The Justice Department has reportedly launched a civil fraud investigation into UnitedHealth Group Inc’s Medicare billing practices.

The probe began in recent months and will examine UnitedHealth’s Medicare Advantage plans and physician groups following reports that the company received billions in federal payments for questionable diagnoses.

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The insurance giant is already under scrutiny. In January, the Federal Trade Commission released a second interim staff report detailing significant price markups on specialty generic drugs by UnitedHealth’s pharmacy benefit management unit along with CVS Health Corp.’s CVS Caremark and Cigna Corp.’s Express Scripts.

The Wall Street Journal reported that Medicare paid UnitedHealth ( UNH ) substantial sums based on diagnoses added to patients’ records, some of which doctors said were irrelevant or undocumented.

The WSJ report’s analysis of Medicare data from 2019 to 2021 found that UnitedHealth ( UNH )-employed doctors significantly increased the number of lucrative diagnoses for patients in the company’s Medicare Advantage plans.

Additionally, some diagnoses were added without physician treatment, including through in-home nurse visits, leading to an extra $8.7 billion in federal payments in 2021.

Each visit by UnitedHealth ( UNH )-employed nurses was valued at an average of $2,735 in additional government reimbursements.

The WSJ report added that UnitedHealth ( UNH ) has defended its Medicare billing practices, arguing that they lead to more accurate diagnoses, improve patient care, and reduce healthcare costs. The company has previously stated that it performs well in Medicare audits and has disputed the Journal’s findings.

UnitedHealthcare, one of the largest health insurers in the U.S. with over 50 million members, has faced ongoing criticism over its claim denial practices.

A Senate investigation earlier this year concluded that Medicare Advantage providers, including UnitedHealthcare, intentionally denied claims to increase profits.

As per a recent media report, UnitedHealthcare, the insurance arm of UnitedHealth ( UNH ), is reportedly offering some employees in its benefits operations unit a chance to take a buyout if they resign by March 3.

In a social media post, investor Bill Ackman said,” When a company, in this case United Healthcare, attacks its critics, the probability that it has committed fraud or is guilty of a crime increases substantially.”

“My psychological short here is paying off and I would avoid this stock,” Ackman added.

Price Action: UNH stock was down 10.2% at $451.36 during the premarket session at the last check on Friday.

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