Compliance December 6, 2024

Firefighter Pension Complaint Alleges Insider Trading by United Health Execs, Including Slain CEO

The late Brian Thompson and two other executives were accused of dumping stock prior a DOJ antitrust investigation into the company.

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A class action lawsuit brought by the City of Hollywood Firefighters’ Pension Fund alleged that slain UnitedHealthcare CEO Brian Thompson, and two other executives, were involved in insider trading in 2023.

The claim, filed May 15, alleged that Thompson, UnitedHealth Group CEO Andrew Witty, and UnitedHealth Group executive chairman Stephen Hemsley sold millions of dollars in stock upon learning in October 2023 that the DOJ had re-opened an antitrust investigation into UnitedHealth’s acquisition of Change Healthcare.

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The suit, titled 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, seeks class action status and aims to represent purchasers of UnitedHealth Group stock during the class period between March 14, 2022, the first trading day after the DOJ first opened its investigation into the company, and February 27, 2024.  

The claim alleges insiders, including Thompson and the named defendants, sold more than $120 million in stock after learning of the re-opening of the federal investigation, which was not made public until a February 27 report from the Wall Street Journal. 

According to the claim, Hemsley sold $102 million of his shares in the company, while Thompson sold $15 million worth of shares after learning the investigation was re-opened. The claim states that despite being aware of the investigation, it was not disclosed to investors or the public. 

The claim by participants in the Hollywood Firefighters Pension, which has $300 million in assets according to the court record, argues the pension fund suffered damages because of the decline in the company’s stock and seeks compensatory damages for plaintiffs. The fund requests a trial by jury to determine compensation.

As of January 31, 2024, UnitedHealth Group had more than 921 million shares outstanding, owned by “hundreds of thousands of investors.” 

A spokesperson for UnitedHealth Group did not respond to requests for comment. Law firms representing the plaintiff did not immediately respond to requests for comment. 

The DOJ’s antitrust case against UnitedHealth stemmed from the company’s January 6, 2021, announcement of its intent to acquire healthcare technology and payment processing firm Change Healthcare. UnitedHealth Group sought to integrate Change Healthcare into its Optum unit. 

Change Healthcare, operated an electronic data interchange clearinghouse which “enable the transmission of claims, remittances, and other critical information between payers and providers.”

The DOJ filed a lawsuit on February 24, 2022, challenging UnitedHealth’s acquisition of Change Healthcare, alleging the integration of Change and Optum would grant the company “unparalleled access to information regarding nearly every health insurer, as well as health data on every single American.”

UnitedHealth had already operated an EDI clearinghouse through its Optum Business. The DOJ claimed in its 2022 lawsuit the combined business would have access to a “vast amount of amount of its rival health insurers’ competitively sensitive information,” which would give the company an unfair advantage. 

UnitedHealth Group, in response, promised to set up a firewall to keep Change and Optum data separate after the merger. In September 2022, the United States District Court in the District of Columbia allowed the acquisition to proceed. 

According to reporting from the Wall Street Journal in February, the DOJ had re-opened its investigation into UnitedHealth’s acquisition of Change. Shares of the company fell $27 the day the story was published, erasing $25 billion in shareholder value, the claim stated. 

The pension claim alleges that UnitedHealth did not establish firewalls between its business units, as the company said it had.

“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,” the claim states. “Firewalls were never properly created for certain business applications. Despite assurances to the contrary, there was never a meaningful technological separation between Optum and UnitedHealthcare that prevented the sharing of CSI.”

UnitedHealthcare CEO Brian Thompson was murdered Tuesday in New York City. The motive for the murder is still being investigated.

Client Service December 6, 2024

How to Assess Workforce Priorities Amid Regulatory and Economic Shifts

Experts at a WTW panel recommended employers remain adaptable to workplace demands.

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Art by Ryan Davis
How to Assess Workforce Priorities Amid Regulatory and Economic Shifts

As employers prepare for evolving demands from their workforce, industry experts at a WTW panel held on Wednesday emphasized governance, compliance and investment strategies as focal points for navigating future challenges.

While exact developments from a new U.S. presidential administration and evolving market dynamics cannot be predicted, the panelists gave employers advice on areas for which they can prepare. They all agreed that employers can remain proactive in meeting workforce demands by strengthening governance, monitoring regulatory developments and optimizing investment strategies.

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Governance and Compliance

Courtney Stubblefield, WTW’s leader of health and benefits insights and commercialization for North America, highlighted the ongoing importance of governance, particularly in health and wellness benefits. She pointed to finalized rules on mental health parity, which have long-standing bipartisan support, as a key area requiring employer attention.

“Some of the intensity of audits and activity that we saw during the [President Joe] Biden administration would continue, but being in compliance with that, making sure that you’ve done the comparative reviews required there, [is] obviously a very good thing to do,” Stubblefield said.

Prescription drug pricing, another bipartisan focus, remains a significant issue for employers. Stubblefield recommended that organizations remain vigilant and adapt their health benefits programs to address potential regulatory changes.

Retirement and Health Savings Accounts

In terms of the increasingly popular use of health savings accounts, Beth Ashmore, WTW’s retirement client experience leader for North America, acknowledged discussion of liberalizing the benefit, such as increasing contribution limits or decoupling health savings accounts from high-deductible health plans. However, she cautioned that such changes are costly and face uncertain prospects, leaving HSAs largely unaffected in the near term.

Speaking on pooled employer plans as a way for plan sponsors to offer retirement plans, Ashmore said they will continue to offer growth and flexibility for employers and employees.

“I actually think that the pooled employer plans are in pretty good standing,” Ashmore said. “A lot of those retirement policies have been put into place on a bipartisan basis. They’re largely defined contribution, and they allow a lot more flexibility for employers and employees to make sure that they’re having retirement savings.”

Investment and Risk Management

Jon Pliner, WTW’s head of delegated portfolio management, turned the conversation to economic strategies, emphasizing interest rate management and portfolio diversification.

“From an interest rate standpoint, and managing the interest rate exposure, consider whether or not you have the ability to be more capital efficient in how you’re managing that interest rate exposure,” Pliner said. “Maximize the dollar of hedging that you’re doing with each dollar within your hedging portfolio.”

Pliner also recommended exploring real assets, including infrastructure and natural resources, to hedge against inflation and stabilize portfolios.

“In an environment where we may see slightly higher inflation than long-term averages, [investors should be] looking at real assets as an opportunity within the portfolio and going beyond just what we see,” Pliner said.

He also said many plan sponsors are zoning in on real estate, but investors should also look into infrastructure and natural resources. They should evaluate whether their portfolio includes assets with strong, stable return characteristics that can support return expectations while minimizing downside risk, he said.

Business Friendly

Addressing potential changes under the incoming administration of President-elect Donald Trump, Lori Wisper, WTW’s global compensation strategy and design solution leader, noted that no sweeping regulatory shifts are expected in executive compensation, which had been a factor under the prior administration.

“The Securities and Exchange Commission is likely to adopt a more business-friendly stance, particularly toward industries like tech that have faced recent scrutiny,” Wisper said.

She added that existing executive pay programs would largely remain unaffected, but advised employers to stay informed on any sector-specific implications.

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