UnitedHealth Group acknowledged Thursday that its Medicare operations are under investigation by the U.S. Department of Justice, confirming it is cooperating with the probe.
The health insurance giant, still reeling from internal turmoil following the murder of a top executive last year, said it proactively contacted the Justice Department after news reports surfaced regarding the inquiry.
“The Company has now begun complying with formal criminal and civil requests from the Department,” UnitedHealth said in a statement. “The Company has full confidence in its practices and is committed to working cooperatively with the Department throughout this process.”
According to The Wall Street Journal, the Justice Department is looking into potential criminal fraud within UnitedHealth’s Medicare Advantage program. The company is one of several private insurers contracted by the federal government to deliver Medicare benefits to seniors and other eligible enrollees.
On Thursday, UnitedHealth reiterated that it has initiated third-party reviews of its operations, including how it codes patients’ health conditions, its managed care strategies, and its pharmacy services.
The DOJ probe adds to a series of recent crises for the nation’s largest health insurer. In December, Brian Thompson, CEO of UnitedHealth’s insurance division, was fatally shot on a New York City street—a tragedy that sparked widespread public outrage over care denials by UnitedHealth and other insurers.
In May, former CEO Andrew Witty resigned abruptly after the company withdrew its full-year financial forecast, citing unexpected cost increases tied to the Medicare Advantage program. Stephen Hemsley, UnitedHealth’s longtime former CEO, has since returned to lead the company.
UnitedHealth Group told CNBC it expects to conclude its internal review by the end of the third quarter as it continues to cooperate with a federal investigation into its Medicare Advantage program.
In a regulatory filing, the company said it “has full confidence in its practices and is committed to working cooperatively with the Department throughout this process.”
Jared Holz, health-care strategist at Mizuho Securities, told clients in a Thursday email that the news is “not shocking,” but noted UnitedHealth had previously denied reports of a DOJ investigation. He added the company’s decision to acknowledge the probes and cooperate “all sounds logical as it moves forward with a new CEO.”
UnitedHealth abruptly announced the departure of former CEO Andrew Witty in May.
Thursday’s statement follows a May report from The Wall Street Journal that revealed the Department of Justice is pursuing a criminal probe into possible Medicare fraud involving UnitedHealth. At the time, the company responded by stating it stands “by the integrity of our Medicare Advantage program.”
In July, The Journal reported that federal investigators had interviewed multiple doctors about whether they felt pressured to submit specific diagnoses that would increase Medicare Advantage payments to UnitedHealth.
That marked the second federal inquiry this year tied to the insurer’s Medicare Advantage operations. In February, The Journal reported on a separate civil investigation focused on whether the company inflated patient diagnoses to secure larger reimbursements.
Still, UnitedHealth defended its operations Thursday, saying that “independent audits by the Centers for Medicare and Medicaid Services ‘confirm’ that the company’s practices are ‘among the most accurate in the industry.’”
Shares of UnitedHealth fell nearly 4% on Thursday. Company executives are expected to address the investigation during their second-quarter earnings call scheduled for July 29.
UnitedHealth’s stock (UNH) has shed nearly half its value in the past year, erasing more than $277 billion in market capitalization.
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