UnitedHealth Group Stock Drops 5% Amid DOJ Medicare Fraud Probe

UnitedHealth Group, a prominent healthcare insurance company, is currently under criminal investigation by the U.S. Department of Justice for alleged Medicare fraud. The company's stock price dropped by 5% in pre-market trading following the news. UnitedHealth Group has denied any wrongdoing, stating that they have not received any notification from the Department of Justice regarding the alleged criminal investigation and that their Medicare Advantage plans operate with integrity.

This investigation comes at a time when UnitedHealth Group is already facing significant challenges. Earlier this week, the company's CEO, Andrew Witty, abruptly resigned, and the company suspended its 2025 financial forecast due to rising healthcare costs. This news caused the stock price to plummet by nearly 18%, reaching a four-year low. Stephen Hemsley, who led the company for over a decade until 2017, has taken over as interim CEO. The company has faced several setbacks in recent months, including the murder of its insurance division CEO, Brian Thompson, in December last year.

The Department of Justice's investigation is focused on UnitedHealth Group's Medicare Advantage business operations. While the specific nature of the potential criminal charges against the company is not yet clear, the investigation has been ongoing since at least last summer. The Department of Justice declined to comment on the investigation, and UnitedHealth Group has not provided any further details.

In a recent filing, UnitedHealth Group disclosed that it is involved in various government investigations, audits, and reviews, but did not provide any additional information. Earlier this year, the company was also the subject of a civil fraud investigation into its Medicare business, which it denied knowing about at the time. In February, U.S. Senator Chuck Grassley launched an investigation into UnitedHealth Group's Medicare billing practices, requesting detailed records of its compliance plan and other relevant documents. The company's stock price has declined by approximately 40% so far this year.

This investigation into UnitedHealth Group comes as Medicare Advantage plans face broader scrutiny. Earlier this month, the Department of Justice filed a lawsuit against three of the largest healthcare insurance companies in the U.S., alleging that they paid billions of dollars in kickbacks to brokers to steer patients to their Medicare Advantage plans. Nearly half of the 65 million beneficiaries of the U.S. Medicare program, which covers individuals aged 65 and older or those with disabilities, are enrolled in private insurance company-run Medicare Advantage plans. Insurance companies are paid a fixed rate per enrollee, but the payment amount may be higher if the enrollee has multiple health conditions. Standard Medicare coverage is managed by the government.