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

The late Brian Thompson, along with two other executives, were accused of dumping stock prior to February announcement of a DOJ antitrust investigation into the company.

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.

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.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

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.