UnitedHealth Stock Plunges Amid DOJ Medicare Fraud Probe

• UnitedHealth Group (UNH) shares dropped over 15% to $261.40, hitting an intraday low of $248.88, after a Wall Street Journal report revealed a DOJ criminal investigation into potential Medicare fraud involving manipulated billing practices, with shares down 42% month-over-month.
• The company faces multiple probes, including a civil investigation into its Optum division’s coding practices and a whistleblower lawsuit alleging $2 billion in unsupported diagnoses, while dismissing claims of wrongdoing and citing superior Medicare Advantage outcomes.
• UnitedHealth’s challenges are compounded by the recent CEO transition, a cyberattack disrupting provider payments, and the killing of UnitedHealthcare CEO Brian Thompson, contributing to investor concerns and market volatility.

UnitedHealth Group (UNH) is facing intense pressure as its shares plummeted more than 15% to $261.40 in midday trading on Thursday, after hitting an intraday low of $248.88, triggered by a Wall Street Journal report detailing a previously undisclosed criminal investigation by the Department of Justice into potential Medicare fraud. The probe, initiated last year and led by New York-based prosecutors in the DOJ’s healthcare fraud unit, is examining whether UnitedHealth manipulated Medicare Advantage billing practices by inflating patient risk scores to improperly boost federal payments. This revelation, which the company claims it was not notified about, has compounded existing challenges, with UNH shares falling 17% after the opening bell and declining over 42% month-over-month, reflecting investor concerns about the insurer’s mounting legal and operational woes.

The criminal investigation adds to a series of setbacks for UnitedHealth, which has been under scrutiny for civil and antitrust issues, including a February report by the Wall Street Journal about a civil investigation into potentially fraudulent billing practices at its Optum division. An internal March 11 email from a UnitedHealth attorney, later disclosed in a shareholder lawsuit, confirmed that the government had inquired about Optum’s coding practices, though it described the inquiry as early-stage. The company dismissed the civil probe report as “misinformation” at the time and continues to reject allegations of submitting inflated or unsupported diagnoses, asserting that its Medicare Advantage program delivers better outcomes and lower costs than traditional Medicare. Additionally, a civil whistleblower lawsuit alleging $2 billion in unsupported diagnoses is ongoing, despite a court-appointed special master’s recommendation to dismiss it for insufficient evidence, a finding UnitedHealth cites as vindication, though the DOJ has pushed back against dismissal.

UnitedHealth’s challenges extend beyond legal probes. The abrupt resignation of CEO Andrew Witty on Monday, followed by the appointment of former CEO Stephen Hemsley, coincided with the company suspending its 2025 financial forecast due to rising medical costs, further eroding investor confidence. The insurer has also been reeling from a cyberattack last year that disrupted payments to healthcare providers nationwide, impacting its Change Healthcare unit, and the high-profile killing of UnitedHealthcare CEO Brian Thompson in December, allegedly by Luigi Mangione in Manhattan. These events have fueled public and shareholder discontent, with a recent lawsuit claiming UnitedHealth misled investors by concealing the business impact of Thompson’s death and related backlash against its claims denial practices.

The DOJ’s focus on Medicare Advantage reflects broader industry scrutiny, as insurers are incentivized to report extensive patient diagnoses to secure higher payments for sicker patients, a practice that has drawn accusations of upcoding. UnitedHealth, the largest provider of Medicare Advantage plans covering over 7.8 million people, has faced allegations of exploiting this system, with prior Wall Street Journal analyses suggesting billions in payments tied to questionable diagnoses. The company’s latest SEC filing acknowledges ongoing governmental audits but omits specific mention of the criminal, civil, or antitrust probes, highlighting a pattern of limited disclosure. As UnitedHealth navigates this turbulent period, the convergence of legal, operational, and reputational challenges threatens its market position, with the stock’s sharp decline signaling investor fears about the potential financial and regulatory fallout from the DOJ’s intensifying scrutiny.

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