A class action lawsuit was filed against UnitedHealth Group, Inc. (NYSE:UNH) on May 14, 2024. The plaintiffs (shareholders) alleged that they bought UNH stock at artificially inflated prices between March 14, 2022, and February 27, 2024 (Class Period) and are now seeking compensation for their financial losses. Investors who bought UnitedHealth stock during that period can click here to learn about joining the lawsuit.
UnitedHealth is viewed as one of the largest health insurance companies in the world in terms of revenue. UNH operates through two segments: UnitedHealthcare, which offers diverse insurance plans including Medicaid, Medicare, Health & Dental insurance, and Group plans for businesses. Meanwhile, its Optum segment is a technology-powered health services platform offering data analytics, health services, and pharmacy care services.
The plaintiffs maintain that UNH and three of its senior executives and/or directors (Individual Defendants) deceived investors by lying and withholding vital information about the company’s business practices during the Class Period. Specifically, the Defendants are accused of omitting truthful information about the separation of its business segments from SEC filings and related material.
The information became clear on February 27, when the Wall Street Journal reported that the Department of Justice (DOJ) had reopened the antitrust probe into UnitedHealth. As per the lawsuit, this was the first time that the public learned about the DOJ’s probe into the relationships between Optum and UnitedHealthcare’s various segments.
To put a point in case, UnitedHealth’s Change Healthcare (part of Optum) became a victim of a cyberattack in February, which led to a complete shutdown of operations for seven days. The attack put the data of millions of Americans at risk of exposure. UNH acquired Change Healthcare in October 2022 and integrated it into the Optum unit.
Interestingly, during the Class Period, UNH repeatedly stated that it had adequate and robust firewalls in place between the units “to protect sensitive customer data and provide information to customers to allow them to verify those firewall processes.” The company also maintained that these firewalls, cybersecurity, and data-security policies stopped any inappropriate sharing of data to outsiders, thus protecting customers’ data.
As per the class action lawsuit, UNH caused its shares to trade at artificially inflated prices by knowingly and recklessly misleading investors about the company’s business practices during the Class Period.
Notably, UNH stock has lost more than 7% so far in 2024, impacting shareholders’ returns.
