TriWest Healthcare Alliance Corp. said it will challenge the Defense Department's decision to award UnitedHealth Group Inc. (UNH) a major military healthcare contract, calling the government's process "flawed and unfair."
The contract, worth up to $20.5 billion over nearly six years, has belonged to TriWest for 16 years.
The new contract, which covers about 2.9 million beneficiaries in Tricare's 21-state West Region, would replace TriWest, a nonprofit that has served the Tricare region for many years, starting in April 2013.
"Due to what we discovered in the government's debriefing, TriWest will exercise its legal right to challenge this decision, with the goal of winning back the contract," TriWest President and Chief Executive David J. McIntyre said.
A UnitedHealth spokesman was not immediately available for comment after business hours.
UnitedHealth had protested and is now taking a contract TriWest won in 2009. Its win in the West offsets a loss in another Tricare territory to rival Humana Inc. (HUM).
TriWest said it will contest UnitedHealth's role in the contract because the provider has less experience serving military patients.
The nonprofit healthcare alliance also said its price came in significantly below UnitedHealth's, adding the disruption caused by switching contractors could cost taxpayers hundreds of millions of dollars.
UnitedHealth shares were recently off fractionally, at $54.93 after hours.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com