Brian Thompson named in lawsuit alleging insider trading
The lawsuit centers on a DOJ investigation into UnitedHealth Group's business segments, including Optum and Change Healthcare.
Photo: Courtesy UnitedHealth Group
Hollywood Firefighters Pension Fund, based in Florida, is suing UnitedHealth Group executives, including the late Brian Thompson, for alleged insider trading.
The lawsuit, filed in May in federal court in Minnesota, also names UnitedHealth Group CEO Andrew Witty and board chairman Stephen Hemsley.
It asks for class action status on behalf of all who purchased shares of UnitedHealth's common stock between March 14, 2022 and February 27, 2024.
The latest in the case is an order for the UnitedHealth executives to answer the complaint charging violations of the Federal Securities Laws before December 23. However, on December 4, that date was extended to March 1, 2025.
WHY THIS MATTERS
The lawsuit has come to light due to the fatal shooting of UnitedHealthcare CEO Brian Thompson in Manhattan on December 4. After a five-day manhunt for the gunman, Luigi Mangione has been charged with the second-degree murder of Thompson.
The lawsuit centers on UnitedHealth Group's acquisition of Change Healthcare in 2021. UnitedHealth affiliate Optum acquired Change and its first-pass claims editing business and electronic data-interchange clearinghouse that does business with numerous providers and payers. When Change was hit by a ransomware attack in February, it affected claims payments for numerous hospitals and health systems.
Change has access to a significant amount of customer sensitive information (CSI) and claims data, the lawsuit said.
In defense of the acquisition to a lawsuit brought by the Department of Justice, UnitedHealth asserted that Optum would maintain a data firewall to prevent this sensitive information from being shared between Optum and UnitedHealthcare. The merger was allowed to go through.
"The truth emerged on February 27, 2024, when The Wall Street Journal reported that the DOJ had reopened its antitrust investigation into UnitedHealth," the lawsuit said.
The DOJ was investigating the relationship between UnitedHealth's various business segments, including Optum, the complaint said. As a result, the company's stock declined by $27 per share, or $25 billion in shareholder value.
UnitedHealth was aware of the DOJ investigation at least since October 2023, the lawsuit said. Instead of disclosing this information to investors or to the public, UnitedHealth insiders sold more than $120 million of their personally held UnitedHealth shares.
Hemsley sold over $102 million of his personally held shares and Thompson sold over $15 million shares.
THE LARGER TREND
The pension fund was established for the benefit of current and retired firefighters. It manages over $300 million in assets.
Because of insider knowledge not available to the public or investors, the pension fund purchased UnitedHealth common stock at "artificially inflated prices" and suffered damages as a result, the complaint said.
The plaintiffs want compensatory damages, plus costs and attorneys' fees.
Email the writer: SMorse@himss.org
