TMG Health Inc., one of the United States' biggest providers of business process outsourcing services for the healthcare industry, has filed a lawsuit with the United States District Court for the Eastern District of Pennsylvania against UnitedHealth Group Inc. In April 2005, TMG says it entered into a contract with Pacificare to provide administrative services in connection with Pacificare's plan to offer its Medicare Advantage product in September of that year.

In July 2005, United announced it was negotiating to purchase Pacificare. TMG alleges that it was assured that United had no intention of terminating the contract with TMG after the merger. But soon after United's acquisition of Pacificare was approved, TMG says, United took steps to cancel the contract. During the regulatory approval process, TMG had continued to invest in personnel and facilities to service the Pacificare contract.

TMG says that United agreed in November of 2006 to pay TMG more than $5.2 million to settle all disputes arising out of the Pacificare contract and for the parties to exchange mutual general releases. TMG claims that United later reneged on that agreement.

TMG is seeking more than $25 million in compensation for the alleged misconduct if the court does not enforce its settlement agreement.