UnitedHealth Group, officials sued over Justice Department probe

UnitedHealth Group and several of the company's leaders are facing a shareholder derivative lawsuit alleging they failed to disclose that the Justice Department opened an antitrust investigation into the company.

The investigation came to the public's attention Feb. 27 when The Wall Street Journal and other news outlets reported that the Justice Department was investigating the relationships between the company's various segments, including Optum. Neither the Justice Department nor UnitedHealth has publicly acknowledged the investigation. 

Following the news, the price of UnitedHealth's stock dropped 12% from a closing price of $525.32 per share on Feb. 26, to a closing price of $513.42 per share on Feb. 27, according to the lawsuit filed July 18 by shareholder Portia McCollum. The stock price continued to decline the following day, closing at $498.28 per share. 

The suit, filed in Minnesota federal court, alleges the individual defendants "breached their fiduciary duties by issuing, causing the issuance of, and/or failing to correct the materially false and misleading  statements and omissions of material fact to the investing public."

The lawsuit alleges that the company never established proper firewalls between Optum and UnitedHealthcare as required by its own policy and as it told a court when the Justice Department took the company to trial in 2022 in an unsuccessful attempt to block Optum's acquisition of Change Healthcare.

Among the 11 individual defendants named in the lawsuit are UnitedHealth Group CEO Andrew Witty, chairman Stephen Hemsley and UnitedHealthcare CEO Brian Thompson. 

The lawsuit alleges that UnitedHealth officials were aware of the investigation since at least October. In that four-month period, Mr. Hemsley and Mr. Thompson are accused of selling "substantial amounts of their personally held UnitedHealth stock while in possession of material non-public information."   

"In light of the individual defendant's misconduct — which has subjected the company to the securities class action, the need to undertake internal investigations, the need to implement adequate internal controls over its financial reporting, losses from the waste of corporate assets, and losses due to the unjust enrichment of the individual defendants who were improperly overcompensated by the company and/or who benefitted from the wrongdoing alleged herein — the company will have to expend millions of dollars," the lawsuit alleges. 

Among other things, the lawsuit seeks the company to be directed to take "all necessary actions to reform and improve its  corporate governance and internal procedures to protect UnitedHealth and its stockholders from a repeat of the damaging events." 

A UnitedHealth Group spokesperson did not comment on the lawsuit to Becker's. 

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