UnitedHealth Group, Inc. (NYSE:UNH) is under renewed legal pressure as shareholders file additional lawsuits, many of which reference a federal investigation into the company's Medicare billing practices reported by the Wall Street Journal in May.
Details of the Latest Lawsuit
Steve Silverman, a UnitedHealth shareholder since 2003, filed a derivative lawsuit last week in federal court in Minnesota. In a derivative suit, a shareholder brings claims on behalf of the company against its own leadership, alleging harm to the corporation itself.
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Silverman's complaint accuses UnitedHealth's leadership, including CEO Stephen Hemsley, former CEO Andrew Witty and several board members, of:
- Breaching their fiduciary duties
- Engaging in insider trading
- Unjust enrichment
- Violating the Securities Exchange Act of 1934
The lawsuit references multiple media reports about UnitedHealth's billing practices, which culminated in the Wall Street Journal article that revealed the Department of Justice was preparing a criminal probe into the insurer's Medicare operations.
"Despite repeated warnings, UnitedHealth's reliance on inflated coding practices continued through at least 2023 and apparently into 2024," Silverman's lawsuit claimed, according to Insurance Newsnet.
"These tactics yielded billions of dollars in excessive reimbursements, a sum so large that it vastly inflated the Company's financial results and stock price," the lawsuit alleges.
UnitedHealth has not commented on the lawsuit. In response to the Wall Street Journal's reporting, the company stated it had not been notified of any DOJ investigation and defended the integrity of its Medicare Advantage program.
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Additional Shareholder Actions
Other investors have filed similar lawsuits:
- Joseph Crognale filed a complaint on June 30, naming the same 14 defendants as Silverman.
- Merry Kogut filed a derivative suit on June 14, alleging that UnitedHealth's leadership failed to disclose a Department of Labor investigation in late 2023. Kogut claims the company repurchased $7.3 billion in stock at inflated prices during this period, and that executives profited from share sales while the DOJ probe was still secret.
Kogut's lawsuit alleges that Hemsley made $211.5 million and Witty $11 million from stock sales before the DOJ investigation became public knowledge.
All three lawsuits center on UnitedHealth's Medicare billing and reporting practices. Plaintiffs argue that while the company's Medicare business has been highly profitable, it has also attracted negative attention that has hurt its stock price.
UNH in Turmoil
UnitedHealth is currently facing a series of challenges, including these lawsuits, a DOJ investigation, regulatory changes from the Trump administration and recent leadership upheaval.
UnitedHealth CEO Andrew Witty resigned in May, and the company withdrew its previous earnings forecast less than a month after issuing it.
Additionally, the Wall Street Journal released a new report on Wednesday, which claims that former UnitedHealth employees told DOJ investigators that the company encouraged the capture of certain lucrative diagnoses during patient assessments.
UnitedHealth Group is set to report its second-quarter earnings and updated guidance on July 29.
UNH shares have fallen more than 40% year-to-date, according to Benzinga Pro, and were trading at $302.10 at the time of publication on Wednesday.
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