Insurer Faces Class Action Over AI Care Denials

A major insurer is facing a proposed class action lawsuit alleging the company used artificial intelligence tools to deny coverage for medically necessary care. The lawsuit claims the company bypassed medical professionals in favor of AI-driven decisions, reflecting a broader trend of AI-related negligence and privacy incidents.

Stanford University detailed this surge in AI-related privacy incidents in its Artificial Intelligence Index Report 2025. The legal challenges mirror previous liabilities from the pixel era of unauthorized data tracking, while U.S. regulators have already taken action in the health sector, such as the Federal Trade Commission fining GoodRx $1.5 million for mishandling health data.

Global regulatory pressure is intensifying, particularly through the EU AI Act. The act classifies AI used in healthcare and recruitment as high risk, with potential fines for bias or transparency violations reaching 7% of a company's global annual turnover or €35 million. While some organizations like the Mayo Clinic have adopted rigorous governance and validation tools to ensure accountability, others face significant legal and reputational risks due to reckless deployment.