The United States Department of Justice (DOJ) has initiated a criminal investigation into UnitedHealth Group amid allegations of Medicare fraud, according to a report by the Wall Street Journal. The inquiry, led by the DOJ’s healthcare fraud division, is believed to have been ongoing since at least last summer, although the specific details of the criminal allegations remain undisclosed.
This probe adds to a series of difficulties faced by UnitedHealth, whose shares fell by over 8% in after-hours trading following the news, dealing a blow to the insurer listed on the Dow Jones Industrial Average. The investigation centres on UnitedHealth’s Medicare Advantage operations, a programme where private insurers manage care for Medicare beneficiaries and receive payments based on patients’ health conditions. There have been longstanding concerns that some insurers may exaggerate diagnosis codes to obtain higher reimbursements, a practice currently under federal scrutiny.
Earlier this year, the DOJ was reported to be conducting a civil fraud investigation into UnitedHealth’s documentation of medical diagnoses, which allegedly led to inflated payments under Medicare Advantage plans. Simultaneously, U.S. Senator Chuck Grassley launched a congressional probe into the company’s Medicare billing practices, requesting comprehensive records regarding its compliance programmes and billing procedures.
The timing of this criminal investigation coincides with upheaval within UnitedHealth. On Tuesday, the company’s CEO, Andrew Witty, resigned unexpectedly for “personal reasons” and was replaced by former CEO and current chairman Stephen Hemsley. Alongside this leadership change, UnitedHealth suspended its financial guidance for 2025 due to rising medical costs, which had already exerted downward pressure on the company’s share price, hitting multi-year lows.
UnitedHealth’s Medicare Advantage segment has been a major growth driver, but recent regulatory and legal challenges have cast doubt on the viability of this strategy. The DOJ has also filed lawsuits against other leading insurers, accusing them of paying kickbacks to brokers to influence patient enrolment in their Medicare Advantage plans.
In addition to the Medicare fraud investigation, UnitedHealth is contending with antitrust inquiries related to its proposed acquisition of home health provider Amedisys Inc., further intensifying regulatory pressures. The company has also faced cybersecurity incidents and the tragic loss of a senior executive in 2024, contributing to a turbulent period for the healthcare giant.
Medicare Advantage covers nearly half of the 65 million Americans enrolled in Medicare, offering private insurance alternatives to traditional government-managed Medicare. Insurers receive fixed payments per enrollee, adjusted according to the severity of patients’ health conditions, which creates incentives for precise—and sometimes aggressive—coding practices.
Neither the DOJ nor UnitedHealth Group has publicly commented on the ongoing criminal investigation.