Lake Havasu City: Arizona Attorney General Sues Major Insurers Over Alleged Price-Fixing Cartel

Arizona Attorney General Kris Mayes filed a lawsuit Monday accusing major health insurance companies of running an illegal price-fixing scheme that cost Arizonans billions of dollars.

The suit names MultiPlan, Aetna, Cigna, UnitedHealthcare, Humana, Elevance, Molina, Centene, and Health Care Service Corp as defendants. The lawsuit alleges these companies conspired to suppress payments to doctors and hospitals using a shared algorithm.

How the alleged scheme worked

According to the lawsuit, insurers provided payment data to MultiPlan, a healthcare cost-management company. MultiPlan then created an algorithm that was distributed back to all participating insurers.

"Instead of competing with each other, instead of making independent decisions about payments, they allegedly used the same data and the same tools, which artificially lowered payments across the entire health insurance industry," Mayes said at a news conference.

The attorney general said the algorithm produced unreasonably low reimbursement rates for medical services. The rates did not account for the complexity of cases, the qualifications of providers, or the cost of care in different communities.

MultiPlan collects a percentage of the savings it generates for insurers. The lawsuit says that fee can be as high as 12 percent.

"The lower MultiPlan's algorithms depress the prices for a healthcare provider's services, the more the client-payor saves, and the greater MultiPlan's fee," the lawsuit states.

Impact on Lake Havasu City residents

The lawsuit says the scheme primarily affects patients with preferred-provider organization (PPO) plans. These patients pay higher premiums for the flexibility to see out-of-network doctors. When those doctors are underpaid by insurers, patients often receive surprise bills for the difference.

The problem is especially acute for specialists. Dr. Andrew Carroll, a family practice physician in Chandler, told InsuranceNewsNet that some specialists in rare fields like bone cancer treatment are not part of any insurance network. Patients who need that care can be left with bills of tens of thousands of dollars.

Residents with health-maintenance organization (HMO) plans are generally less affected because those plans restrict care to in-network providers. However, HMO patients traveling out of state and seeking out-of-network care could also face surprise billing.

What the state is seeking

Arizona is asking a court for a permanent injunction against the alleged price-fixing scheme. The state also wants defendants to return money to harmed patients and providers. Mayes is seeking civil penalties and demanding the companies surrender profits from the alleged scheme.

The attorney general put total losses for Arizonans in the "billions of dollars" range. Individual patient losses could reach tens of thousands of dollars, according to Mayes.

Defendants respond

Jen O'Conner, vice president of brand marketing for MultiPlan, told The Center Square that the allegations "are without merit."

"It is not uncommon to see copycat complaints filed in matters such as these, and similar theories have previously been dismissed by courts," O'Conner said.

A spokesman for CVS, the parent company of Aetna, said the company "denies the allegations and will defend ourselves vigorously."

Political reaction

State Sen. Janae Shamp, R-Surprise, who is a nurse, told The Center Square she is "deeply concerned about any practices that undermine fair reimbursement for providers and drive up costs for patients."

Shamp also criticized Mayes for focusing on private sector defendants while ignoring fraud in state programs.

"From wasteful spending in Medicaid to unchecked fraud in state contracts and bloated bureaucracies that bleed taxpayer dollars, Arizonans deserve an Attorney General who aggressively pursues every form of fraud," Shamp said.

The lawsuit marks another major consumer protection action by Mayes' office. The case now moves to federal court where discovery will determine the specific financial impact on Arizona patients and providers.