UnitedHealth Group Stock Plummets on DOJ Investigation Report

UnitedHealth Group (UNH) shares tumbled more than 10% in premarket trading on Friday, February 21, 2025, following a report that the U.S. Department of Justice (DOJ) has launched an investigation into the company's Medicare billing practices. The Wall Street Journal reported that the DOJ is probing whether UnitedHealth tends to over-diagnose conditions to earn larger Medicare Advantage payouts.

The investigation comes after a series of articles from the newspaper last year, which reported that Medicare paid UnitedHealth billions of dollars for questionable diagnoses. Doctors told The Wall Street Journal that they were trained by UnitedHealth to document revenue-generating conditions, some of which they found "obscure or irrelevant." Furthermore, a July report from The Wall Street Journal found that UnitedHealth added diagnoses for untreated conditions, leading to $8.7 billion in extra federal payments in 2021.

UnitedHealth has criticized the newspaper's reporting, saying "the Journal does not understand the Medicare Advantage program." However, the company has not yet responded to Investopedia's request for comment on the DOJ investigation.

The news was also weighing on other health insurer stocks, with CVS Health (CVS), The Cigna Group (CI), and Humana (HUM) each down following the report. UnitedHealth shares were down 11% Friday morning, poised for their lowest open since last April.



If the DOJ investigation finds evidence of wrongdoing, UnitedHealth Group could face significant legal and reputational consequences. These could include civil penalties, criminal charges, exclusion from Medicare and Medicaid programs, damage to brand image, loss of customer trust, increased regulatory scrutiny, and potential class-action lawsuits.

To mitigate potential damage to its stock price, UnitedHealth Group can employ several strategies, such as proactively communicating with investors, cooperating with the investigation, strengthening internal controls, diversifying revenue streams, and addressing investor concerns.



In conclusion, the DOJ investigation into UnitedHealth Group's Medicare billing practices has the potential to significantly impact the company's financial outlook and investor confidence. The company must act swiftly and decisively to address the investigation and demonstrate its commitment to ethical business practices. Investors should closely monitor the situation and consider the potential legal and reputational consequences as the investigation unfolds.