Dow Dragged Lower By UnitedHealth After Government Sues Largest US Health Insurer

Tyler Durden's picture

The Dow Jones "Industrial" Average is suffering one of its worst intraday declines in weeks as a result of a 3.6% drop in UnitedHealth shares, which are sinking on news that the DOJ joined a whistleblower lawsuit against the insurer filed by a former executive claiming the country's largest health insurer overcharged Medicare hundreds of millions of dollars.

The company denied the allegations, with UnitedHealth spokesman Matthew Burns saying in a statement that "we reject these more than five-year-old claims and will contest them vigorously." 

Alleging insurance fraud, the lawsuit which was filed in 2011 and unsealed on Thursday, claims UnitedHealth Group overcharged Medicare by claiming the federal health insurance program's members nationwide were sicker than they were, according to the law firm Constantine Cannon LLP. Overnight, the DOJ also joined in allegations against WellMed Medical Management Inc, a Texas-based healthcare company UnitedHealth bought in 2011.

The lawsuit by whistleblower Benjamin Poehling, a former UnitedHealth executive, has been kept under seal in federal court in Los Angeles while the Justice Department investigated the claims for the past five years. Constantine Cannon posted the lawsuit online when it was unsealed on Thursday.  No total damages were specified in the lawsuit.

UNH's drop is the biggest contributor to the DJIA's intraday slide, accounting for nearly 80% of the total point loss in the index.

Despite the lawsuit, Wall Street's sellside analysts - most of whom are bullish on the company - have quickly come to its defense, via Bloomberg

Oppenheimer (Michael Wiederhorn)

  • DOJ claims center on UNH’s efforts to improve coding, date back to 2011
  • While headlines aren’t positive, these processes take a long time and “typically result in manageable settlements”
  • Expects UNH will get past this overhang, sees weakness as buying opportunity
  • Rates UNH outperform, PT $186

Leerink (Ana Gupte)

  • Risk is overblown; recommends buying UNH, Humana, WellCare and other Medicare Advantage (MA) stocks on weakness today
  • Expects Trump administration will favor private MA plans with deregulation and more industry-friendly policies
  • Rates UNH outperform, PT $195

Credit Suisse (Scott Fidel)

  • DOJ joining whistleblower case is negative headline, especially since market has been bullish for prospects for MA under Republican leadership
  • Even so, regulatory scrutiny isn’t new issue and Centers for Medicare & Medicaid Services has said MA revenue should benefit from more accurate risk coding
  • Rates UNH outperform, PT $180

Evercore ISI (Michael Newshel)

  • While DOJ joining case adds to risk, complaint doesn’t have “any particularly damning new evidence”
  • Believes many of coding optimization practices described are common to industry
  • Rates UNH buy, PT $185

The unsealed lawsuit is below:

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LawsofPhysics's picture

It would be nice to know which animals are "more equal" ahead of time...

Ghost of PartysOver's picture

It would seem that if you are not defrauding the Fed Govt you are just not trying hard enough.   I sure hope Trumps Team will start doing some Perp Walks.  Including the Financial Industry but with all his Wall Street guys that will probably never happen.

Yukon Cornholius's picture

.gov rule #1: cheating is encouraged

.gov rule #2: see rule #1

Fed Supporter's picture

CBS sad that Tillerson fired entire 7th floor "shadow government" at the state dept.

Wa Wa

TwelveOhOne's picture

"Please disable ad blocker.  To view this video, you must disable your ad-blocking software and reload this page."


And, THANK YOU!  Because I also fucking hate autoplay, and even though it's configured to "ON", my ad blocker prevented it from auto-playing.  Good.

From the article: "“It is irresponsible to let qualified, nonpartisan, experienced people go before you have any idea of their replacement. You can’t do foreign policy by sitting in the White House, just out of your back pocket,” explains Tom Countryman, Former Assistant Secetary for Non-Proliferation who was let go earlier this month. "

Too bad, so sad: you took a government job, and didn't expect periodic house cleanings?

HelluvaEngineer's picture

Exactly.  This is really unfair.  I bet the CEO, who probably makde about $250k a day for showing up at work, had a sweetheart deal with the old administration.  Changing the rules of the game now is just not right.  I mean, everybody was making money.  What's the harm? /sarc

E.F. Mutton's picture

He'll get a harsh penalty I'm sure.  Maybe up to a $10,000 fine!

(Pause for shocked gasps)

doomchild's picture

Take down bitchez. Donald Trump will prove to be corporate America's worth nightmare.

Bill of Rights's picture

You gathered all that from three weeks in office huh? I swear some of you geniuses should run for office you're all so wonderful and intelligent than the rest of us.

hedgeless_horseman's picture


UnitedHealth Group overcharged Medicare by claiming the federal health insurance program's members nationwide were sicker than they were

Something doesn't smell right to me.

It is the medical provider that submits the ICD-10 code on the claim, not the insurer, which indicates the severity of the illness.

Probably the fully-retarded government employees at CMS trying to blame someone else for their complete incompetence, as always.

BigFatUglyBubble's picture

Surely the answer, as always, is more pills and more fiscal stimulus.

TheLooza's picture

you sound like you know what you are talking about but you don't. 


1. DOJ is not CMS  

2. the providers submit the codes to the health plan and then the plan submits to CMS.  The plan can also add  dx codes that are supported in the record above and beyond what the contracted provider's office originally submitted with the encounter form.

3. the plan attests to the accuracy of the risk adjustments submissions

hedgeless_horseman's picture


Alleging insurance fraud, the lawsuit which was filed in 2011 and unsealed on Thursday, claims UnitedHealth Group overcharged Medicare by claiming the federal health insurance program's members nationwide were sicker than they were, according to the law firm Constantine Cannon LLP.

DOJ is not CMS, but Medicare is CMS.

The plan can also add  dx codes that are supported in the record above and beyond what the contracted provider's office originally submitted with the encounter form.

Insurance company basement trolls diagnosing patients?

Isn't that practicing medicine without a license?

In theory, maybe, but this does NOT EVER occur in practice, nor is that what is being claimed to have occured in this case.

TheLooza's picture

Just atart reading form page 38 of the complaint, and then revisit your comment above....

hedgeless_horseman's picture



119. United trains and otherwise encourages its chart reviewers to identify diagnoses that do not qualify for risk adjustment claims. Chart reviewers are encouraged to look beyond members’ provider-reported diagnoses and identify diagnoses from supplementary data in the medical records. United submits these additional diagnoses without seeking any confirmation from the appropriate providers. 

Good find!

If this claim is eventually proven to be true, then that is indeed a problem.  Like I said, this alleged practice would essentially be practicing medicine without a license, at worst, or without having actually examined the patient, if it is a licensed MD adding DX codes.

However, a plaintiff can claim almost anything in a lawsuit, and they usually do, especially government lawyers.

We will probably never know the truth.  UHC will settle for a slap on the wrist.

TheLooza's picture

maybe, but this is a very big issue in the MA world.   The Swoben case is another live one on the same issue.  It is interesting re "practice of medicine" point.   The plans are only changing the coding, never the medical record itself.  Even at the provider's offices,  a billing nurse typically does the first round of coding -- reviewing what the physician recorded on his progress notes and then adding the relevant dx codes -- the nurses aren't practicing medicine when adding the codes.  The issue right now is that the plans are busy adding their own codes to increase payment and allegedly not doing  a good job trying/turning a blind eye re identification of invalid/unsupported codes on the charts they are working.

RichardP's picture

Dollars are not attached to diagnosis codes.  You can add and subtract those to a medical claim til the cows come home and you won't get paid anything.

Dollars are attached to the procedure codes (CPT - Current Procedural Terminology).  If those are not on the claim form, you won't be paid anything, no matter how many diagnosis codes are present.

You guys upthread from here need to revise your logic.

To get paid for a procedure, the proper diagnosis codes must be present.  If the diagnosis codes do not support the procedure done, payment will not be made.  Let's say I do a Colonoscopy - a procedure (CPT 45378) - and put down Abnormal EKG (DX R94.31) as the diagnosis, the reason why I did the Colonoscopy.  The CPT won't get paid (that's where the dollars are attached) because the reason given for the Colonoscopy was an abnormal EKG.  In medicine, Colonoscopies and abnormal EKG's are not normally related to each other.

If my biller, or United Health, were to see my mismatched codes, they are well within their rights to check the charts to see if there is anything written down that would support a different diagnosis (all codes must be supported by what is witten in the chart - either paper or Electronic Medical Record).  Technically, any changes to the codes are supposed to be approved by the doctor.  But - let's say my biller or United Health see written in the chart that the patient has a family history of Colon Cancer.  My biller or United Health could add that to the billing claim and it would pass an audit - because the code is supported by what is written in the chart.  A family history of colon cancer would be an appropriate reason for me to perform a colonoscopy, and so the procedure should get paid.  Adding codes that are supported by what is written in the patent's medical record also works if the Procedure Code requires two or three diagnosis codes in order to get paid and the doctor only provided one.

Chances are, the truth lies somewhere around United Health employees looking into the patient's Electronic Medical Record for information that would allow them to add the diagnosis codes required to get the procedure paid on claims that were submitted by the doctor without sufficient diagnosis codes.  Not really supposed to do that without OK from the doctor.  But ... if the added diagnosis codes are supported by what is written in the patient's chart, this might be difficult to prosecute.

Now - if the real issue is upcoding Procedure Codes - that is a different animal because it changes the dollars owed (e.g., 99213 vs 99215 - low complexity office visit vs. high complexity office visit).  Again, this could be supported by what is written in the patient's chart, and so would pass an audit.  But overall this is a more serious issue if my nurse or United Health were to do it without my permission (I'm not a doctor by the way).  But the wording in the lawsuit says diagnosis codes, not procedure codes.  So I am interested in seeing how this turns out.  On the surface, it looks like they are just trying to make an example out of United Health, to scare others to not be so quick to do what they did - even if it can be defended by what is written in the patient's medical record.

newdoobie's picture

Here is S. Fla. the medicare scam capital of the U.S. United Health was 'fixing' the bullshit so they along with the scammers got paid.

newdoobie's picture

You mean the ID10T code right?

SenselessPanic's picture

i am short! -- enjoying the Don taking down everything that kept the people down

Zeusky Babarusky's picture

I would list the number of things I hate about United Health Care, but space prevents such a large endeavor. They have refused to pay for tests they should have paid for, jacked up co-pays, when I finally found a medication that works, and the list goes on and on. I would not be bothered if they go belly up.

edifice's picture

Their plans are horrific. We use them at work. Deductible is $1,500.

hedgeless_horseman's picture



The amount of the deductible is inversely related to the amount of the premium.

It is just math.  

If your employer picks a lower premium, then you will pay a higher deductible.

Blame your employer for being cheap.

Or better yet, be grateful you have a job and health insurance.

Miss Expectations's picture

My deductible is $10,000.
What do I win?

Osmium's picture

The chance to open an HSA at the bank of your choice?  Mine is only 6k

Miss Expectations's picture

I have an HSA.  Thankful it was grandfathered.

Miss Expectations's picture

Storm headed to Oroville Dam area carries 10 inches of rain, revised forecast warns

Maestro Maestro's picture

An honest American is not an oxymoron but a contradiction in terms.

United Health Care for president.


MedicalQuack's picture

Hey we're back to the same old Ingenix subsidiary again, and I've been covering their code hosing antics for about 8 years now. And guess what, who was the CEO during all of this, none other than departing CMS Medicare Administrator, Andy Slavitt.  Obama had put the biggest crook in charge of Medicare that he could find and the incest of United Healthcare over his adminstration is staggering.  How about some morning tweets....

Read the cheating lawsuit, as the whistleblower was a former Ingenix exec (now Optum Insights) at United Healthcare

United Healthcare DOJ fraud lawsuit, this appeared to have occurred under Andy Slavitt's watch while at Ingenix 

United Healthcare lawsuit, like the one years ago, other insurers sued too as they bought in to the upcoding algos 

Interesting now that Loretta Lynch (former United HC anti trust lawyer) is out of DOJ and the United Healthcare lawsuit gets unsealed

Whistleblower Relator joined United in 2002 from Arthur Andersen, so did CEO Hemsley (Former Arthur Anderson CFO) bring him over to UHC?

United’s Patient Assessment Forms in lawsuit, where prescription and other data is used to substantiate an upcode

Was this one of those lawsuits that Burwell packed up into moth balls for Andy Slavitt so he could run CMS?

Larry Renfro, Optum Insights, former AARP CFO too was the one named in the United Lawsuit w/big bonus money 


Here's some links you might find of interest, like how Express Scripts uses Ingenix algorithms to produce a secret predictive score on whether or not you will take your meds..from 2010

An update on how that secret scoring works, complete with screenshots...and you know Express Scripts years ago bought Diversified Pharmaceuticals, United Healthcare's original PBM so they have loads of that software around the place.

Pay cash and those algos don't find enough data about you, then you default to non compliant outlier.

Here, go back to 2011 and it's the same dudes again that DOJ, Calpers, etc. all sued for short paying doctors and patients..the Ingenix algos, computer a score near you soon if not already.

I'm short on time but I have 8 years of this stuff about them and a lot about thier close to 300 subsidiaires they have bought and merged in to their operations, and God forbit the Surgical Care Affiliates deal goes though, but it probably will.  Get acquainted with OptumCare taking doctors and surgeons.  This is where SCA will be placed.  Here's a picture of what the new doctor's offices look like once they are taken over, appearing everywhere along with more of the Optum MedExpress Urgent Care centers.

If I have time later I can add more but geez, go search my blog if you want 8 years of connecting data dots and research.  

Bossman1967's picture

Im in medicare biz for 31 years all the insurance companies medicare patients and doctors screw the govt everyday sad. Now when I am 65 in 16 years medicare be bankrupt bullshit.

hotrod's picture

Been on the billing side of Healthcare and you are exactly right.  Example, A dermatologist will call you back to the office 3 times for something he could do in 1 visit. Now becomes 3 office visit charges. Government is billed for tons of products that are not used for home healthcare and alternate care patients.  Truly a license to steal in many areas of healtcare.

roadhazard's picture

Social Security and Medicare could take care of themselves if it were not for the theft. The Fed owes at least $3Trillion to SS.

skunzie's picture

Thanks to LBJ for figuring out how to raid the SS Trust Fund.  Been downhill ever since.

mainstream media is useless's picture

When is BTFD not the advice analysts give?

WillyGroper's picture

coding optimization practices...obfuscation by word majick.

summed up with 1 word.


TheRideNeverEnds's picture

Yea man, the DOW futures are down a solid quarter percent, nearly a hundred points down from the all time high.

They are pretty much crashing.

NoWayJose's picture

Now we know why Medicare is broke!

skunzie's picture

Want to see this shit get corrected once and for all.  Just make the corporate Board and top five stock holders personally liable for illegal activities under their watch.  If things occurred in the past, those who were on the board and top investors at the time would pay financially and criminally for their crimes.  All funds secured would go to to the treasury.

MedicalQuack's picture

Ok well here's more, this is not the only lawsuit going on as you can see yet another one with United accused of acting as a an agent of the government.  I talk to folks that used to work inside CMS and the ones in the know will tell you all about the United Healthcare/Optum incest at HHS and CMS.  It's the truth if you want to see it as United has been creating models for CMS for years and they make money.  United healthcare is run by a bunch of quants and algorithms anymore and if you happy to get some decent coverage from them, well good for you.

HHS even back sold out their own FDA agency on the ability to capture data and help with research of their own drugs.  Instead we have this monster that has not done one damn thing other than give drug companies access and data to use to sell their drugs that HHS joined.  They're selling data and access to data.

Have you gone to a Quest lab of late, yeah they are doing the billing there too.

Are you insured by Cigna?  Well guess what United Healthcare is your pharmacy benefit manager as Optum bought the exclusive PBM Catamaran a couple years ago and got all that business to lump right into OptumRX PBM.

Ok so they are risk fiddling algos for profit with Part D, so how much of that does Mayo Clinic get to see when Optum bills Medicare for Mayo?  Yup they do that too as well as a couple of other hospital chains who give them the outsourced business, so sign up as a hospital with Optum and get your Medicare bills upcoded all the time with those Optum analytics.  Optum 360 comes in and fires the hospital billers and hires them back with Optum 360 for less money and benefits and they have to use the software from Optum from there on out.

They cheat with proprietary computer code and eventually it catches up to them, like it did in 2011, we're back to the Ingenix algos that cheat once again.

The bastards didn't even want doctors to have the ability to group together and fight unfair insurance practices and the Supreme Court gave that to MDs a couple years ago.  It was always one doctor up against a group at an insurance company, all the time, so what were the odds on that!

A lot of companies or retirement plans don't invite them to bid anymore either as if they don't win the Medicaid or retirement contract, United comes back and sues.  PAs going through that right now as I write trying to get them off their backs as United didn't win, look it up.