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WALL STREET TO INSURERS: KEEP DENYING CARE  
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Katya Schwenk
June 6, 2025
The Lever
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_ UnitedHealth Group’s investors were profiting from its high
denial rates. Now, they’re suing to ensure that doesn’t change. _

, AP Photo/Kevin Hagen

 

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 29 million people
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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
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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
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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
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even under a doctor’s orders. The corporation was one of the first
insurers to come under fire
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for using artificial intelligence tools to deny care.

The company’s denial rates
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renewed attention in December following the assassination of its CEO.
In the months since, as it’s faced a Justice Department probe
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and several major lawsuits, the company has struggled to regain
control of its public image. Amid its damage control, the insurer
announced
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reforms
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to its use of prior authorizations, which theoretically could reduce
denials
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and help people access more health care. 

The investor lawsuit has now been consolidated
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into a larger ongoing shareholder suit against UnitedHealth Group. In
its annual shareholder meeting this week, the company tried its best
to quell
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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
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facing discontent from investors. Last May, the California Public
Employees’ Retirement System (CalPERS) — the nation’s largest
public pension fund [[link removed]], managing
$500 billion in workers’ retirement savings, and a UnitedHealth
Group investor — sued UnitedHealth Group
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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
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in order to collect more government money — allegedly “a
longstanding 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
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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
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by the U.S. 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 X
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“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
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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
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makes it into law. The insurer is also facing probes from lawmakers
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over its billing practices.

Yet Wall Street has different plans for UnitedHealth Group. On Monday,
shareholders greenlit a $60 million pay package
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for the company’s CEO and shot down a proposal
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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.

_The Lever_ is a nonpartisan, reader-supported investigative news
outlet that holds accountable the people and corporations manipulating
the levers of power. The organization was founded in 2020 by David
Sirota, an award-winning journalist and Oscar-nominated writer who
served as the presidential campaign speechwriter for Bernie Sanders.

* health insurance
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* UnitedHealth
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