updated 2/13/2008 1:31:12 PM ET 2008-02-13T18:31:12

New York Attorney General Andrew Cuomo on Wednesday said he will sue Ingenix, its parent UnitedHealth Group and three subsidiaries, saying the insurers are defrauding consumers by manipulating how much doctors and hospitals are reimbursed.

Cuomo also sent 16 subpoenas to insurance companies including Aetna Inc., Cigna Corp. and Empire Blue Cross Blue Shield, the state's largest health insurer.

The case contends that insurance companies are underpaying consumers who use out-of-plan physicians.

No company or individual has been charged with wrongdoing.

Cuomo said he wants to end what he claims is a fraudulent practice and also to seek restitution for customers.

"I believe it involves a fraud in the hundreds of millions of dollars and affects thousands and thousands of families," Cuomo said. "That's what this investigation is about today."

The practice, which includes conflicts of interest, have gone on for nearly a decade, he said.

There was no immediate comment from United Health and Ingenix.

Cuomo's investigation focused on the "reasonable and customary" rate that UnitedHealth used, but which investigators claim was kept artificially low, resulting in profit for the company and unnecessary cost for consumers.

"When insurers like United create convoluted and dishonest systems for determining the rate of reimbursement, real people get stuck with excessive bills and are less likely to seek the care they need," Cuomo said.

Investigators claim UnitedHealth manipulated data and even lied about reimbursement rates, which it said were based on national research.

"UnitedHealth Group and other health insurers have shortchanged tens of millions of patients who agreed to pay higher premiums for access to their choice of physicians from outside a health insurer's network," Dr. Nancy H. Nielsen, of the American Medical Association, said in a prepared statement. "At issue could be billions of dollars that health insurers have pocketed by paying treatment costs at less than what was promised."

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