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Shares of UnitedHealth Group plunged greater than 13% on Thursday following a report that the Department of Justice is conducting a criminal investigation into the health-care giant over possible Medicare fraud.
The DOJ is specializing in the corporate’s Medicare Advantage business practices, but the precise nature of the potential criminal allegations is unclear, The Wall Street Journal reported late Wednesday, citing people acquainted with the matter.Â
In an announcement, UnitedHealth Group said the Justice Department has not notified it concerning the reported probe and called the newspaper’s reporting “deeply irresponsible.”
The corporate also said “we stand by the integrity of our Medicare Advantage program.”
It marks the second time this 12 months that the insurer’s Medicare Advantage business has come under federal scrutiny. The Journal reported in February that the DOJ is conducting a civil investigation into whether the corporate inflated diagnoses to trigger extra payments to its Medicare Advantage plans.Â
UnitedHealthcare’s Medicare and retirement segment, which incorporates the Medicare Advantage business, is UnitedHealth Group’s largest revenue driver, raking in $139 billion in sales last 12 months.
The reported investigation also follows the surprise exit of UnitedHealth Group CEO Andrew Witty, who will probably be replaced by the corporate’s former longtime chief executive, Stephen Hemsley.Â
Shares of UnitedHealth Group are down roughly 49% this 12 months following a string of setbacks for the corporate.
UnitedHealth Group has lost over $300 billion of its $600 billion market cap in only one month, Jared Holz, Mizuho health-care equity strategist, said in an email Thursday. He said there may be some risk that the corporate will probably be faraway from the Dow Jones Industrial Average “sooner or later unless there is larger evidence of greater consistency.”
UnitedHealth Group also had a tumultuous 2024, grappling with a historic cyberattack, higher-than-expected medical costs and the torrent of public blowback after the murder of UnitedHealthcare’s CEO Brian Thompson.
