UnitedHealth Group sues tech giant Broadcom over ‘exorbitant’ price hikes

In a battle of corporate behemoths, an arm of UnitedHealth Group claims it will lose access to critical software unless it capitulates to “exorbitant” price increases demanded by vendor Broadcom Inc.

United Healthcare Services sued Broadcom on Wednesday over software that is “ubiquitous” throughout the Eden Prairie-based health insurer’s computer systems.

The UnitedHealth subsidiary, which provides the company’s administrative services, is asking a federal court for an injunction to stop Silicon Valley-based Broadcom from terminating its contract and cutting off service on April 18.

Broadcom is perhaps best known for its broad range of computer hardware products, but since its 2018 purchase of CA Inc. the company has expanded aggressively into software for the corporate market.

United Healthcare Services began licensing CA’s mainframe computer software and maintenance support services in 2006. The company claims in its heavily redacted lawsuit that Broadcom is supposed to renew those licenses and services with limited price increases.

But this year, UnitedHealth alleges, Broadcom refused to honor its contractual commitments.

“Instead, Broadcom is attempting to coerce United into paying hundreds of millions of dollars more for access to CA software,” according to the suit filed in U.S. District Court for Minnesota.

Simply switching to another software vendor isn’t an option.

“United has incorporated the CA Software into its operations so extensively that transitioning to an alternative mainframe software and associated support services would take years,” the lawsuit said.

Broadcom did not respond to requests for comment.

UnitedHealth’s complaint is the second breach of contract suit against Broadcom over corporate software pricing in the past eight months.

In August, Dallas-based telecom and internet services provider AT&T alleged that Broadcom tried to raise prices on its VMware software by 1,050%.

Like UnitedHealth, AT&T claimed that it had the right to renew its Broadcom software licensing contract without new, large price hikes. Broadcom and AT&T reached a confidential settlement in November.

Broadcom’s 2023 acquisition of VMware has caused an uproar over large price hikes aimed at corporate customers, according to tech press reports. UnitedHealth is still negotiating with Broadcom over its use of VMware; its suit covers only its CA software contracts.

UnitedHealth filed the suit after negotiations with Broadcom failed.

Broadcom’s “repudiation” of its contract provisions “is a naked and unlawful attempt by Broadcom to leverage its growing power in the software industry,” UnitedHealth said in the suit.

UnitedHealth, which owns the nation’s largest health insurer, also has been accused of abusing market power, though the company maintains it has not.

The U.S. Justice Department and four states sued in November to block UnitedHealth Group’s proposed $3.3 billion acquisition of Amedisys, a Louisiana-based home health company that would further UnitedHealth’s push into the home care and hospice markets.

The complaint marks the second time in less than three years that the DOJ has tried to stop UnitedHealth from completing deals to bolster its fast-growing Optum division. The government unsuccessfully sued to block Optum’s acquisition of Change Healthcare in 2022.

At a U.S. Senate committee hearing last spring, UnitedHealth’s size was a recurring — and bipartisan — theme in lawmakers’ questioning. The hearing probed the massive 2024 cyberattack at Change Healthcare, which caused nationwide claims processing chaos for health care providers.

Sen. Bill Cassidy, R-Louisiana, asked if UnitedHealth Group’s health care dominance created “a special [cybersecurity] vulnerability,” while Sen. Elizabeth Warren, D-Mass., called the Eden Prairie-based business “a monopoly on steroids.”

The impasse between the two companies — both among the top 20 U.S. companies as measured by the value of their stock — led to direct negotiations in March between Broadcom CEO Hock Tan and UnitedHealth Chief Technology Officer Sandeep Dadlani.

UnitedHealth in the lawsuit said, with negotiations failing, that without an injunction, there will be “widespread consequences for the millions of parties who rely on United’s operations and services on a daily basis.”