UnitedHealth Group Under Federal Criminal Investigation for Potential Medicare Fraud

By: Carl Schwartzbaum

UnitedHealth Group, the nation’s largest health insurer, is now facing a criminal investigation by the U.S. Department of Justice (DOJ) over potential Medicare fraud, according to a detailed report in The Wall Street Journal on Wednesday. The investigation is being led by the DOJ’s criminal division, specifically its healthcare-fraud unit, and focuses on the company’s billing practices within its massive Medicare Advantage program.

According to individuals familiar with the matter, the investigation has been active since at least mid-2024, though the company has stated it has not been officially notified. In a statement provided to the WSJ, UnitedHealth said it “stands by the integrity of our Medicare Advantage program” and emphasized that the company had not been informed of any criminal inquiry.

The DOJ declined to comment, citing the ongoing nature of the probe.

This criminal investigation adds to a growing list of regulatory challenges facing UnitedHealth. Earlier this year, the WSJ reported on separate civil and antitrust investigations into the company’s operations. These include inquiries into Medicare billing irregularities and potential anti-competitive behavior resulting from UnitedHealth’s broad vertical integration, particularly its ownership of both insurance operations and physician groups through its Optum division.

The timing of the criminal probe could not be worse for UnitedHealth. The company is grappling with severe leadership upheaval and investor unrest. CEO Andrew Witty was abruptly replaced last week by Chairman and former CEO Stephen Hemsley. Meanwhile, UnitedHealth’s stock has taken a dramatic hit, plunging over 50% in the past month. The WSJ report indicated that on Thursday alone, shares fell 16%, marking the company’s lowest closing price since 2020.

UnitedHealth has also faced internal crises in the past year, including a cyberattack that crippled one of its key technology units and disrupted healthcare payments nationwide, and the shocking death of a senior executive in its insurance division.

At the heart of the criminal investigation, as reported by the WSJ, are concerns that UnitedHealth may have fraudulently manipulated risk adjustment practices in Medicare Advantage. The program pays insurers higher rates for covering patients with more serious health conditions. This has created a financial incentive to over-report diagnoses, and WSJ investigations have shown how this practice can significantly inflate taxpayer-funded payments to insurers.

Although UnitedHealth has disputed these findings, calling them “inaccurate and biased,” internal company documents tell a more complex story. In a March 11 email obtained during shareholder litigation, a company attorney warned a former employee that the government had “asked us some questions regarding Optum’s coding practices.” The email further described the probe as being “in the early stages” and cautioned the recipient about possible government contact.

Despite these internal acknowledgments, UnitedHealth has publicly maintained that it is unaware of any new federal investigations. After the WSJ broke the news of the civil fraud probe in February, the company dismissed the report as “misinformation.”

This is not UnitedHealth’s first legal entanglement with Medicare billing practices. A whistleblower lawsuit filed in 2011 and joined by the DOJ in 2017 alleged that the company submitted over $2 billion in improper claims based on diagnoses unsupported by medical records. That case has seen mixed developments. In March, a court-appointed special master recommended dismissing the suit, citing a lack of compelling evidence. However, the WSJ reported that the DOJ has urged the presiding judge to reject that recommendation, signaling it is not ready to abandon the case.

UnitedHealth, for its part, declared the special master’s findings as evidence that “there was no support for DOJ’s claims that we were overpaid or did anything wrong.”

In its most recent annual report to the Securities and Exchange Commission, UnitedHealth noted that it was involved in various government audits and investigations, including those from the DOJ. However, it did not explicitly mention the criminal, civil, or antitrust probes that have been outlined in the WSJ report.

The DOJ’s healthcare-fraud unit, traditionally focused on individual doctors and labs, has recently pivoted toward scrutinizing large insurers, especially those operating in the Medicare Advantage space. These insurers, which now cover over half of all Medicare beneficiaries, have become a focal point for federal investigators due to the ballooning costs of the program and allegations of widespread overbilling.

The WSJ has led investigative reporting into this area, revealing how companies such as UnitedHealth use aggressive coding practices to boost government payments. The paper’s reporting was central to congressional questioning during the confirmation hearings for Mehmet Oz, who now leads the Centers for Medicare and Medicaid Services (CMS). Senators grilled Oz on the Journal’s findings, prompting him to pledge a crackdown on fraudulent billing practices in Medicare Advantage.

The political backdrop is equally significant. With President Donald Trump now back in office, his administration has prioritized reducing federal healthcare spending, including reevaluating Medicare Advantage’s cost structure. Trump allies in Congress have expressed alarm over how loosely some insurers appear to be interpreting rules governing the program.

The latest criminal probe could deal another blow to UnitedHealth’s already damaged reputation. Legal experts told WSJ that a criminal case involving Medicare fraud would be rare but not unprecedented for an insurance giant of UnitedHealth’s scale. If federal prosecutors determine that company executives knowingly submitted false information or orchestrated overbilling schemes, the consequences could include heavy fines, executive prosecutions, and tighter regulatory oversight.

In the meantime, shareholders are growing increasingly anxious. The rapid decline in UnitedHealth’s stock, combined with a lack of transparent communication from leadership, has fueled speculation about broader financial instability. The replacement of Witty with Hemsley—who previously guided the company through multiple legal challenges—is seen by some analysts as an attempt to restore confidence.

Still, UnitedHealth’s problems are far from over. The convergence of a criminal DOJ probe, civil lawsuits, antitrust scrutiny, and a political push to overhaul Medicare spending poses a formidable challenge for the company. As the WSJ reported, the outcome of these investigations could have far-reaching implications not only for UnitedHealth but also for the entire Medicare Advantage system and the tens of millions of Americans who rely on it.

For now, all eyes remain on the DOJ’s next move—and whether one of America’s most powerful healthcare companies will be held accountable in a court of law.