Recent shareholder lawsuits against health insurance company UnitedHealth Group may indicate that corporate committee decisions are subject to much greater scrutiny than they have seen in the past few years. The lawsuit raises questions about the level of accountability that must convey very important information to investors. and develop and approve business strategies that are ethical and not harmful to the public.
The lawsuit accused United Health of making false and misleading statements while it had not disclosed to investors, and ultimately lost its shareholder value of $170 billion in December 4, 2024 following the murder of United Care CEO Brian Thompson.
According to news reports, the shareholder complaint stated, “The defendant issued a false and/or misleading statement and did not disclose it. UnitedHealth had been engaged in a corporate strategy of denying health insurance to make a profit, which ultimately led to the murder of Brian Thompson.”
In fact, UnitedHealth had issued guidance on forecasts for 2025 a day before Thompson's murder. This is a forecast based on profitable strategies for companies that reject health insurance. A severe public pressure and scrutiny of regulations forced the company to adjust its business strategy, and the stock price plunged when it announced on April 17 that it would lower its 2025 growth forecast. In May, the insurance company completely retracted its 2025 forecast, and the stock price fell even further. As of May 14th, UnitedHealth Group shares had fallen 38.95% that year.
The lawsuit alleges that shareholders who purchased UnitedHealth shares between December 3, 2024 and December 3, 2025 to April 16, 2025 were fraudulent. They did or inflated prices at all. ”
Now, the UnitedHealth Board faces the challenge of fighting class action litigation seeking unspecified damage. The company is reassuring that it can develop and implement new, profitable business strategies that are not considered consumers. And it reduces the reputational damage caused by this crisis. As it could be seen as a first step into United Health turnaround, the company announced that CEO Andrew Whitty will step down “for personal reasons” and will be replaced by Chairman Stephen Hemsley, CEO of United Health from 2016 to 2017, who currently holds both CEO and chairman positions.
Any allegations of lawsuits and public and regulatory responses against the UnitedHealth Group situation may want to consider the following with the board:
There will be a greater scrutiny of disclosure of the impact of business decision-making on shareholders. The board has great discretion in pursuing business decisions, but the outcome of these decisions is judged more strictly, especially by shareholders. As the board's decisions are likely to result in more speculation, the board should be able to protect decisions with as much hard data as possible. Forecasts of businesses far from Mark can lead to resignation and litigation very well. Directors can consider including discussions of possible “upside” and “downside” in their predictions of full disclosure as needed. Timely disclosures that negatively affect your business can help investors make informed decisions and protect management from fraudulent claims. Transparency allows you to become friends with the board of directors.
There is a greater risk to approving business practices, an ethical boundary. If there is slight concern that business practices may be questionable at all levels, directors should try to find alternatives that do not harm consumers and expose the company to future litigation. It is unacceptable to put the company's reputation and future existence at risk. Deliberately engaged in unethical business practices can also lead to prison time.
Listening to customers and the public can help strengthen your business. They should not have realized that they should take the horrible murder of United Health executives and adjust their business practices. The company had information from customers about its refusal to claim that it was able to avoid unnecessary death and loss of shareholder value. When used correctly, customer engagement is key to a company's long-term growth. This situation shows that ignoring customer feedback can lead to a crisis for your organization.
