The University of Maryland Medical System filed a lawsuit Monday in Baltimore against one of the private companies that manages Medicaid claims for the state, seeking more than $15 million for medical care it says was wrongly denied.

The suit against Maryland Physicians Care MCO was born out of the care the hospital system provided for 15,000 lower-income patients who use Medicaid. Most of those patients accumulated bills in the emergency departments of the nonprofit health care system’s 11 hospitals around the state. They also include people who were infected with COVID-19 and premature babies treated in the neonatal intensive care units.

In a statement, Dr. Mohan Suntha, president and CEO of the system, said care was provided for “premature babies with special needs and patients recovering from heart attacks, gunshot wounds, strokes and other life-threatening conditions” but the privately-run Medicaid provider rejected the health system’s bills for those services.

Maryland Physicians Care was founded in 1996 and is owned by other hospital systems in the state, including Ascension Saint Agnes, Holy Cross Health, Meritus Health, and UPMC Western Maryland.

The company did not immediately respond to a request for comment.

The suit filed in state circuit court claims Maryland Physicians Care systematically denied claims in a way that violates federal and state laws as well as its contract with the health system.

The University of Maryland health system is now asking the court to order the management company to pay the claims and change its practices that limit reimbursement for medical services.

The lawsuit says the health system was compelled to bring the lawsuit because the management company “has engaged in longstanding, ongoing, deliberate, and systematic practices of denying timely and complete payment for covered medical services provided to MPC Members by UMMS.”

This lawsuit is somewhat unusual in Maryland. To collect on unpaid bills, hospitals around the country have historically gone after patients in court, not insurers or the management companies that handle claims.

Maryland has added legal protections for patients over the years, and those with the lowest incomes are largely entitled to free and reduced-cost care for out-of-pocket costs. State lawmakers have even required hospitals to repay patients they wrongly charged.

Hospitals also largely stopped suing patients directly over their debts several years ago, a previous Banner investigation found.

Experts had said even with judgments collecting was difficult, and the suits often brought bad publicity. Further, hospitals in Maryland are entitled to charge all hospital patients higher rates to help cover their unpaid bills.

The $15 million the lawsuit is now seeking is a relatively small sum compared to the billions the hospitals take in from patient care a year. The University of Maryland Medical System hospitals provide about a quarter of all hospital care in the state.

But the lawsuit says the management company has been unjustly enriching itself at the expense of the hospitals. The money comes from taxpayers who fund the Medicaid insurance program. The state pays the company $1 billion a year to manage the enrollees’ health care and gets to keep savings, the suit says.

The suit said it largely does this in the emergency room by rejecting claims unjustly. According to the suit, the standard is to allow claims for care that a patient believes at the time to be an emergency, like chest pain, even if it turns out to be indigestion.

Since the Maryland health system joined the management company’s hospital network in 2018, the suit says, the company has rejected claims at a far higher rate than any of the state’s eight other management companies.

It said 99% of complex emergency claims were denied, along with 79% of emergency behavioral health claims and 70% of COVID-related claims. The suit did not report rejection rates of other management companies.