A provision in the giant omnibus bill passed at the end of Minnesota’s 2024 legislative session is the target of a lawsuit brought by the nation’s largest health insurer.
In a complaint filed in Hennepin County District Court on Aug. 2, Minnetonka-based UnitedHealth Group takes issue with a provision in the bill that prohibits the state from contracting with for-profit health maintenance organizations (HMOs) to run Medicaid plans.
UnitedHealth’s lawsuit largely hinges on a procedural issue: The company argued that the omnibus bill passed in May violates the “single subject clause” in the Minnesota constitution, which states that “no law shall embrace more than one subject, which shall be expressed in its title.” Under that logic, the suit states that both the provision and the omnibus bill itself are unconstitutional.
“The Jumbo Omnibus violates the Single Subject and Title Clauses of Section 17,” UnitedHealth Group said in the suit. “It governs everything from higher education, to traffic cameras, to Uber and Lyft driver compensation, to veterinary licensing, to power plant emissions (to name only a few of the many subjects it addresses).”
Since 2022, UnitedHealthcare, UnitedHealth Group’s insurance arm, has been working under contract to administer two Medicaid programs for Minnesota: Families and Children Medical Assistance, and MinnesotaCare.
Minnesota’s Department of Human Services first awarded the contract at the end of 2021 for the following year, and renewed it in 2023 and 2024. But UnitedHealth Group’s suit said that department commissioner Jodi Harpstead has “refused to renew the contracts for plan year 2025 because of a provision snuck into the Jumbo Omnibus on the last day of the legislature session.”
Harpstead first sent a letter to UnitedHealth Group on June 14 informing the for-profit company that the state would not renew the contract “to conform to this new law.” She cited the change in Minnesota law stating that “the commissioner must not enter into a contract with a health maintenance organization … which is not a nonprofit corporation.”
In the suit, UnitedHealth said that it will need to send notices to “tens of thousands of Minnesotans beginning in October 2024 to tell them that their benefit plans have been canceled and they will need to find a new plan, which will cause irreparable harm to its business and goodwill, as well as to its members who chose its plans and will be forced off them.”
The lawsuit names the state of Minnesota, Attorney General Keith Ellison, and commissioner Harpstead as defendants. It asks the court to declare the HMO provision in the omnibus bill unconstitutional. The suit went on to ask for “judgment in favor of Plaintiffs declaring that the HMO Provision does not apply to the renewal of its contracts with the Department [of Human Services] and that it was error for the Commissioner to refuse to renew the contracts on that basis.”
UnitedHealth’s suit also said that Harpstead has misinterpreted the law: “The provision only precludes the Department from ‘enter[ing] into’ new contracts with for- profit HMO,” the suit said.
“It does not preclude the Commissioner from renewing existing contracts.”
In an emailed statement, UnitedHealth Group officials said that the state’s new regulations limits choice for Minnesotans.
“Minnesotans deserve the right to choose among health plans that offer the broadest access to care, the most innovative services and the highest quality benefits to meet their health care needs,” the company said.
The state’s department of human services, meanwhile, has said it is reviewing the suit, KSTP reported last week.
In a statement to TCB, John Connolly, administrative assistant commissioner of health care in the department, said his agency is “following the clear directive of the law as recently amended by the Legislature.”
“The agency is now prohibited from contracting with for-profit HMOs, which disqualifies UnitedHealthcare from participation. We cannot renew the contracts and comply with the law. If the Legislature reverses course in the future and once again allows for-profit entities to be eligible for contracts, DHS would consider proposals from UHC.”
Though several omnibus bills have come out of the Minnesota statehouse over the years, the 2024 edition was met with considerable controversy. DFL legislators in the House and Senate each pushed the bill through in less than 15 minutes, MinnPost reported earlier this year. House Minority Leader Lisa Demuth, a Republican legislator who serves as House Minority Leader, said at the time that “the minority voice was shut down by the Democratic majority.”
It’s worth noting that Minnesota had for years had a law on the books banning HMOs from operating Medicaid plans, but, in 2017, that was repealed.
[This story has been updated to include a comment from the Minnesota Department of Human Services.]
