Investors Are Pressing UnitedHealth Group to Deny More Care
UnitedHealth Group’s investors have profited from its sky-high coverage denial rates. Now, as the company faces mounting public pressure to approve more patient care, they are suing to stop the insurer from changing its “corporate practices.”
UnitedHealth Group signage on the floor of the New York Stock Exchange in New York City on May 15, 2025. (Michael Nagle / Bloomberg via Getty Images)
A health care industry giant’s Wall Street overlords just admitted that the company’s sky-high health insurance coverage denial rates reaped them enormous profits — and to keep the money flowing, they’re suing to stop the insurer from approving more patient care.
UnitedHealth Group has been facing growing discontent from its investors, a battle that — as the corporation faces mounting public scrutiny over its care denials — could shape the future of health insurance for twenty-nine million people.
A May 7 lawsuit brought by a small-time investor in UnitedHealth Group is one of the latest chapters in the battle, arguing that the company’s tanking stock performance this spring had cost its investors unfairly. Some corporate media reports framed the suit as investors taking on the company for its “aggressive, anti-consumer tactics.”
But in reality, court documents reveal, some of UnitedHealth Group’s investors are concerned that the company’s changing “corporate practices” have been too consumer-friendly. And they suggest that these practices are a driving force behind UnitedHealth Group’s disastrous first quarter of 2025, which saw cratering stock value and the departure of longtime CEO Andrew Witty.
UnitedHealth Group has one of the highest denial rates of any major insurer, which can force patients to forgo critical treatment, even under a doctor’s orders. The corporation was one of the first insurers to come under fire for using artificial intelligence tools to deny care.
The company’s denial rates received renewed attention in December following the assassination of its CEO. In the months since, as it’s faced a Justice Department probe and several major lawsuits, the company has struggled to regain control of its public image. Amid its damage control, the insurer announced reforms to its use of prior authorizations, which theoretically could reduce denials and help people access more health care.
The investor lawsuit has now been consolidated into a larger ongoing shareholder suit against UnitedHealth Group. In its annual shareholder meeting this week, the company tried its best to quell the growing discontent among investors, who are increasingly shaken by the company’s tanking stock value and poor financial outlook.
As UnitedHealth Group’s investors revolt, the admissions in the lawsuit serve as a reminder that Wall Street greed is one of the reasons for its tendency to deny patients care.
“The objectives of patients and shareholders are often at odds,” Wendell Potter, a former health insurance executive turned reform advocate, told the Lever. The most recent investor lawsuit, he said, showed that investors “certainly want to hold [UnitedHealth Group] accountable to make themselves richer, to enhance their earnings, their portfolio.”
“That is not the same objective that most patients have,” he added. “But it is the way that our health care system is now being run.”
“Significant Losses and Damages”
Even before Brian Thompson, the CEO of UnitedHealthcare, UnitedHealth Group’s insurance arm, was killed in December, the company was facing discontent from investors. Last May, the California Public Employees’ Retirement System (CalPERS) — the nation’s largest public pension fund, managing $500 billion in workers’ retirement savings, and a UnitedHealth Group investor — sued UnitedHealth Group, alleging securities fraud and insider trading by executives, including Thompson.
The 2024 case, which CalPERS filed in Minnesota federal court, alleged that UnitedHealth Group was overbilling Medicare by “upcoding,” or giving patients questionable diagnoses in order to collect more government money — allegedly “a long-standing practice” at the company. When news broke that federal regulators were taking a closer look at the company’s billing practices, according to the case, the company’s stock price dropped, costing its shareholders.
The case expanded in the wake of Thompson’s death and the subsequent national attention on UnitedHealth Group’s business practices, including a new investigation by the US Department of Justice — which, once again, shook UnitedHealth Group’s stock price.
Yet last month’s investor lawsuit, brought by a shareholder in New York, had a narrower focus: the company’s new projections for 2025, released in April, forecasted a significant cut in earnings. One analyst quoted in court documents, Lance Wilkes, called the adjusted guidance, which shocked the market, “very unusual.”
The May lawsuit noted that the company had attributed the poor results in part to the “increased coverage and care for beneficiaries of Medicare Advantage.” So, too, did Wilkes, who in an April media appearance attributed the stock value drop to “probably United, and maybe the industry, pulling back on prior authorizations” — i.e., denying care to patients less often.
As a result, its shareholders were seeing a “precipitous decline in the market value” of the company, leading to “significant losses and damages,” per the lawsuit.
As billionaire hedge fund manager Bill Ackman put it in a since-deleted — but prescient — February post on Twitter/X: “I would not be surprised to find that the company’s profitability is massively overstated due to its denial of medically necessary procedures and patient care,” quipping that “if I still shorted stocks, I would short United Healthcare.”
The new lawsuit, Potter said, was emblematic of Wall Street’s influence on the health care system, where the “the top objective of these companies is and always will be to increase shareholder value.”
In that sense, UnitedHealth Group flew too close to the sun after it spent years denying care at high rates to appease its Wall Street overlords. Now, as the company scrambles to reform its image, in part by announcing it will deny less care, its investors are frustrated that its stock value is declining.
Still, Potter warned that UnitedHealth Group’s own claims about reforms to its denials process should be treated with skepticism.
“In my view, I think this is mostly for show,” he said. “It’s mostly for PR.”
He saw UnitedHealth Group’s claims as attempts to stave off regulation from lawmakers who see the company as an increasingly valuable political target: “They’re under pressure to try to show lawmakers that they can self-regulate,” he explained.
Shortly after the new investor case was filed, attorneys for CalPERS intervened in the new investor lawsuit, and last week, the plaintiff agreed to drop the suit and consolidate it with the larger case.
The investor battles will continue alongside other attempts to hold UnitedHealth Group accountable. Another lawsuit is currently challenging the company’s alleged use of AI to deny claims — a practice the company may be empowered to continue if Republicans’ AI blank check provision makes it into law. The insurer is also facing probes from lawmakers over its billing practices.
Yet Wall Street has different plans for UnitedHealth Group. On Monday, shareholders greenlit a $60 million pay package for the company’s CEO and shot down a proposal that would have increased investor scrutiny of executive payouts.
“I think you would find that shareholders would hold them accountable differently from the way most consumers would want them to be held accountable,” Potter said.