Health-care giant is to blame for NM’s behavioral health shakeup, lawsuit alleges


Editor’s note: Read the full, 36-page lawsuit here.

Many have blamed the administration of Gov. Susana Martinez for the 2013 shake-up of the state’s behavioral health system that disrupted services and put longtime New Mexico organizations out of business.

La Frontera

Heath Haussamen /

La Frontera’s lawsuit, according to the Las Cruces Sun-News, states that United Healthcare covered up its inability to fulfill its contractual obligations to the State of New Mexico by blaming the 15 providers whose funding was later frozen.

A new lawsuit places blame elsewhere.

La Frontera, an Arizona company that provided services in Southern New Mexico for a time after the 2013 shake-up, alleges that United Healthcare and its subsidiary, OptumHealth New Mexico, “engineered a cover-up of its own failings by accusing 15 community providers across New Mexico of fraud,” the Las Cruces Sun-News is reporting.

La Frontera is accusing United “of fraud and misrepresentation that led to La Frontera losing millions of dollars while providing behavioral health-services in southern New Mexico,” the newspaper wrote.

In mid-2013, the state’s Human Services Department chose to freeze funding to 15 providers who were responsible for services for tens of thousands of New Mexicans suffering from depression, suicidal thoughts and other conditions. At the time, OptumHealth oversaw the reimbursement of hundreds of millions of Medicaid dollars to those health providers for the State of New Mexico.

The so-called “Medicaid freeze” sparked a chaotic transition. There were disruptions in service to patients. Many New Mexico-based companies and nonprofits went out of business and were replaced by Arizona companies, including La Frontera.

Some of the Arizona providers — La Frontera among them — later pulled out of New Mexico, sparking new transitions. The local organization La Clinica de Familia, which took over services in Doña Ana County last year, has continued to struggle.

Meanwhile, the AG has thus far cleared 13 of the 15 original providers of criminal wrongdoing.


We’ve long known that OptumHealth, not the Martinez Administration, first approached La Frontera about taking over services in New Mexico. La Frontera CEO Dan Ranieri told me more than two years ago OptumHealth approached his company in late 2012, which Ranieri said made sense because the two organizations worked together in Arizona.

“They said ‘We may have some problems. We can’t tell you much about it, but if we need help would you be willing to consider that?'” Ranieri told me in 2013. That led to preliminary discussions with the state’s Human Services Department, which had already contracted with another private company to investigate the 15 New Mexico health providers.

Then in mid-2013 came the Medicaid freeze. With the state’s behavioral health system “about to collapse,” in the words of La Frontera’s lawsuit, United Healthcare was focused on the fact that OptumHealth’s conract with the state was winding down — and having an “exit strategy” to meet its “company revenue goals,” the Sun-News reported.

United Health Group, Inc., the parent company of United Healthcare and OptumHealth, is No. 14 on the Fortune 500.

La Frontera is accusing United of having defective systems for processing claims. The lawsuit, according to the Sun-News, states that United covered up its inability to fulfill its contractual obligations to the State of New Mexico by blaming the 15 providers whose funding the state later froze.

The Sun-News quoted a spokeswoman for Optum as saying the company couldn’t comment on the recent filing.

La Frontera is seeking reimbursement of millions of dollars in addition to punitive damages and legal fees, the Sun-News reported.

Comments are closed.