• UnitedHealth Group investigation focuses on alleged Medicare Advantage fraud, raising serious legal and financial concerns.
• Multiple lawsuits accuse UHG of using AI to deny claims and misleading investors after CEO Brian Thompson’s death.
• The DOJ also challenges the Amedisys merger, citing risks to competition in the home health market.

The U.S. Department of Justice has launched a criminal investigation into UnitedHealth Group. The focus is on the company’s Medicare Advantage business. The Wall Street Journal first reported the news, citing unnamed sources. These sources say the DOJ is examining UnitedHealth’s billing and business practices. So far, the exact charges remain unclear. But the report sent shockwaves through the healthcare industry.

UnitedHealth Stock Falls After News Breaks

The market reacted immediately to the investigation news. UnitedHealth shares dropped by 16% the same day. That marked a five-year low for the company. Investors now worry about deeper problems inside UnitedHealth’s Medicare Advantage program. The drop shows how sensitive the market is to legal risks in the healthcare space.

Company Claims It Knows Nothing About the Probe

UnitedHealth denies any knowledge of a DOJ investigation. A company spokesperson said they haven’t received any notice from the government. The spokesperson also criticized The Wall Street Journal’s reporting. They called the article “deeply irresponsible.” UnitedHealth continues to defend the integrity of its Medicare Advantage program. The company says it follows all legal guidelines and rejects the idea of fraud.

Civil Medicare Investigation Came Earlier This Year

This isn’t the first time UnitedHealth has faced scrutiny. In February, the Wall Street Journal reported a civil investigation. That probe also involved Medicare billing. UnitedHealth dismissed the article back then. It said it wasn’t aware of any new investigations. But court documents later revealed more information.

Email Confirms Government Asked Questions About Billing

A March 11 email from a UnitedHealth lawyer provided new details. The email appeared in a lawsuit filed by an investor. It warned a former employee that the government was asking about billing practices at Optum. Optum is UnitedHealth’s health services branch. The lawyer described the civil probe as being in the “early stages.” The email also advised the employee to prepare for possible contact from investigators.

CEO Will Step Down Amid Ongoing Legal Problems

UnitedHealth will also see a leadership change this year. CEO Andrew Witty plans to step down in October. Stephen J. Hemsley will take over. Hemsley served as CEO from 2006 to 2017. The leadership shake-up comes at a tense time. Legal pressure continues to build, and the company faces public criticism.

Lawsuit Claims AI Wrongfully Denied Medicare Claims

UnitedHealth is fighting more than one legal battle. A class-action lawsuit accuses the company of using artificial intelligence to deny medical claims. The lawsuit says UHG, UnitedHealthcare, and naviHealth used AI instead of doctors to review claims. The result, according to the lawsuit, was a high number of rejections. Patients suffered from delayed care. In some cases, the delays may have caused death. A judge dismissed five out of seven claims but allowed the lawsuit to continue.

DOJ Tries to Block UnitedHealth and Amedisys Merger

In another case, the DOJ is suing to stop UnitedHealth from buying Amedisys. The government says the deal would harm competition in the home health industry. Both companies operate in the same markets. If the merger goes through, UnitedHealth could control 30% or more of the home health and hospice markets in eight states. The DOJ also warned the merger would give too much power to just two insurers—UnitedHealthcare and Humana. Humana already owns Kindred, a major home health provider.

Price-Fixing Lawsuit Targets Major Insurers

UnitedHealth is also named in a separate lawsuit. This one involves a price-fixing scheme. Orthopedic providers filed the suit in November. It names Elevance, UnitedHealthcare, and other insurance firms. The lawsuit claims the companies worked with MultiPlan to lower payments to out-of-network doctors. The goal, they say, was to reduce costs at the expense of fair doctor pay.

Lawsuit Alleges Misleading Investors After CEO’s Death

Another lawsuit adds to UnitedHealth’s troubles. This one claims the company misled investors after the murder of CEO Brian Thompson. Thompson was killed in December during an investor event in New York. The lawsuit says UnitedHealth failed to update its financial guidance after the tragedy. It claims the company knew the loss of its CEO would affect operations. Still, UnitedHealth repeated its original financial outlook. Investors say this caused financial harm and misled shareholders. They are seeking class-action status.

UnitedHealth Lowers Earnings Forecast After High Costs

In April, UnitedHealth cut its 2024 earnings outlook. The company cited higher-than-expected costs in its Medicare Advantage program. More patients used outpatient services and visited doctors than expected. UnitedHealth now expects net earnings of $24.65 to $25.15 per share. That’s down from earlier predictions of up to $30. The company also lowered adjusted earnings to $26 to $26.50 per share.

Optum Member Changes Add to Financial Pressure

UnitedHealth also blamed changes in Optum Health member profiles for the financial dip. Some health plans exited markets, and fewer members engaged with their benefits. This affected how much the company could claim in reimbursements. UnitedHealth says this shift will have a lasting impact throughout 2024.