$524 Million Verdict Against UnitedHealth Subsidiaries Over a Hepatitis C Outbreak

In early 2008, the Southern Nevada Health District sent letters to more than 50,000 people, warning them they may have been exposed to hepatitis C, HIV, and hepatitis B during procedures at endoscopy clinics owned by Dr. Dipak Desai. Investigators traced the infections to the reuse of large anesthetic vials across multiple patients and inadequate sterilization of equipment. Nine cases were definitively linked to procedures performed at Desai's facilities in 2007. Another 105 Desai patients tested positive for hepatitis C, though those cases could not be conclusively tied to the clinics. Dr. Desai later surrendered his medical license, declared bankruptcy, and faced separate criminal proceedings in both state and federal court.

Among those infected were Bonnie and Carl Brunson, a Las Vegas couple who had undergone procedures at one of Desai's clinics. They retained Robert Eglet and his firm to pursue claims not against Dr. Desai alone, but against the health plan that had granted him network access. The theory was direct: Health Plan of Nevada, a UnitedHealth Group subsidiary, had dropped Desai from its provider network in 1992 over quality-of-care concerns. It reinstated him in 1997, drawn by his high patient volume and willingness to accept lower reimbursement rates. The plaintiffs argued that the company's credentialing and oversight failures were the foreseeable cause of the outbreak.

Trial proceeded in two phases. In the first, the jury found Health Plan of Nevada and its former parent Sierra Health Services liable and awarded $24 million in compensatory damages: $12 million to Bonnie Brunson, $3 million to Carl Brunson, and $9 million to a third plaintiff, Helen Meyer. In the second phase, the jury returned $500 million in punitive damages split between the two defendants, $270 million against Health Plan of Nevada and $230 million against Sierra Health Services. The combined $524 million award was reported at the time as the largest U.S. civil verdict of 2013.

After the verdict, Eglet said the jury 'sent a strong message to every HMO and health insurance company in this country.' He argued in post-verdict interviews that insurers could not continually pressure physicians on reimbursement rates and expect no consequences for patient safety. The defendants disputed the punitive award as constitutionally excessive and announced plans to challenge it on appeal. Before those challenges were resolved, the parties reached a confidential settlement in November 2014 covering the Brunson case and other pending suits brought by individuals allegedly infected through Desai's clinics. UnitedHealth Group disclosed in its 2014 annual report that the settlement amount was not material to its financial results.