UnitedHealth faces antitrust lawsuit over alleged misconduct after health care acquisition move

UnitedHealth Group is at the center of a legal storm as executives of the health insurance giant face a lawsuit from a shareholder accusing the company of misleading investors about its business operations following its acquisition of Change Healthcare Inc. The derivative lawsuit, detailed in a recent Bloomberg report, comes amid heightened scrutiny from the Department of Justice (DOJ), which has opened an antitrust investigation into UnitedHealth’s business practices.

The lawsuit, filed Monday in the U.S. District Court for the District of Minnesota, alleges that company executives engaged in misconduct that could result in significant financial losses for UnitedHealth, resulting from the need to conduct internal investigations and defend against a proposed class action lawsuit, Bloomberg reported.

At the heart of the complaint is an allegation that UnitedHealth failed to implement promised separations, or “firewalls,” between its Optum and UnitedHealthcare businesses. Despite assurances to the Justice Department, the court, and investors, the complaint alleges that those firewalls were never properly established. The failure to maintain a significant technological separation between the two entities allegedly allowed for the improper sharing of confidential customer information.

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The complaint alleges that UnitedHealth executives made false statements and concealed key information about the company’s internal operations. Specifically, the executives are accused of misleading stakeholders into believing that necessary precautions were in place to prevent data sharing between Optum and UnitedHealthcare, consistent with UnitedHealth’s policies and legal obligations.

The lawsuit highlights significant repercussions for UnitedHealth, suggesting that the alleged misstatements resulted in significant losses for shareholders. A related securities class action lawsuit seeks to recover damages for investors adversely affected by the alleged securities fraud, spanning the period from March 14, 2022, through February 27, 2024.

This isn’t the first legal challenge to UnitedHealth, which has been under the Justice Department’s microscope for potential antitrust violations. The latest lawsuit adds to pressure on the health insurer to address its corporate governance and operational transparency, especially in the wake of large-scale acquisitions like Change Healthcare Inc.

Source: Bloomberg’s New Law