This week, I haven’t seen any reincorporations, so we’re at lull.
Will that, I thought it might of interest to highlight a recent securities fraud lawsuit filed against United Healthcare. This the complaint on The Rosen Law Firm’s website.
The core allegations seem to be that United Healthcare issued misleading guidance before the killing of its CEO and stuck with its earnings guidance after the killing of its CEO on December 4, 2024:
- On December 3, 2024, ahead of its December 4, 2024 investor conference in New York City, UnitedHealth introduced its 2024 outlook. The guidance included net earnings of $28.15 to $28.65 per share and adjusted net earnings of $29.50 to $30.00 per share.
- This guidance was materially false and misleading at the time it was issued because it omitted how the Company would have to adjust its strategy (which resulted in heightened denials compared to industry competitors) because of scrutiny from the United States Senate, as well as public scrutiny. Because of the change in strategy, the Company was
deliberately reckless in issuing the 2025 guidance as it related to net and adjusted earnings per share.- On January 16, 2025, subsequent to Mr. Thompson’s murder, the Company
announced that it was sticking with its previously issued guidance. Specifically, the Company issued a press release entitled “UnitedHealth Group Reports 2024 Results.” The press release affirmed the guidance issued on December 3, 2024. It stated the following, in pertinent part:
UnitedHealth Group affirmed the 2025 performance outlook established in December
2024, including revenues of $450 billion to $455 billion, net earnings of $28.15 to
$28.65 per share, adjusted net earnings of $29.50 to $30.00 per share and cash flow
from operations of $32 billion to $33 billion.- The statement in ¶ 33 was materially false and misleading at the time it was
made because it omitted that the Company was no longer willing (as a result of heightened
scrutiny against the Company, as well as open hostility against the Company from large swaths of the general public) to use the aggressive, anti-consumer tactics that it would need to achieve $28.15-$28.65 in earnings per share, or $29.50 to $20.00 in adjusted net earnings per share. As such, the Company was deliberately reckless in doubling down on its previously issued guidance.
These strike me as forward-looking statements. Usually, this means that the pleading standard for a fraud claim here will be higher than statements about historical facts. To establish liability, they’ll have to show that United Healthcare had “actual knowledge . . . that the statement was false or misleading” at the time it was made.
A few months later, United Healthcare reduced its guidance:
- On April 17, 2025, UnitedHealth shocked the market with revised full year
guidance. UnitedHealth issued a press release in which it stated that its 2025 net earning outlook would be revised to $24.65 to $25.15 per share (as compared to the prior range of $28.15 to $28.65 per share), and adjusted earnings of $26 to $26.50 (as compared to the prior range of $29.50 to $30.00 per share).- The press release indicated that UnitedHealth is allowing increased coverage and care for beneficiaries of Medicare Advantage. As discussed earlier, it had been documented by the United States Senate how UnitedHealth denied claims to beneficiaries under Medicare Advantage.
I’m in the skeptical camp on this suit at this point. The stronger inference here may be that United Healthcare was reeling from the public murder of its CEO and hadn’t yet decided what, if anything, to do. They affirmed guidance that was already out there. After a little time passed, they released updated guidance. I’m not confident that the plaintiffs can establish at the motion to dismiss stage that that United Healthcare clearly knew it wouldn’t achieve that guidance at the time it made the statement.
To the extent that United Healthcare could have updated that guidance sooner once it knew more, that also isn’t going to be a basis for liability. Companies generally do not have any duty to update forward-looking statements.