TMG Health Files Suit Against UnitedHealth Group
KING OF PRUSSIA, Pa., Jan. 12 /PRNewswire/ — TMG Health, Inc., the leading provider of Business Process Outsourcing (BPO) services for the healthcare industry, today announced that it has filed a lawsuit with the United States District Court for the Eastern District of Pennsylvania against UnitedHealth Group, Inc.
The lawsuit alleges that in April 2005, TMG entered into a contract with Pacificare to provide administrative services in connection with Pacificare’s plan to offer its Medicare Advantage private fee for service product beginning on September 1, 2005.
In July 2005, United announced it was negotiating to purchase Pacificare. TMG alleges that it was assured that United had no intention of terminating the contract with TMG after the merger, and that therefore TMG continued to undertake significant investments in personnel and facilities to service the contract, and accomplish the national roll-out of Pacificare’s Medicare Advantage product. TMG’s complaint alleges, however, that soon after the regulatory approval of United’s acquisition of Pacificare, United took steps to cancel the contract, so that it could eliminate the outsourcing of the services provided.
TMG’s complaint, among other things, alleges that United entered into a valid, binding and enforceable settlement agreement in November of 2006, to pay TMG over $5.2 million to settle all disputes arising out of the Pacificare contract and for the parties to exchange mutual general releases. TMG claims that United later reneged on that agreement, amidst a significant management shake-up within United.
TMG’s complaint alleges, alternatively, that United’s assurances that there was no plan or intention to terminate the contract between TMG and Pacificare were false and untrue, that defendant United was the source of these misrepresentations, that United knew or should have known that these misrepresentations would be communicated to TMG, and that TMG would rely upon them in committing extensive resources, making expenditures, and continuing to perform under the contract. TMG is seeking in excess of $25 million in compensation for this misconduct, if its settlement agreement is not enforced.
“United’s actions have left us little choice but to resort to litigation,” said Jack Tighe, president and CEO of TMG Health. “Our company is proud of the fact that we initiated, administered and developed the nationwide roll-out of Pacificare’s Medicare Advantage private fee for service product, which rapidly grew to in excess of $1.0 billion in annual revenue during the eight months of our administration and now generates about $2 billion in annual revenue for United. Unfortunately, our extraordinary efforts and good faith were rewarded with unfair, heavy-handed negotiating tactics by United,” he added.
About TMG Health
TMG Health is the leading provider of Business Process Outsourcing (BPO) services to the Medicare, Medicaid and retiree health plan markets. TMG provides operational outsourcing solutions and information systems for health plans, providers, and employers with large retiree groups. TMG is the most experienced vendor in the market and has the broadest solution set serving over 40 health plans in all 50 states. Benefits of partnering with TMG Health include advanced and innovative systems, rapid implementations, reduced capital costs, fixed operational costs and proven regulatory compliance. TMG Health is a privately held corporation located in suburban Philadelphia with National Operations Centers located in Northeastern Pennsylvania. For more information, please visit http://www.tmghealth.com/.
CONTACT: Cass Oryl 215.564.3200 x16 coryl@braithwaitepr.com
TMG Health, Inc.
CONTACT: Cass Oryl, +1-215-564-3200 x16, or coryl@braithwaitepr.com, forTMG Health, Inc.
Web site: http://www.tmghealth.com/