UnitedHealth Medicare Fraud Probe Expands Into Criminal Territory

Source: YouTube

The U.S. Department of Justice is conducting a criminal investigation into UnitedHealth Group for potential Medicare fraud. According to sources familiar with the matter, the DOJ’s healthcare-fraud unit, which is part of its criminal division, has been actively investigating the company’s Medicare Advantage operations since at least mid-2024.

This probe comes as UnitedHealth faces mounting challenges on several fronts. The company is already dealing with separate antitrust investigations, civil Medicare fraud inquiries, and investor lawsuits. Most recently, it replaced its CEO and suffered a 50% decline in stock value over the past month.

Why Medicare Advantage Is Under Scrutiny

Medicare Advantage plans are government-funded alternatives to traditional Medicare, managed by private insurers. These companies receive higher payments for covering patients with more severe health conditions. Critics argue that this structure creates incentives to over-diagnose and inflate the apparent illness of patients.

UnitedHealth has repeatedly disputed allegations that it exploits this structure. However, the DOJ appears to be focused on billing practices within Optum, UnitedHealth’s healthcare services arm, particularly how patient diagnoses are coded and submitted for reimbursement.

An internal email disclosed in a shareholder lawsuit shows that UnitedHealth was aware of DOJ inquiries regarding coding practices, even as the company dismissed earlier reports of a civil fraud probe as misinformation.

UnitedHealth’s Bigger Picture: Leadership Turmoil and Public Trust

The criminal investigation further strains UnitedHealth’s credibility. The abrupt CEO transition, following the assassination of another top executive and fallout from a major cyberattack, has left shareholders wary. While UnitedHealth insists on the integrity of its Medicare Advantage operations, federal scrutiny continues to intensify. Congressional hearings earlier this year featured sharp questioning of Medicare and Medicaid agency head Mehmet Oz, who pledged stricter oversight. Lawmakers cited Wall Street Journal findings alleging that questionable diagnosis data may have cost taxpayers billions.

If the DOJ can substantiate fraud, it would mark a turning point in regulatory enforcement against large insurers. Historically, fraud enforcement has focused on small providers, but this shift toward major corporations could realign compliance standards across the industry.

A Test of the DOJ’s Reach

The DOJ has faced setbacks in prior cases involving UnitedHealth. A whistleblower case joined by the government in 2017 may soon be dismissed, following a special master’s recommendation due to lack of evidence. The government has urged the judge to reject that finding.

Regardless of the outcome, the very existence of a criminal probe signals growing political and legal pressure on Medicare Advantage providers. With over half of all Medicare enrollees now on Advantage plans, oversight of billing practices is becoming a priority for both Congress and federal prosecutors.

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