UnitedHealth's headquarters in Minnetonka, Minnesota. Credit: wolterke/Adobe Stock;
UnitedHealth Group Inc. plummeted as much as 18% following a report that the insurer was under criminal investigation for possible Medicare fraud, adding to an already tumultuous week.
The Justice Department has had a probe into the company's Medicare Advantage business since at least last summer, the Wall Street Journal reported, citing unidentified people familiar with the matter.
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UnitedHealth said in a statement late Wednesday that the Department of Justice hadn't notified the company about the reported investigation.
"We stand by the integrity of our Medicare Advantage program," it added.
UnitedHealth shares dropped every day for the last eight trading sessions, including sinking more than 17% Tuesday when the company abruptly replaced its chief executive officer and suspended 2025 guidance. It has lost more than $110 billion in market value this week.
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Shares of rival insurers also fell, with Elevance Health Inc. dropping as much as 4.5%, CVS Health Corp. shares down 2.6%, and Humana Inc. shares down 5.8%.
The nature of the potential criminal allegations against the insurer isn't clear, the newspaper reported, citing the people.
"While we had hoped Tuesday's nearly 18% decline had represented a bottom for the stock, adequately pricing incremental utilization risk in our view, the WSJ report rekindles headline risk, which fueled volatility earlier in the year," RBC analysts wrote in a note to clients.
Medicare Advantage
The alleged investigation piled further doubt on the company's strategy to focus on Medicare, which pushed profit growth for years but has recently faltered.
UnitedHealth also faces growing scrutiny in Washington, as antitrust regulators challenge its planned purchase of home-health operator Amedisys Inc.
Insurers' Medicare Advantage practices have drawn questions in recent years. Companies get paid more for taking care of sicker patients in the program, with rates determined by the diagnosis codes they submit. Watchdogs and whistleblowers have accused insurers of exaggerating how sick their patients are to boost profits, and some firms have paid large sums to resolve cases.
UnitedHealth faced allegations in a long-running civil Medicare fraud case that it improperly overcharged the US government by more than $2 billion. The company in March received a favorable finding in that case, bringing it a step closer to winning potential dismissal.
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