(Bloomberg) -- A UnitedHealth Group Inc. unit improperly denied payment for emergency room visits and urine drug tests, the US Department of Labor alleged in a lawsuit.

Thousands of people were improperly denied benefits under plans administered by UMR Inc., a UnitedHealth subsidiary that manages health plans for employers, according to the suit filed Monday. 

The case represents an unusual step for the department, which oversees health benefit plans that companies fund on their own, rather than through an insurer. About two-thirds of US workers who get health benefits are covered by such plans, according to a survey from health research group KFF. The plans, mainly offered by large US employers, are exempt from state insurance regulation, and federal officials rarely intervene.

An investigation found that UMR denied payment for “medically necessary claims,” Ruben Chapa, regional director for the Employee Benefits Security Administration in Chicago, said in an email. The department wants to ensure that “participants in employee benefit plans receive the services that they have contracted for to meet their and their families’ medical needs.”

A UnitedHealth representative said the complaint “deals with practices that are no longer in effect” and it will work with the Department of Labor to “discuss any concerns” about the matter. The shares were little changed as of 3:07 p.m. in New York. 

‘Simply Denied’

UMR “simply denied” all urine drug screen claims from August 2015 to August 2018, without regard for whether they were medically necessary, according to the suit filed in federal court in the Western District of Wisconsin.

Regarding emergency visits, UMR’s policies “failed to consider what a person with average knowledge of health and medicine would think at the time the symptoms present themselves,” according to the Labor Department’s lawsuit. Instead, the company relied on the diagnosis after treatment “to deny ER claims,” it said.

The unit’s handling of claims violates the Employee Retirement Income Security Act, known as ERISA, which governs self-funded health plans, according to the suit. The department asked the court to order UMR to change its procedures for handling emergency visit and urine drug test claims, and re-adjudicate those denied since 2015.

The case is Julie A. Su, Acting Secretary of Labor, US Department of Labor, vs. UMR, Inc., 3:23-cv-00513, in the US District Court for the Western District of Wisconsin.

(Updates with UnitedHealth Group comment in fifth paragraph)

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