UnitedHealth (UNH) stock fell as much as 2% early Thursday after the insurance giant disclosed in a regulatory filing that it is facing an investigation from the Department of Justice into its Medicare billing practices.
Following news reports from the Wall Street Journal about insurance billing techniques used by UnitedHealth and other large medical insurers, the Justice Department’s healthcare fraud unit began making criminal and civil requests of the company, according to the filing.
“The Company has full confidence in its practices and is committed to working cooperatively with the Department throughout this process,” UnitedHealth said in its disclosure. “The Company has a long record of responsible conduct and effective compliance.”
The insurer also said it has “proactively launched its own initiative to conduct third party reviews of policies, practices, and associated processes and performance metrics for risk assessment coding, managed care practices, and pharmacy services.”
The Wall Street Journal’s reporting, first published in December 2024, documented several ways in which United and other major insurers have received billions of dollars in extra payments from the federal Medicare Advantage system, which allows approved private companies to provide health benefits in lieu of the federally managed Medicare system.
These include companies taking on extra, and sometimes incorrect, diagnoses to patient profiles when those rulings had not been made by the doctors actually treating the patients, allowing the insurers access to extra payouts from the Medicare program, among other tactics.
The health insurance giant has been facing a probe from the Justice Department into possible Medicare fraud since at least the summer of 2024, according to the Wall Street Journal’s reporting.
UnitedHealth has been embroiled in a series of leadership controversies and financial setbacks over the last year, with its stock falling about 50% over that period.
In May 2024, the company and several senior executives — including founder and group chairman Stephen Helmsley, and then-UnitedHealthcare CEO Brian Thompson — were sued by a Hollywood-based pension fund for insider trading in a lawsuit alleging executives sold more than $100 million in stock after the company found out it was facing an antitrust probe by the Department of Justice but before the investigation was publicly disclosed.
Seven months later, in December, Thompson was shot and killed in Manhattan the morning of the company’s annual investor meeting. Reactions across the country centered on anger toward UnitedHealthcare over its treatment of people on its insurance, including denial of claims.
When the company reported earnings a month later, the results showed revenue missed analyst estimates and the insurer’s medical care ratio — which measures how much of collected premiums are spent by the insurer on medical care — spiked. The stock dropped around 5% after the release.
Three months later, the company’s first quarter earnings report saw it slash its adjusted earnings per share guidance and sent shares down over 22%, its worst single-day performance since 1998. The next month, UnitedHealth’s CEO Andrew Witty abruptly stepped down while the company pulled its annual forecast.
Helmsley, who had previously moved to a role as group chairman, was quickly appointed as CEO to replace Witty. He was granted a pay package that includes a $1 million salary and $60 million in stock options that will vest after three years.
That same month, the company suspended its annual forecast entirely, sending shares tumbling by roughly 16%. And in a final blow, UnitedHealth accidentally leaked a memo to STAT News in June that listed internal talking points on topics including the use of AI models to deny claims.
Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.
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