UnitedHealth Group Stock Plummets as DOJ Opens Fraud Probe

UnitedHealth Group (UNH) stock took a hard hit on Friday as news broke that the United States Department of Justice (DOJ) has opened a civil fraud investigation into possible overcharging of Medicare Advantage plans. The investigation involves allegations of fraudulent practices, specifically the addition of false diagnoses to beneficiaries' medical records to overcharge the federal government entity for retiree health services.

The stock slid as low as $438.50, marking a 10-month low for UnitedHealth Group. The market reacted swiftly to the news, with shares plunging as much as 12.7% at the open. By lunchtime, the stock was down about 9% to near $457.

UnitedHealth Group, one of the largest holdings in the Dow Jones Industrial Average, faced scrutiny from the DOJ amidst a regulatory environment that was perceived to be more lenient under the Trump administration. The investigation is particularly concerning as it targets the country's largest private health insurer.

According to reports, the Office of Inspector General at the US Department of Health & Human Services is also involved in the investigation, although no official comments have been made by the government agencies involved.

In response to the allegations, a spokesperson for UnitedHealth Group called them "outrageous" and "false." The company has faced negative headlines in the past, including a previous antitrust probe by the DOJ and a lawsuit to block its proposed acquisition of Amedisys.

The news of the DOJ investigation sent shockwaves through the market, impacting not only UnitedHealth Group but also other health insurer stocks. CVS Health and Humana also saw declines in their stock prices following the report.

As the investigation unfolds, investors and industry experts will be closely monitoring the developments and their potential impact on UnitedHealth Group's future performance in the stock market.