Judge Rules $400 Million Algorithmic System Illegally Denied Thousands of People’s Medicaid Benefits

Thousands of Tennesseans were illegally denied Medicaid and other benefits due to programming and data errors in an algorithmic system the state uses to determine eligibility for low-income residents and people with disabilities, a U.S. District Court judge ruled this week.

The TennCare Connect system—built by Deloitte and other contractors for more than $400 million—is supposed to analyze income and health information to automatically determine eligibility for benefits program applicants. But in practice, the system often doesn’t load the appropriate data, assigns beneficiaries to the wrong households, and makes incorrect eligibility determinations, according to the decision from Middle District of Tennessee Judge Waverly Crenshaw Jr.

“When an enrollee is entitled to state-administered Medicaid, it should not require luck, perseverance, and zealous lawyering for him or her to receive that healthcare coverage,” Crenshaw wrote in his opinion.

The decision was a result of a class action lawsuit filed in 2020 on behalf of 35 adults and children who were denied benefits.

“This is a tremendous win for the plaintiffs and all TennCare members who have lost their vital health coverage due to TennCare’s unlawful policies and practices,” said Michele Johnson, executive director of the Tennessee Justice Center, which was one of several organizations that represented the plaintiffs. “We are proud to have stood with the courageous families that brought the case in order to protect the health coverage of many thousands of their neighbors across the state.”

The TennCare Connect system, which launched in 2019, was the result of a years-long effort by the state to modernize its Medicaid system and adhere to new eligibility criteria and streamlined enrollment requirements mandated by the Affordable Care Act. Under the new rules, states were supposed to provide a single application process that would collect residents’ information and determine which of the many complex health and disability benefits programs they were eligible for. Crenshaw found that TennCare Connect did not consider whether applicants were eligible for all available programs before it terminated their coverage.

Deloitte was a major beneficiary of the nationwide modernization effort, winning contracts to build automated eligibility systems in more than 20 states, including Tennessee and Texas. Advocacy groups have asked the Federal Trade Commission to investigate Deloitte’s practices in Texas, where they say thousands of residents are similarly being inappropriately denied life-saving benefits by the company’s faulty systems.