AI Ethics Essentials: Lawsuit Over AI Denial of Healthcare

Editor’s Note: This article was originally authored by our colleague and BARC Fellow, Douglas Laney, and was first published on Forbes.com. We are republishing it with full permission, as we believe its insights are highly relevant to the topics we cover and valuable for our community.

UnitedHealthcare has been sued for the alleged wrongful denial of extended care claims for elderly patients through the use of an artificial intelligence (AI) algorithm. This case brings the abstract concept of AI ethics into sharp, real-world focus, offering critical lessons for any organization deploying AI in high-stakes decision-making.

The class-action lawsuit claims that the company used an AI model called nH Predict, which was known to have a high error rate, to override physicians’ recommendations and prematurely terminate care for Medicare Advantage patients. The suit alleges that this was a systematic effort to cut costs, even at the expense of patient well-being.

Regardless of the lawsuit’s outcome, it serves as a powerful cautionary tale. The core issue is not just about a faulty algorithm but about the governance surrounding it. Key questions arise: Who is accountable when an AI makes a harmful decision? What level of human oversight is required for automated systems that have a direct impact on people’s lives? And how can organizations ensure that the drive for efficiency doesn’t trample ethical considerations?

For any business leader, this case highlights the urgent need for a robust AI ethics and governance framework. Without one, companies expose themselves not only to significant legal and financial risk but also to irreparable damage to their brand and public trust.

The systemic failures highlighted in this case study are a critical concern for any modern enterprise. Building true operational resilience requires a structured approach that integrates technology, strategy, and culture. For those interested in a deeper exploration of this topic, our BARC+ subscription offers unrestricted access to our full research library. A relevant starting point is our enhanced analysis of the lessons learned from major operational crises.