UnitedHealthcare corporate headquarters in Minnetonka, Minnesota. Photo: Ken Wolter/Shutterstock
A class action lawsuit brought by the City of Hollywood Firefighters’ Pension Fund alleges that UnitedHealthcare CEO Brian Thompson, who was slain in New York City last week, as well as two other company executives, were involved in insider trading in 2023.
In May, the Hollywood Firefighters’ Pension Fund filed a lawsuit against Thompson, along with UnitedHealth’s Chairman Stephen Hemsley and UnitedHealth Group CEO Andrew Witty. The suit alleges the executives sold over $120 million of UnitedHealth stock despite knowledge of an active Justice Department antitrust investigation into the company that they did not disclose to investors or the public.
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The DOJ’s antitrust case against UnitedHealth stemmed from the company’s January 6, 2021, announcement of its intent to acquire healthcare technology firm Change Healthcare.
The Hollywood Firefighters’ Pension Fund, which was established for the current and retired firefighters of the City of Hollywood, Florida. The fund, which manages over $300 million in assets for its beneficiaries, “purchased UnitedHealth common stock at artificially inflated prices … and suffered damages as a result of the violations of the federal securities laws,” according to the lawsuit, City of Hollywood Firefighters’ Pension Fund V. UnitedHealth Group, Andrew Witty, Stephen Hemsley, and Brian Thompson, filed in the U.S. District Court in the District of Minnesota.
The class action lawsuit aims to represent purchasers of UnitedHealth Group stock during the period between March 14, 2022, the first trading day after the DOJ first opened its investigation into the company, and February 27, 2024.
The DOJ’s antitrust case against UnitedHealth stemmed from the company’s January 6, 2021, announcement of its intent to acquire health care technology firm Change Healthcare. UnitedHealth Group sought to integrate Change Healthcare into its Optum unit. In September 2022, the United States District Court in the District of Columbia allowed the acquisition to proceed.
The DOJ had re-opened its investigation into UnitedHealth’s acquisition of Change. The lawsuit alleges that “UnitedHealth never established proper firewalls between Optum and UnitedHealthcare as required by its own policy, and as it told the court in the antitrust action, the DOJ and investors it would do.”
“UnitedHealth was aware of the DOJ investigation since at least October 2023,” according to the lawsuit. “Instead of disclosing this material investigation to investors or the public, UnitedHealth insiders sold more than $120 million of their personally held UnitedHealth shares.
“In the four months between learning about the DOJ investigation and the investigation becoming public, UnitedHealth’s Chairman Stephen Hemsley sold over $102 million of his personally held UnitedHealth shares and Brian Thompson, the CEO of UnitedHealthcare, sold over $15 million of his personally held UnitedHealth shares.”
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
