UnitedHealth Group shares tumbled early Friday on a report that the U.S. Department of Justice has started an investigation into the health care giant’s Medicare billing practices.
The Wall Street Journal said federal officials have launched a civil fraud investigation into how the company records diagnoses that lead to extra payments for its Medicare Advantage plans. Those are privately run versions of the government’s Medicare coverage program mostly for people ages 65 and over.
The paper, citing anonymous sources, said the probe focused on billing practices in recent months.
UnitedHealth had no immediate comment on the report.
The company’s UnitedHealthcare business covers more than 7.8 million people as the nation’s largest provider of Medicare Advantage plans. The business has been under pressure in recent quarters due to rising care use and rate cuts.
Shares of the Minnetonka, Minnesota, company sank more than 10%, shedding over $52 in pre-market trading to fall below $447. Shares of other prominent Medicare Advantage insurers like Humana were down as well.
UnitedHealth Group Inc. stock has been in a rut since early December, when UnitedHealthcare CEO Brian Thompson was fatally shot in midtown Manhattan on his way to the company’s annual investor meeting. A 26-year-old suspect, Luigi Mangione, faces federal and state charges in connection with Thompson’s death.
Company shares shed more than $100 in value in the weeks following Thompson’s death, as the shooting gave rise to an outpouring of grievances about insurance companies.