UnitedHealth Faces Antitrust Lawsuit Over Alleged Misconduct Post Change Healthcare Acquisition

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

The lawsuit, filed on Monday in the U.S. District Court for the District of Minnesota, asserts that the company’s directors engaged in misconduct that could incur substantial financial losses for UnitedHealth. These losses stem from the necessity of conducting internal investigations and defending against the proposed class action, Bloomberg reported.

Central to the complaint is the allegation that UnitedHealth failed to implement the promised separations, or “firewalls,” between its business units Optum and UnitedHealthcare. Despite assurances to the DOJ, the court and investors, the complaint claims that these firewalls were never properly established. The failure to maintain a meaningful technological separation between the two entities allegedly allowed for the improper sharing of sensitive customer information.

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The complaint highlights that UnitedHealth’s directors made false statements and concealed crucial information about the company’s internal operations. Specifically, it accuses the directors of misleading stakeholders into believing that the necessary precautions were in place to prevent data sharing between Optum and UnitedHealthcare, in compliance with UnitedHealth’s policies and legal obligations.

The lawsuit underscores significant repercussions for UnitedHealth, suggesting that the alleged misrepresentations have led to substantial shareholder losses. A related class action securities lawsuit seeks to recover damages for investors adversely affected by the alleged securities fraud, covering the period from March 14, 2022, to February 27, 2024.

This legal challenge is not the first of its kind for UnitedHealth, which has been under the DOJ’s microscope for potential antitrust violations. The latest lawsuit amplifies the pressure on the health insurer to address its corporate governance and operational transparency, particularly in the wake of large-scale acquisitions like that of Change Healthcare Inc.

Source: New Bloomberg Law