AP Photo
UnitedHealth Group CEO Stephen Hemsley in 2014
In a surprise announcement last week, UnitedHealth Group revealed that Andrew Witty is stepping down as CEO of the health insurance leviathan, citing “personal reasons” for his departure. Before Witty, UnitedHealth was overseen by Brian Thompson, a former executive who was allegedly gunned down by Luigi Mangione on the streets of New York last year. Taking Witty’s place is Stephen Hemsley, a UnitedHealth executive who previously served as CEO from 2006 to 2017. All three officials have been accused of insider trading, and this latest C-suite switch also comes at a time when the government is reported to have launched a criminal investigation of the company for Medicare fraud.
After a 2006 investigation into UnitedHealth Group’s backdating stock options—changing the grant date of stocks to increase their value—CEO William McGuire was forced to step down.
Hemsley, who then served as UnitedHealth’s COO, joined McGuire in returning hundreds of millions of dollars in stock options—in his case, $190 million. External investigators whom UnitedHealth had hired to investigate the backdating ultimately cleared Hemsley, finding that he “had little or no role in the negotiations of, or the process leading up to, the option award.”
Nearly two decades after his initial brush with public scrutiny, Hemsley was once again accused of impropriety, this time in a lawsuit brought by the Hollywood Firefighters’ Pension Fund, which claims that he, alongside slain CEO Thompson and outgoing CEO Andrew Witty, engaged in insider trading by selling off stocks while failing to disclose an antitrust investigation brought by the Department of Justice into UnitedHealth. The class action suit brought by the pension fund is currently before the United States District Court of Minnesota.
In addition to Hemsley, Chief Accounting Officer Tom Roos and Chief People Officer Erin McSweeney have also found themselves under scrutiny for collectively selling $101.5 million in stock shares prior to the antitrust disclosure.
The insider trading allegations have drawn the ire of consumer rights champions in Congress, including Massachusetts Sens. Elizabeth Warren and Ed Markey, who wrote to former SEC chairman Gary Gensler last year, urging an investigation into the allegations first surfaced by the firefighters’ pension fund. In the letter, Hemsley is cited by name.
“We write to request that the Securities and Exchange Commission (SEC) conduct an investigation of reports that ‘UnitedHealth Group, Inc. Chairman Stephen Hemsley and three senior executives netted a combined $101.5 million from stock sales’ made over a four-month period between the time when UnitedHealth officials reportedly learned of a Department of Justice (DOJ) antitrust probe of the company and when the probe was first publicly reported,” Warren and 16 other lawmakers wrote.
“Federal law bars individuals from ‘purchasing or selling a security while in possession of material nonpublic information’—in this case, reportedly, a DOJ investigation of the company. Violation of these laws may subject individuals to civil penalties ‘three times the amount of the profit gained or loss avoided’ and criminal penalties up to $5,000,000 and 20 years imprisonment,” they added.
Claims of insider trading are just one part of a series of allegations against the $280 billion firm that have rocked stock prices and led to multiple congressional hearings on the company’s business practices. Just days after the announcement that Witty would step down with Hemsley taking his place, The Wall Street Journal published an explosive scoop on the company, heralding yet another federal investigation, this time criminal.
According to the Journal report, the Department of Justice’s Criminal Division has been investigating UnitedHealth’s Medicare Advantage business practices since last year. An email exchange surfaced in one of the multiple lawsuits ensnaring the health care provider shows a company attorney cautioning that “the government has asked us some questions regarding Optum’s coding practices.” Optum is UnitedHealth’s technology and pharmacy services subsidiary.
“Medicare Advantage insurers are paid extra for covering sicker patients, creating an incentive to document diagnoses for patients they cover. In some cases, the Journal’s reporting has shown, questionable diagnoses by UnitedHealth added billions to taxpayers’ costs,” the report found.
In response to the Journal’s claims, UnitedHealth released a terse statement on the company website: “We have not been notified by the Department of Justice of the supposed criminal investigation reported, without official attribution, in the Wall Street Journal today. The WSJ’s reporting is deeply irresponsible, as even it admits that the ‘exact nature of the potential criminal allegations is unclear.’ We stand by the integrity of our Medicare Advantage program.”
The market has taken Witty’s resignation as an ominous sign. UnitedHealth stocks were down 15 percent on the news of his departure, trading close to $320 a share, down from a recent high of $630 in November. After the Wall Street Journal article was published, shares dropped to a new low of $255. Last week, UnitedHealth also said it was delaying its outlook for 2025, citing the fact that “the medical costs of many Medicare Advantage beneficiaries new to UnitedHealthcare [remain] higher than expected.”
Prior to the election of Donald Trump, Medicare Advantage purveyors like UnitedHealthcare were bullish on the hyper-accelerated privatization push heralded by Trump’s return to the White House. Project 2025, the proposed road map for Trump’s second term, laid out the plan to ramp up privatized health care, placing vast swaths of an aging population into the hands of Medicare Advantage providers. But a growing chorus, not limited to Democrats, has attacked health insurers for practices widely viewed as monopolistic and anti-consumer.
In the face of a swarm of legal and political challenges, as the Prospect reported in January, UnitedHealth paid an army of 50 lobbyists $5,860,000 in 2024 in an effort to push back against elected officials who argue that the company should be broken up and subjected to aggressive government enforcement actions. Those efforts haven’t dissuaded such officials from subjecting the company to continued criticism.
MAGA Republican stalwart Sen. Josh Hawley of Missouri, for instance, has pilloried companies like UnitedHealth in congressional hearings for what he describes as anti-competitive business practices. “The cost of healthcare is just totally unaffordable,” Hawley said. “The cost of prescriptions is unaffordable. And part of the reason—a big part of the reason—why is these companies. It’s mass consolidation. It’s classic monopolistic, sort of cartel-like behavior and vertical integration.”
