UnitedHealth says it is under a federal investigation and cooperating

Key Points

• UnitedHealth Group disclosed in its SEC filing that it's under a Department of Justice investigation, saying it has begun complying with both criminal and civil requests and is cooperating with federal authorities.
• The probe follows a Wall Street Journal report of a civil fraud investigation into how UnitedHealth records diagnoses to secure additional payments under its Medicare Advantage plans.
• UnitedHealthcare, the nation's largest Medicare Advantage provider covering over 8 million members, has recently faced financial pressure from rising care use and rate cuts.
• Following the disclosure, UnitedHealth’s stock fell 2% to $286.50, extending a downward trend that began after the fatal shooting of its UnitedHealthcare CEO, Brian Thompson, in December.

UnitedHealth Group says it is cooperating with federal criminal and civil investigations involving its market-leading Medicare business.

The health care giant said Thursday that it had contacted the Department of Justice after reviewing media reports about investigations into certain elements of its business.

“(UnitedHealth) has a long record of responsible conduct and effective compliance,” the company said in a Securities and Exchange Commission filing.

Earlier this year, The Wall Street Journal said federal officials had launched a civil fraud investigation into how the company records diagnoses that lead to extra payments for its Medicare Advantage, or MA, plans. Those are privately run versions of the government’s Medicare coverage program mostly for people ages 65 and over.

The company’s UnitedHealthcare business covers more than 8 million people as the nation’s largest provider of Medicare Advantage plans. The business has been under pressure in recent quarters due to rising care use and rate cuts.

The Journal said in February, citing anonymous sources, that the probe focused on billing practices in recent months.

The paper has since said that a federal criminal health care-fraud unit was investigating how the company used doctors and nurses to gather diagnoses that bolster payments.

UnitedHealth said in the filing Thursday that it "has full confidence in its practices and is committed to working cooperatively with the Department throughout this process."

UnitedHealth Group Inc. runs one of the nation's largest health insurance and pharmacy benefits management businesses. It also operates a growing Optum business that provides care and technology support.

UnitedHealth raked in more than $400 billion in revenue last year to come in third in the Fortune 500 list of biggest U.S. companies. Its share price topped $630 last fall to reach a new all-time high.

But the stock has mostly shed value since December, when UnitedHealthcare CEO Brian Thompson was fatally shot in midtown Manhattan on his way to the company’s annual investor meeting. A suspect, Luigi Mangione, has been charged in connection with the shooting.

In April, shares plunged some more after the company cut its forecast due to a spike in health care use. A month later, former CEO Andrew Witty resigned, and the company withdrew its forecast entirely, saying that medical costs from new Medicare Advantage members were higher than expected.

The stock price was down more than 3%, or $10.73, to $281.78 Thursday afternoon. That represents a 55% drop from the all-time high it hit in November. Broader indexes were mixed.

UnitedHealth will report its second-quarter results next Tuesday.