Adding to UnitedHealth woes, WSJ reports Justice Department has launched criminal investigation

Miami Herald

15-05-2025

UnitedHealth Group stock was sliding again Thursday as the market took in a report in the Wall Street Journal that the U.S. Department of Justice has launched a criminal fraud investigation of Medicare billing practices, the latest development in a string of allegations about the Eden Prairie-based company.
In a story posted late Wednesday, the Journal quoted sources familiar with the matter who said the investigation is overseen by the health care-fraud unit of the Justice Department's criminal division, and has been ongoing since at least last summer. Investigators are focusing on the company's business practices in Medicare Advantage health plans, although the exact nature of the allegations are unclear.
The Eden Prairie-based health care said in a statement to the Minnesota Star Tribune Wednesday night that it's not been notified by the Justice Department of any such investigation and called the story "deeply irresponsible."
"We stand by the integrity of our Medicare Advantage program," the health care company said.
UnitedHealth Group stock fell 14% in morning trading Thursday, marking the second major downward movement this week after the company abruptly announced Tuesday that CEO Andrew Witty was stepping down, to be immediately replaced as chief executive by Chairman Stephen Hemsley.
The news Wednesday followed reports earlier this year that the company's Medicare Advantage business was being investigated in a civil probe, after it had been singled out in a federal watchdog report for the questionable use of diagnosis data to boost payments from the government program for seniors by billions of dollars.
Allegations that insurers including UnitedHealthcare, the massive health insurance division at UnitedHealth, have gamed Medicare's risk-rating system in order to wrongly inflate their federal payments are not new. The company is still fighting a whistleblower lawsuit first filed in 2011 by an insider named Benjamin Poehling, who made similar allegations.
But investigative news reports over the past year, combined with widespread public anger at the company that was piqued following the killing of a top company executive on a public sidewalk in New York City, have contributed to the sense that UnitedHealth Group - a giant player in the nation's health care economy and the largest firm in Minnesota - has become a company under siege.
Hemsley put a brave face on the challenges in an internal message to employees earlier this week, which was obtained by the Minnesota Star Tribune.
"I am optimistic about our future since many of the issues standing in the way of achieving our goals are within our capacity to resolve," he wrote. "I know we will approach them with humility, rigor and urgency, guided as always by our mission to help people live healthier lives and help make the health system work better for everyone."
Medicare Advantage is a program in which the government pays private health insurers a per-member, per-month fee to provide medical benefits to seniors. These payments are increased based on "risk-adjustment" data submitted by insurers, so they are rewarded financially for managing care for people with serious health problems.
Historically, insurers faced criticism for shunning patients with high medical costs.
In early 2017, the federal government joined a whistleblower lawsuit from a former UnitedHealth Group employee in the Twin Cities who alleged, among other things, that the nation's largest insurer had wrongly received excess Medicare revenue by reviewing medical charts to boost payments without also making data corrections that would have saved the government money. The litigation was initially filed under seal by former employee Poehling in 2011.
In March, a court-appointed special master recommended the lawsuit not be allowed to move forward after finding no evidence to support key allegations about the company's alleged gaming risk-adjustment payments. The Justice Department in April said it wanted to push forward with the case, despite the special master's finding of a "complete failure" of evidence.
UnitedHealth Group stood out from its peers in an October 2024 federal watchdog report that questioned how Medicare Advantage insurers used diagnosis data to boost Medicare Advantage payments by billions of dollars.
The company was the biggest recipient of the add-on funds based on "questionable" practices for 2023, according to the report from the Office of the Inspector General (OIG) at the U.S. Department of Health and Human Services.
UnitedHealth Group insisted the OIG report was wrong. The watchdog agency published similar findings three years earlier, which UnitedHealth also rejected at the time as misleading and inaccurate.
OIG's reporting, plus coverage over the past year from the Wall Street Journal, prompted U.S. Sen. Chuck Grassley, R-Iowa, to demand answers from UnitedHealth Group on billing practices in a letter he sent in February.
Last July, the Wall Street Journal published an investigation that alleged UnitedHealthcare and other private insurers in Medicare Advantage made hundreds of thousands of questionable diagnoses that triggered an extra $50 billion in taxpayer-funded payments.
UnitedHealth Group pushed back against the newspaper's reporting that summer as well as a series of federal watchdog reports suggesting the company has stood out from others in its use of questionable practices to boost risk-adjustment payments in Medicare Advantage, the privatized version of the government health insurance program for seniors.
Then in February 2025, the Journal reported that the DOJ had initiated a separate civil fraud inquiry into UnitedHealth's Medicare billing practices. The company at the time insisted it was not aware of any such investigation.
"We are aware, however, that the Journal has engaged in a yearlong campaign to defend a legacy [Medicare] system that rewards volume over keeping patients healthy and addressing their underlying conditions," the company said at the time. "Any suggestion that our practices are fraudulent is outrageous and false."
In addition, UnitedHealth Group is confronting an unprecedented set of challenges.
Just this week, the company announced the return of longtime company leader Stephen Hemsley as chief executive, a move meant to restore confidence with investors amid a steep decline in the value of United shares. The stock has plunged with financial missteps under the leadership of former CEO Andrew Witty, who remains as a senior advisor.
Meanwhile, the company's reputation was significantly tarnished amid public outrage over health insurance industry practices following the killing of UnitedHealthcare CEO Brian Thompson. Ire has focused on the company due to its status as the nation's largest health insurer plus limited availability of data about claims denials, leaving it open to interpretation.
Lawsuits settled just in the past four months alleged the company's health insurance divisions weren't providing sufficient access to an emerging cancer treatment called proton beam radiation therapy as well as emergency room care and urinary drug screenings.
Other controversies include the continuing fallout from a massive cyberattack and withering criticism of the pharmacy benefit manager (PBM) industry where UnitedHealth is a major player. The Justice Department sued last year to block the company's proposed acquisition of Amedisys, a home care and hospice company.
In February 2024, UnitedHealth Group did not comment when the Wall Street Journal reported the Justice Department had opened an antitrust investigation of the company including interactions between the massive UnitedHealthcare health insurance and medical groups operated by United's Optum division for health care services.
And tough investigative reports over the past year or so from the Wall Street Journal and online health care news outlet STAT are among the exhibits cited by shareholders alleging securities fraud by the company in the U.S. District Court of Minnesota.
United has pushed back on all fronts.
On denials, the company insists it ultimately pays 98% of all claims received that are for eligible members, when submitted in a timely manner with complete, non-duplicate information. For the remainder that are not approved, the majority are instances where the services did not meet the benefit criteria established by the plan sponsor, UnitedHealth says, such as the employer, state or Centers for Medicare & Medicaid Services.
In the lawsuits over proton beam therapy and emergency room care, UnitedHealth denied the allegations and said it was reaching settlements to bring litigation to a close while admitting no wrongdoing. On the cyberattack, the company repeatedly has pointed to the billions in financial assistance it's provided to health care providers caught up in system shut down to contain damage from the hack.
Pharmacy benefits managers including UnitedHealth's Optum Rx division insist their tactics have been misconstrued and that critics don't appreciate how the companies provide a check on the power of drug companies to set high prices. And UnitedHealth has moved to dismiss the shareholder lawsuit, while contesting Justice Department claims in the Amedisys case.
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