Hollywood Firefighters Pension Fund Sues UnitedHealth Group Executives for Alleged Insider Trading
Photo: Courtesy UnitedHealth Group
Hollywood Firefighters Pension Fund, based in Florida, has filed a lawsuit against UnitedHealth Group executives, including the late Brian Thompson, for alleged insider trading. The lawsuit, which was filed in May in federal court in Minnesota, also names UnitedHealth Group CEO Andrew Witty and board chairman Stephen Hemsley.
The lawsuit seeks class action status on behalf of all individuals who purchased shares of UnitedHealth’s common stock between March 14, 2022, and February 27, 2024. The latest development in the case is an order for the UnitedHealth executives to respond to the complaint alleging violations of the Federal Securities Laws by December 23. However, this deadline was extended to March 1, 2025, on December 4.
Key Points:
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- The lawsuit was filed by Hollywood Firefighters Pension Fund against UnitedHealth Group executives for alleged insider trading.
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- The lawsuit seeks class action status for individuals who purchased UnitedHealth’s common stock between March 14, 2022, and February 27, 2024.
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- An order for the UnitedHealth executives to respond to the complaint was extended to March 1, 2025.
Significance of the Lawsuit
The lawsuit gained attention following the tragic shooting of UnitedHealthcare CEO Brian Thompson in Manhattan on December 4. After a five-day manhunt, Luigi Mangione was charged with the second-degree murder of Thompson. The lawsuit revolves around UnitedHealth Group’s acquisition of Change Healthcare in 2021. The acquisition involved Optum, a UnitedHealth affiliate, acquiring Change and its first-pass claims editing business and electronic data-interchange clearinghouse.
When Change Healthcare was targeted by a ransomware attack in February, it impacted claims payments for various hospitals and health systems. The lawsuit highlights the access that Change has to customer sensitive information and claims data.
Repercussions of the Acquisition
In response to a lawsuit by the Department of Justice, UnitedHealth defended the acquisition by stating that Optum would maintain a data firewall to prevent the sharing of sensitive information between Optum and UnitedHealthcare. However, on February 27, 2024, The Wall Street Journal reported that the DOJ had reopened its antitrust investigation into UnitedHealth.
As a result, the company’s stock plummeted by $27 per share, representing a $25 billion loss in shareholder value. The lawsuit alleges that UnitedHealth was aware of the DOJ investigation since at least October 2023 but failed to disclose this information to investors or the public. Instead, UnitedHealth insiders sold over $120 million of their personally held shares, with Hemsley and Thompson being among the sellers.
Key Developments:
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- The lawsuit highlights UnitedHealth Group’s acquisition of Change Healthcare and the subsequent impact on the company’s stock value.
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- The DOJ’s antitrust investigation led to a significant decline in UnitedHealth’s stock price.
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- UnitedHealth insiders sold over $120 million of their personally held shares amid the DOJ investigation.
Implications for Hollywood Firefighters Pension Fund
The pension fund, which manages over $300 million in assets for current and retired firefighters, alleges that due to insider knowledge not available to the public or investors, it purchased UnitedHealth common stock at “artificially inflated prices” and suffered financial losses as a result. The plaintiffs are seeking compensatory damages, as well as costs and attorneys’ fees.
