The US Department of Justice (DOJ) is looking into UnitedHealth Group concerning potential Medicare fraud.
This story was initially reported by The Wall Street Journal (WSJ) on Wednesday.
UnitedHealth stated that they hadn’t received any official notifications from the DOJ regarding the “presumably reported criminal investigations” and emphasized their support for “the integrity of the Medicare Advantage program.”
The DOJ’s Healthcare Fuller Unit is reportedly overseeing a criminal inquiry into the company’s business practices related to Medicare Advantage, according to sources familiar with the matter.
While the specific details of the potential criminal allegations against UnitedHealth remain unclear, the investigation has been ongoing since at least last summer, as reported.
A spokesperson for the DOJ declined to provide comments to the WSJ regarding this new investigation. The department also didn’t respond promptly to a request for comments from Reuters.
In a routine submission last week, UnitedHealth mentioned they were participating in “various government investigations, audits and reviews,” but didn’t elaborate.
This investigation comes amid increased scrutiny of the Medicare Advantage program itself. This program allows private companies, approved by Medicare, to offer plans that supplement traditional Medicare for individuals over 65, covering services beyond what the government provides, like dental and vision care.
In February, the WSJ reported a civil investigation into UnitedHealth’s dealings within Medicare, although the company claimed they were unaware of any new inquiries.
During that same month, Iowa Senator Chuck Grassley initiated an investigation into the Medicare claims practices of UnitedHealth, requesting specific records related to the company’s compliance programs.
Earlier this month, the DOJ filed a lawsuit against three major health insurance providers, accusing them of paying brokers excessive kickbacks to direct patients to their Medicare Advantage Plans.
Nearly half of the 65 million individuals eligible for Medicare, which serves seniors and disabled persons in the U.S., are enrolled in Medicare Advantage plans managed by private insurers.
These insurance companies receive a standard fee for each patient, with the possibility of higher payments for those with multiple health issues. Traditional Medicare coverage is regulated by the government.
Brewing confusion
For months, health insurance companies have been facing increasing pressure. UnitedHealth Group’s CEO, Andrew Witty, unexpectedly resigned on Tuesday, halting the company’s financial forecasts for 2025 amid rising healthcare costs. This news led to an 18% decline in stock prices, marking a four-year low.
Stephen Hemsley, who previously led the company for over ten years until 2017, has resumed leadership following several dramatic events, including the December murder of the CEO of the insurance unit, Brian Thompson, bringing UnitedHealth into sharper public focus.
The revelation of the DOJ investigation caused UnitedHealth Group shares to drop 18% to a five-year low on Thursday.
“The stocks are already struggling, and now this added uncertainty is just compounding the issues,” remarked James Harlow, senior vice president of Novare Capital Management, a holder of UnitedHealth shares, in a statement to Reuters.
If losses continue, UnitedHealth could become the worst-performing stock on the S&P 500 Index over two of the past three days.
The stock’s recent decline has wiped approximately $300 million off UnitedHealth’s market value. After reaching peak numbers in November, it has since lost more than half of its worth.
