Rhode Island Medicaid Insurer Sues State for $100 Million in Unpaid Claims

Neighborhood Health Plan of Rhode Island is suing the state for $100 million in unpaid Medicaid reimbursements, according to a 20-page complaint filed in Providence County Superior Court.

The lawsuit, first reported by The Providence Journal, alleges that the state has failed to repay the nonprofit insurer for the rising costs of covering medically needy residents. Some of these disputed payments are more than a decade old, stemming from contract disputes that began as far back as 2013.

The Rhode Island Executive Office of Health and Human Services and its interim director, Kristen Sousa, are named as defendants in the legal action. Neighborhood contends that the state breached its obligations under two sets of contracts covering the period from 2013 to 2025.

“Neighborhood relied on the State’s promises,” the complaint says. “It continued to cover and pay for these members’ care without waiting for the State’s systems to catch up, executed amendments to the Contracts, and continued to work with [the health and human services office] to reconcile and resolve the amounts owed rather than pursue other remedies. The State has not kept its promises.”

Systemic failures in RIBridges

The dispute centers on how the state manages its managed care obligations. As a managed care organization, Neighborhood oversees services for roughly 60% of the 250,000 Rhode Islanders who qualify for Medicaid, including children, people with disabilities, and low-income residents.

Under the current arrangement, the state pays Neighborhood a fixed, upfront rate per person. However, because medical needs change—particularly for those in nursing homes or long-term care—the state is required to track actual costs and reimburse the insurer for the difference when expenses exceed that initial payment.

The insurer claims the state’s inability to fulfill these reimbursements is rooted in the botched rollout of its online public benefits system, originally known as UHIP and later renamed RIBridges. The system has been plagued by difficulties verifying eligibility and processing applications.

Before the digital system was implemented, the state averaged 90 days to process long-term care applications. Following the transition, that timeline ballooned to between 12 and 18 months, a delay that persisted through at least 2019, according to the court filing.

These administrative bottlenecks have created a massive gap between the actual cost of care provided to vulnerable residents and the payments actually issued by the state.

A decade of unresolved debt

The complaint outlines a timeline of underpayment spanning 13 years. The financial friction began with a five-year long-term care contract in 2013 and continued through a second agreement for members eligible for both Medicare and Medicaid, which ran from 2016 to 2025.

The state was not unaware of these discrepancies. The lawsuit points to an actuarial certification in 2018, written into Amendment No. 9 of the Unity Contract, where the state admitted it

“has identified and is working to resolve reconciliation issues between its eligibility and enrollment systems.”

the complaint states.

Despite that admission, the insurer alleges the issue remains unresolved. “Eight years later, the State still has not reconciled the payments,” the filing says.

Beyond the $100 million in direct reimbursements, Neighborhood claims it has lost millions more in administrative costs. The insurer says it has had to dedicate significant staff resources to manually building member-level files and tracking underpayments to compensate for the state’s record-keeping errors.

Contract Period	Focus Area	Status
2013–2018	Long-term care	Alleged underpayment
2016–2025	Dual Medicare-Medicaid members	Alleged underpayment

Kerri White, a spokesperson for the state’s health and human services agency, declined to comment on the litigation. Gail Leach Carvelli, a spokesperson for Neighborhood, also declined to comment when asked about the timing of the lawsuit, which comes 10 months after the second contract ended.

The insurer is asking a judge to order the state to pay the owed amount plus damages. Alternatively, Neighborhood has requested the appointment of a special master or an independent auditor to review the records and determine the exact amount required for reconciliation.