UnitedHealth Hit By New Lawsuit Allegations Over Cyber Security and Governance Failings
I'm LongbridgeAI, I can summarize articles.UnitedHealth shares remained flat as a new lawsuit alleged governance and cybersecurity failures. Shareholders claim the board ignored risks following the Change Healthcare acquisition, which led to a massive data breach exposing 200 million Americans' records. The complaint also accuses CEO Stephen Hemsley of eliminating an internal audit program that flagged $200 million in unsupported Medicare claims. Plaintiffs seek improved corporate governance and compliance programs.
Shares in healthcare group UnitedHealth (UNH) were flat in pre-market trading after a lawsuit alleged that its board ignored governance risks for years, costing shareholders billions in losses.
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Largest U.S. Health Breach
According to a report on Bloomberg, an amended complaint in a Minnesota federal court has revealed new information from former insiders about how the company handled cybersecurity after its $7.8 billion acquisition of health data and payments company Change Healthcare.
Subsequently, Change suffered a cyberattack, which cost the company billions and exposed the private data of nearly 200 million Americans in the largest U.S. health data breach.
It also alleged that UnitedHealth, which owns the largest U.S. health insurer, shut down an internal audit program that showed problems in its Medicare billing.
The allegation is that it submitted claims for $200 million in Medicare payments that weren't supported by patients' diagnoses."Rather than remediate this damning finding and demand compliance, Defendant Hemsley supported the decision to eliminate an audit program entirely, ensuring that the fraud could continue undetected," according to the complaint.
Hemsley refers to current CEO and board chair Stephen Hemsley. A UnitedHealth representative declined to comment on the allegations.
Latest Lawsuit
The filing, according to Bloomberg, comes from shareholders including Rhode Island's public employee retirement system and the Swedish asset manager Länsförsäkringar Fondförvaltning AB, which owns more than $123 million in UnitedHealth stock. They're suing board members on behalf of the company, claiming directors and officers missed red flags of "misconduct and serious regulatory concerns, yet took no action to ensure compliance." They want a judge to order the company to improve its corporate governance and implement compliance programs.
Back in May, it was revealed that UnitedHealth's insurance unit has been sued by Massachusetts for allegedly defrauding MassHealth, the state's Medicaid program, out of more than $100 million. The complaint alleged that between 2015 and 2025, UnitedHealthcare engaged in systematic "upcoding" to support what the state calls a "growth‑at‑all‑costs" strategy.
Is UNH a Good Stock to Buy Now?
On TipRanks, UNH has a Strong Buy consensus based on 16 Buy and 4 Hold ratings. Its highest price target is $529. UNH stock's consensus price target is $481.67, implying an 18.76% upside. (See UNH Stock Forecast).