial of Plaintiffs’ and Class members’ claims was based on
the malicious implementation of the nH Predict AI Model intended to enable Defendants
Page 38 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 38 of
to deny as many claims as possible and to pay out as little as possible. Defendants’ refusal
to pay Plaintiffs’ and Class members’ claims was not predicated upon circumstances that
furnish reasonable justification therefore.
187.
Defendants’ use of the nH Predict AI Model to deny Plaintiffs’ and Class
members’ claims constitutes refusal to pay claims in an arbitrary and capricious manner.
EIGHTEENTH CAUSE OF ACTION
INSURANCE BAD FAITH—OKLAHOMA
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
188.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
189.
Plaintiffs and Class members were covered persons under the insurance
agreement.
190.
Defendants’ use of the nH Predict AI Model to deny Plaintiffs’ and Class
members’ claims without an individual or holistic review was unreasonable under the
circumstances.
191.
By using the nH Predict AI Model to unreasonably deny Plaintiffs’ and Class
members’ claims, Defendants failed to deal fairly and act in good faith in its handling of
Plaintiffs’ and Class members’ claims.
192.
As alleged above, Defendants’ conduct breached the duty of good faith and
fair dealing, directly causing Plaintiffs’ and Class members’ damages.
Page 39 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 39 of
193.
Defendants knew or should have known that the nH Predict system was an
inadequate method for deciding to deny claims and knew or recklessly disregarded that
there was no reasonable basis for denial.
194.
By reason of the conduct of Defendants as alleged herein, Plaintiffs are
entitled to attorneys’ fees and costs associated with bringing this litigation, pursuant to
Okla. Stat. Title 36 § 3629.
NINETEENTH CAUSE OF ACTION
INSURANCE BAD FAITH—RHODE ISLAND
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
195.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
196.
Defendants had no reasonable basis for the denial of coverage.
197.
Defendants knew or should have known that the nH Predict system was an
inadequate method for deciding to deny claims and knew or recklessly disregarded that
there was no reasonable basis for denial.
198.
Defendants failed to conduct an independent holistic review of Plaintiffs’ and
Class members’ claims.
199.
Defendants acted unreasonably in their evaluation and processing of
Plaintiffs’ and Class members’ claims and knew or was conscious of the fact that their
implementation of the nH Predict AI Model to deny Plaintiffs’ and Class members’ claims
was unreasonable.
Page 40 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 40 of
200.
Defendants’ denials of Plaintiffs’ and Class members’ claims were based on
the malicious implementation of the nH Predict AI Model intended to enable Defendants
to deny as many claims as possible and to pay out as little as possible. The validity of
Plaintiffs’ and Class members’ claims was neither fairly debatable, nor was there a
reasonable basis for denying the claim.
TWENTIETH CAUSE OF ACTION
INSURANCE BAD FAITH—SOUTH CAROLINA
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
201.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
202.
Plaintiffs and Class members entered into insurance agreements with
Defendants that provided for coverage for medical services administered by healthcare
providers.
203.
Defendants refused to pay Plaintiffs’ and Class members’ claims as required
by the insurance agreement.
204.
Defendants deployed their nH Predict AI Model to unreasonably deny claims
that ought to have not been denied, in bad faith and in violation of the insurance agreement.
205.
As alleged above, Defendants’ conduct breached the duty of good faith and
fair dealing.
206.
Plaintiffs and Class members suffered damages as a result of Defendants’
bad faith.
Page 41 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 41 of
207.
Defendants’ denial of Plaintiffs’ and Class members’ claims was based on
the malicious implementation of the nH Predict AI Model intended to enable Defendants
to deny as many claims as possible and to pay out as little as possible. Defendants had no
reasonable grounds for contesting and denying Plaintiffs’ and Class members’ claims.
208.
By reason of the conduct of Defendants as alleged herein, Plaintiffs are
entitled to reasonable attorneys’ fees and costs associated with bringing this litigation,
pursuant to S.C. Code Ann. § 38–59–40.
TWENTY-FIRST CAUSE OF ACTION
INSURANCE BAD FAITH—SOUTH DAKOTA
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
209.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
210.
Defendants’ denials of Plaintiffs’ and Class members’ claims were based on
the malicious implementation of the nH Predict AI Model intended to enable Defendants
to deny as many claims as possible and to pay out as little as possible. Defendants had no
reasonable basis for denying Plaintiffs’ and Class members’ claims, withholding policy
benefits, or failing to comply with the insurance agreement.
211.
Defendants knew or had reason to know that the nH Predict system was an
inadequate method for deciding to deny claims and knew or had reason to know that the
nH Predict AI Model was not a reasonable basis to deny claims.
Page 42 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 42 of
212.
Defendant failed to conduct an adequate independent investigation into
Plaintiffs’ and Class members’ claims before issuing a denial, acting with reckless
disregard for whether there was a reasonable basis to deny the claims.
213.
Plaintiffs and Class members sustained damages as a result of Defendants’
bad faith.
214.
The validity of Plaintiffs’ and Class members’ claims was readily apparent
on its face and was not fairly debatable after an adequate investigation.
TWENTY-SECOND CAUSE OF ACTION
INSURANCE BAD FAITH—VERMONT
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
215.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
216.
Defendants’ denials of Plaintiffs’ and Class members’ claims were based on
the malicious implementation of the nH Predict AI Model intended to enable Defendants
to deny as many claims as possible and to pay out as little as possible. Defendants had no
reasonable basis for denying Plaintiffs’ and Class members’ claims, withholding policy
benefits, or failing to comply with the insurance agreement.
217.
Defendants knew or had reason to know that the nH Predict system was an
inadequate method for deciding to deny claims and knew or had reason to know that the
nH Predict AI Model was not a reasonable basis to deny claims.
Page 43 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 43 of
218.
Defendants failed to conduct an adequate independent investigation into
Plaintiffs’ and Class members’ claims before issuing a denial, acting with reckless
disregard for whether there was a reasonable basis to deny the claims.
TWENTY-THIRD CAUSE OF ACTION
INSURANCE BAD FAITH—WASHINGTON
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
219.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
220.
Defendants’ denial of Plaintiffs’ claims was based on the malicious
implementation of the nH Predict AI Model intended to enable Defendants to deny as many
claims as possible and to pay out as little as possible. Defendants’ denials of Plaintiffs’
claims were unreasonable, frivolous, and unfounded.
221.
Defendants’ denials of Plaintiffs’ and Class members’ claims were based on
generalized data from the nH Predict system, not on facts specific to Plaintiffs’ and Class
members’ claims. Consequently, Defendants acted unreasonably in performing its
“investigation” of Plaintiffs’ and Class members’ claims, and the denials were not based
upon a reasonable interpretation of the insurance agreement.
222.
Defendants failed to conduct an adequate independent investigation into
Plaintiffs’ and Class members’ claims before issuing a denial, acting with reckless
disregard for whether there was a reasonable basis to deny the claims.
223.
By reason of the conduct of Defendants as alleged herein, Plaintiffs are
entitled to damages enhancements pursuant to RCW 48.30.015.
Page 44 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 44 of
TWENTY-FOURTH CAUSE OF ACTION
INSURANCE BAD FAITH—WEST VIRGINIA
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
224.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
225.
Defendants’ denial of Plaintiffs’ and Class members’ claims was based on
the malicious implementation of the nH Predict AI Model intended to enable Defendants
to deny as many claims as possible and to pay out as little as possible. The validity of
Plaintiffs’ and Class members’ claims was neither fairly debatable, nor was there a
reasonable basis for denying the claim.
226.
Defendants knew or had reason to know that the nH Predict system was an
inadequate method for deciding to deny claims and knew or had reason to know that the
nH Predict AI Model was not a reasonable basis to deny claims.
227.
Defendants failed to conduct an adequate independent investigation into
Plaintiffs’ and Class members’ claims before issuing a denial, acting with reckless
disregard for whether there was a reasonable basis to deny the claims.
TWENTY-FIFTH CAUSE OF ACTION
INSURANCE BAD FAITH—WYOMING
AGAINST ALL DEFENDANTS
(On Behalf of Plaintiffs and the Multi-State Class)
228.
Plaintiffs reallege and incorporate by reference all preceding allegations as
though fully set forth herein.
229.
Defendants’ denials of Plaintiffs’ and Class members’ claims were based on
the malicious implementation of the nH Predict AI Model intended to enable Defendants
Page 45 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 45 of
to deny as many claims as possible and to pay out as little as possible. The validity of
Plaintiffs’ and Class members’ claims was neither fairly debatable, nor was there a
reasonable basis for denying the claim.
230.
A reasonable insurer would not have denied Plaintiffs’ and Class members’
claims under the facts and circumstances alleged herein.
231.
Defendants knew or had reason to know that the nH Predict system was an
inadequate method for deciding to deny claims and knew or had reason to know that the
nH Predict AI Model was not a reasonable basis to deny claims.
232.
Defendants failed to conduct an adequate independent investigation into
Plaintiffs’ and Class members’ claims before issuing a denial, acting with reckless
disregard for whether there was a reasonable basis to deny the claims.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs, individually and on behalf of all others similarly
situated, request that this Court enter an order granting the following relief against
Defendants:
a.
Awarding actual damages, consequential damages, statutory damages,
exemplary/punitive damages, costs and attorneys’ fees;
b.
Awarding damages for emotional distress;
c.
Awarding disgorgement and/or restitution;
d.
Awarding pre-judgment interest to the extent permitted by law;
Page 46 CASE 0:23-cv-03514 Doc. 1 Filed 11/14/23 Page 46 of
e.
Appropriate declaratory and injunctive relief enjoining Defendants from
continuing its improper and unlawful claim handling practices as set forth
herein;
f.
Such other and further relief as the Court may deem just and proper.
JURY TRIAL DEMANDED
Plaintiffs demand a jury trial on all triable issues.
DATED: November 14,
LOCKRIDGE GRINDAL NAUEN PLLP
By: s/Karen Hanson Riebel
Karen Hanson Riebel (#0219770)
David W. Asp (#0344850)
Kristen G. Marttila (#0346007)
Derek C. Waller (#0401120)
100 Washington Avenue South, Ste Minneapolis, MN Tel: (612) 339-khriebel@locklaw.com
dwasp@locklaw.com
kgmarttila@locklaw.com
dcwaller@locklaw.com
Glenn A. Danas, Esq.
Ryan Clarkson, Esq.
Zarrina Ozari, Esq.
Pro Hac Vice Forthcoming
CLARKSON LAW FIRM, P.C.
22525 Pacific Coast Highway
Malibu, CA Tel: (213) 788-gdanas@clarksonlawfirm.com
rclarkson@clarksonlawfirm.com
zozari@clarksonlawfirm.com
Attorneys for Plaintiffs
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