Thompson, UnitedHealth kept probe secret and misled investors, lawsuit claims

Editor's Note: See the latest developments in the case as police arrest a suspect in the murder of CEO Brian Thompson.

As one of the largest healthcare insurers in the United States, UnitedHealthcare and late CEO Brian Thompson are defendants in numerous lawsuits. But one in particular, filed in U.S. District Court for Minnesota, is notable in light of the brazen Wednesday morning shooting death of Thompson in downtown Manhattan.

Thompson was on his way to an investor conference at the New York Hilton Hotel when an gunman ambushed and shot him in the chest, NYC police say.

Thompson joined UnitedHealth Group in 2004 and was named CEO for UnitedHealthcare in April 2021. A few months prior to that, on Jan. 6, 2021, UnitedHealth announced its largest acquisition ever: Change Healthcare, a health technology company, for $13 billion.

Change operated a clearinghouse, processing health insurance claims and moving data from entity to entity. According to a UnitedHealth estimate, more than half of American medical insurance claims “pass through (or touch)” Change’s systems.

DOJ on alert

On Feb. 24, 2022, the Department of Justice sued to block the Change acquisition on antitrust grounds, arguing UnitedHealth would gain access to sensitive data that it could wield against its competitors. UnitedHealth prevailed and the Change acquisition was finalized.

Throughout the dispute, UnitedHealth executives insisted that the company had “internal firewalls that prevent the sharing of competitively sensitive information across business units,” plaintiffs say.

Shares soared from about $350 per share when the Change acquisition was announced to more than $500 per share in February 2024, when Change networks fell victim to a systemwide cyberattack.

By that point, UnitedHealth executives were already keeping secrets from investors, plaintiffs allege in the Minnesota class-action lawsuit. On Oct. 10, 2023, UnitedHealth received notice that the DOJ had launched a “non-public antitrust investigation into the company,” the lawsuit states.

“Concealing this material information from investors and the public, UnitedHealth chairman Stephen J. Hemsley and several other senior executives immediately took action – selling more than $100 million of their own UnitedHealth stock at artificially inflated prices as the market and other investors remained unaware of the new federal antitrust investigation,” the lawsuit claims.

When the Wall Street Journal exposed the investigation in a Feb. 27, 2024 article, the price of UnitedHealth stock declined over $27 per share, falling from $525.32 per share on Feb. 26, 2024 to $498.28 on Feb. 28, 2024, the lawsuit notes.

In response, Sen. Elizabeth Warren, D-Mass., was among lawmakers from both parties to call for investigations of UnitedHealth.

“Because UnitedHealth has bought up every link in the healthcare chain, it’s in a position to jack up prices, squeeze competitors, hide revenues, and pressure doctors to put profits ahead of patients. UnitedHealth is a monopoly on steroids,” Warren said in a statement.

New report alleges improper payments

The class-action lawsuit was initially filed on May 14 with the City of Hollywood Firefighters’ Pension Fund as the lead plaintiff. It has since been amended twice, most recently last week.

On Oct. 24, 2024, the Office of Inspector General released a new report titled: “Medicare Advantage: Questionable Use of Health Risk Assessments Continues To Drive Up Payments to Plans by Billions.”

The government watchdog found that UnitedHealth reaped $3.2 billion in extra federal payments in 2023 for diagnoses from in-home health risk assessments (HRAs) and HRA-linked chart reviews. According to the report, UnitedHealth accepted these payments even though the patients did not receive any additional treatment or medical services following the new diagnoses, the lawsuit noted.

The lawsuit class includes any owners of UnitedHealth Group shares between Sept. 22, 2021 and Feb. 27, 2024. During this time, Thompson sold over 31% of his UnitedHealth shares for proceeds of over $15 million, the lawsuit says.

“Throughout the Class Period, UnitedHealth leveraged its monopolistic power to crush competition, manipulate government officials, and force others in the healthcare industry to cede to its demands. In the process, UnitedHealth unlawfully obtained billions of dollars of revenue from the federal government, healthcare providers, and its own members,” the lawsuit states.

On Wednesday, Magistrate Judge David T. Schultz signed an order giving UnitedHealth, and Hemsley and Thompson, until March 1, 2025 to respond to the amended complaint.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.