When coverage denials tied to an AI tool get appealed, more than 90% are reversed. Only about 0.2% of affected Medicare Advantage enrollees ever file an appeal, according to a KFF analysis cited in the complaint.
That gap sits at the center of a proposed class-action lawsuit filed November 14, 2023, against UnitedHealth Group, UnitedHealthcare, and its subsidiary NaviHealth in the US District Court for the District of Minnesota. The case, Estate of Gene B. Lokken et al. v. UnitedHealth Group Inc., et al., alleges the companies illegally deployed an AI tool called nH Predict to deny post-acute care owed to elderly Medicare Advantage patients.
How the Algorithm Works
NaviHealth case managers feed patient data into nH Predict, and the model outputs a projected discharge date.
Inputs include age, living situation, and physical function. The model then compares that profile against millions of historical cases to estimate how long a patient should need care.
According to former employees cited in investigative reporting by Stat, the algorithm does not fully account for comorbidities or complications that emerge mid-stay, such as pneumonia, which can significantly extend recovery time.
The 90% Problem
When patients fight the denials, they almost always win; most patients never fight.
The complaint states that defendants deployed AI to deny care owed to elderly patients, alleging the model overrides “their treating physicians’ determinations as to medically necessary care based on an AI model that defendants know has a 90% error rate,” according to the filing dated November 14, 2023. Plaintiffs characterize that reversal rate as evidence the tool is, in their words, “blatantly inaccurate.”
Plaintiffs argue UnitedHealth was aware of that reversal rate and continued using the tool precisely because most patients would not challenge denials, leaving the vast majority of allegedly wrongful coverage cuts uncorrected.
The Human Cost
Two families put specific dollar figures to what the algorithm allegedly cost them.
Gene Lokken, 91, fractured his leg and ankle after a fall in May 2022. His physicians recommended extended physical therapy, but UnitedHealth allegedly covered only 19 days before denying further care, and his family paid roughly $150,000 out of pocket until his death in July 2023, according to the complaint.
Dale Tetzloff, 74, suffered a stroke in October 2022, and his doctors projected he would need up to 100 days of skilled nursing care. UnitedHealth allegedly denied coverage after 20 days, then issued a second denial after 40 days even after an initial appeal succeeded, leaving his family to pay approximately $70,000 over ten months before he was moved to assisted living, where he later died.
Pressure on Staff
Case managers were allegedly measured against the algorithm’s predictions, not their patients’ needs.
In 2022, NaviHealth reportedly required case managers to keep patient stays within 3% of nH Predict’s projection; by 2023, that margin had tightened to 1%. Former case manager and occupational therapist Amber Lynch told investigators the approach “takes the dignity out of the patient,” according to reporting by Stat.
UnitedHealth’s Position
The company says the tool advises rather than decides.
The naviHealth predict tool is not used to make coverage determinations. The tool is used as a guide to help us inform providers, families and other caregivers about what sort of assistance and care the patient may need both in the facility and after returning home. Coverage decisions are based on CMS coverage criteria and the terms of the member’s plan. This lawsuit has no merit, and we will defend ourselves vigorously.
Optum Health spokesperson
Where the Case Stands
A federal judge has ordered UnitedHealth to open its records on the algorithm.
A federal magistrate judge in Minnesota has ordered UnitedHealth to produce extensive documentation about nH Predict’s role in coverage decisions, and discovery remains ongoing as of 2026. How courts rule on the tool’s relationship to actual coverage denials could reshape how insurers nationwide are permitted to use AI in utilization management.
The outcome may also determine what protections Medicare Advantage patients have when an algorithm’s projection conflicts with their doctor’s judgment.
