WSJ What’s News - DOJ’s UnitedHealth Investigation Sends U.S. Stocks Lower

Episode Date: February 21, 2025

P.M. Edition for Feb. 21. The Justice Department haslaunched a civil fraud investigation into UnitedHealth’s Medicare Advantage billing practices, sending its shares and broader U.S. stock indexes sliding. WSJ healthcare reporter Chistopher Weaver discusses what we know about the probe, its impact and where it could go next. Plus, the U.S. housing market logged another disappointing month in January. Reporter Nicole Friedman tells us what it would take to turn things around. And the Trump administration removes the acting director of ICE. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

The Justice Department is investigating United Health, pulling down health care stocks. Plus, new data shows the housing slump continues. Some economists may have been expecting that the sales decline would be smaller because there's been an increase in inventory in the homes available for sale. But really what we've seen is a lot of buyers are just deterred by these current mortgage rates and the high prices. And one fast food chain's high tech way of getting you your sandwiches quicker. It's Friday, February 21st. I'm Alex Osala for the Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. We report exclusively that the Justice Department has launched an investigation into United

Health Group's Medicare billing practices. According to people familiar with the matter, the new civil fraud investigation is examining how the company recorded diagnoses that trigger extra payments to its Medicare Advantage plans. Here to tell us more is Christopher Weaver, who covers US health care companies for the journal. Chris, break this down a little bit for us. What is the DOJ looking into? Yeah, so what we know now is that attorneys

for the DOJ's Civil Division and at the US Attorney's Office in Minnesota have questioned a number of medical providers who either used to work for United or had contracts with the company about its practices for recording diagnoses for Medicare billing purposes. The way United's Medicare Advantage plans work is they get paid basically a lump sum that goes up when people are sick or creating an incentive to add more diagnoses.

And as the journal reported in December, doctors working for United were adding such diagnoses at much higher than usual rates. And in some cases, say, they've experienced various forms of encouragement or even pressure to record diagnoses. So if I'm a patient with my insurance through United Health, what could the consequences of this be for me? For a patient, you may not even know what diagnoses are submitted on your behalf by

a Medicare Advantage insurer. This is something that largely happens behind the scenes and concerns the kind of taxpayer-funded payments that United and other insurers in that market receive. So for this story, you and other reporters reached out for comment from the DOJ and the Department of Health and Human Services Office of Inspector General, which is also involved in the probe, and they both declined to comment. UnitedHealth also declined to comment, but after the article was released, the company published a response on its website saying it wasn't aware of the Justice Department's

actions. It also said the journal's reporting amounted to a year-long campaign against Medicare Advantage and that any suggestion that its practices are fraudulent is outrageous and false. The spokeswoman for the journal said, we stand by our reporting. Now Chris, where can an investigation like this one end up? Yeah, civil fraud investigations sometimes go nowhere. Sometimes they result in monetary settlements. Occasionally, they've even turned criminal. At this point, it's too early to say where it's going. What we know is that in recent months they began

this effort, that they've interviewed a number of witnesses named in our articles over the last year as part of this broader investigation the journals conducted of Medicare Advantage companies. That was WSJ reporter Chris Weaver. Thank you, Chris. Oh, thank you. Major U.S. stock indexes were down today as investors reacted to the news of the DOJ probe as well as other signs of a lackluster economy. UnitedHealth stock dropped more than 7 percent. Its high stock price means it has a sizable effect

on the Dow which fell nearly 750 points or 1.7%. Other healthcare stocks, including Humana and CVS Health, also sold off. The Nasdaq fell around 2.2%, and the S&P 500 dropped about 1.7%. And speaking of UnitedHealth, a lawyer for Luigi Mangione, the man accused of killing the head of the company's insurance arm in December, protested what she said was unfair treatment of her client as he battles three sets of criminal charges. Today's court appearance, a hearing in a state court in Manhattan, was Mangione's first since December when he pleaded not guilty to murder charges. The judge didn't schedule a trial date. Even setting aside today's performance, investors are getting less sunny about the

future of the stock market. According to the latest survey from the American Association of Individual Investors, the number of traders who expect stock prices to fall over the next six months reached about 47% for the week ended February 12th. That's the highest level in more than a year. WSJ reporter Hannah Aaron-Lang spoke with our Your Money Briefing podcast about what's giving investors pause. It's a reflection of just a lot of uncertainties that are floating around right now. We had this DeepSeek tech route in January that shook confidence in some of those leading

artificial intelligence stocks. We've had persistently stubborn inflation. It's raising questions about the time and size of potential interest rate cuts. And we've had this blizzard of headlines coming out of the Trump administration on immigration, on trade policy, on reshaping the federal workforce. And I think investors are still digesting all of that and trying to figure out what will end up having a durable impact on American companies and markets. To hear more from Hannah, check out this coming Monday's episode of Your Money Briefing.

And it's not just investors. Consumers too are getting more pessimistic. New data today in the University of Michigan's Index of Consumer Sentiment showed that consumer confidence tumbled at the end of February to well below January's score and weaker than economists' expectations. The director of the survey said, in particular, its gauge of the buying conditions for durable goods, those are things that are meant to last five years or more, slumped,

in large part due to fears that price increases related to tariffs are coming soon. Coming up, what could it take to get the housing market going again? That's after the break. That's after the break. According to new data out today from the National Association of Realtors, U.S. home sales fell 4.9% in January from the month before. That's a much bigger decline than the 2.6% that economists anticipated.

Nicole Friedman covers the housing market for the journal, and she's here to give us the big picture. Nicole, this is the latest in two years of very sluggish home sales. We've talked a lot about it on the show, the high prices, the high mortgage rates, low inventory. So even though all that has been going on for a while, last month's decline was bigger than anticipated. Why was that? So the rates are really just holding steady at around 7% and so that's continuing to keep people out of the market. It's also been a cold winter and winter is usually a slow time for home sales. People don't like to go house hunting in the snow, in the rain, and also some economists may

have been expecting that the sales decline would be smaller because there's been an increase in inventory in the homes available for sale. But really what we've seen is even with that increase in inventory, a lot of buyers are just deterred by these current mortgage rates and the high prices. So if we take out the weather factor, I guess, could rising inventory be enough to get the housing market going again? So definitely rising inventory is good for buyers. It gives them more options and also gives them a bit more

leverage to negotiate that buyers no longer have to make an offer the same day they see a house. They're not necessarily competing against other buyers. And so that might be enough to make it more affordable or to entice some buyers into the market. And the spring is usually the busiest time for home sales. And so we could also just see more activity because buyers have been waiting for the spring

and are going to jump in in the next couple of months. We noted in this morning's show that rents are rising in much of the country. Could that possibly boost home sales, like maybe push people to buy? A lot of first-time buyers, you know, they really weigh that rent versus buy cost. And what am I paying in rent versus what would it cost me to own? As rents rise, that is a major factor in pushing renters to say, well, maybe let's buy even if it's expensive, if we can afford it, then

we'd be able to lock in that cost for the next 30 years. So definitely rising rents could push more people to consider buying. That was WSJ reporter Nicole Friedman. Thank you, Nicole. Thanks for having me. In other news, the Food and Drug Administration has declared that the shortage of weight-loss medications Wigovia and Ozempic has been resolved. The company that makes the drugs Novo Nordisk said the announcement confirms that the U.S. supply of the prescription-only drugs now meets or exceeds both current and projected

demand. The crypto exchange Coinbase says the Securities and Exchange Commission plans to drop a lawsuit against it. The suit had sought to regulate the company as a stock exchange. Dismissing it would require a commission vote, which the company expects to happen next week. The SEC is making peace with crypto firms after Coinbase and others poured millions into helping elect lawmakers who were friendlier to the industry. EV makers are under scrutiny in Italy.

The country's competition watchdog has launched several investigations into the local arms of Stellantis, Volkswagen, BYD, and Tesla. It's looking into whether the car makers failed to inform customers about the limitations of their electric vehicle battery performance and warranties. The companies didn't immediately respond to a request for comment. And we're exclusively reporting that the Trump administration has removed the acting director of immigration and customs enforcement amid frustration that deportations haven't accelerated faster. That's according to administration officials and other people familiar with the matter. One official said the administration is shaking up ICE's leadership and that it's expected to announce a new acting director soon.

A spokeswoman for the Department of Homeland Security said the acting director, Caleb Vitello, is actually being promoted. Efforts to reach Vitello weren't immediately successful. And finally, Chick-fil-A is on a mission to get you your sandwich faster. The booming chicken chain has an elite team that it sends out to individual restaurants. Once it's there, the team uses high-flying drones to understand drive-through traffic patterns, and it monitors security cameras in the kitchen

to find where slowdowns happen. Our restaurants reporter, Heather Haddon, says the team uses that footage to help each restaurant up its game. Heather Haddon, Reporter, The New York Times So individual operators actually ask this team to come out when they're having some kind of issue or they just want to be more productive. They're all looking to increase sales and the operators are rewarded for doing that.

So it's in the operator's interest to actually have this team come out and analyze, you know, where are the bottlenecks in the drive-thru? Do you need more order takers in the drive-thru? Do you need more order takers in the drive-thru? Do you need to split up duties in the actual restaurant more efficiently between more people to speed things up? Could you have some kind of access door to get people their food directly from the restaurant into the drive-thru? They're willing to look at all kinds of possible solutions to try to speed things up for these operators who really want to get as many people in and out of their drive-thru as possible and to have as best experience as possible as well.

Chick-fil-A's insights are also reshaping the way it builds new restaurants. Last summer, it opened a location outside Atlanta that has a second-floor kitchen that delivers food down to customers through a small elevator, like a dumbwaiter. It can serve about 700 cars an hour. And that's What's News for this week. Tomorrow you can look out for our weekly markets wrap-up, What's News in Markets. Then on Sunday we'll have the first episode of our new special series, Building Influence, where we look at how China spent more than a trillion dollars to make friends around

the world and undercut the US. That's on What's New Sunday. And we'll be back with our regular show on Monday morning. Today's show was produced by Anthony Bansi and Pierre Bienneme with Deputy Editor, Chris Sinzley. Michael Laval wrote our theme music. Aisha El-Muslim is our development producer. Scott Salloway and Chris Sinzley are our deputy editors.

And Philana Patterson is the Wall Street Journal's head of news audio. I'm Alex Osala. Thanks for listening.