A federal judge in Minnesota has allowed part of a securities lawsuit against UnitedHealth Group to move forward, ruling Sept. 30 that the nation's largest public pension fund may pursue claims that the company misled investors about 2024 transactions that added $3.3 billion to its earnings. The California Public Employees' Retirement System (CalPERS) alleges the deals were used to hide weakness in UnitedHealth's Medicare Advantage business. None of the claims have been proven, and UnitedHealth denies wrongdoing.
U.S. District Judge Jeffrey Bryan dismissed most of the case, according to STAT. Of 48 alleged false statements, claims tied to 43 were dismissed, including those relating to upcoding and insider trading, Bloomberg reported. Claims tied to five statements about the 2024 transactions survived.
The ruling matters beyond Wall Street. About 34.9 million people, or 55% of eligible Medicare beneficiaries, were enrolled in Medicare Advantage plans in 2025. How those plans are paid affects federal spending and the Part B premiums every Medicare enrollee pays.
Inside the Judge's Split Decision
CalPERS sued UnitedHealth in 2024 and amended its complaint several times. A March 2025 amendment added allegations that UnitedHealth ran a scheme to make Medicare Advantage patients appear sicker through home visits and diagnosis coding, citing STAT's reporting.
Bryan found most of the challenged statements too vague or to be typical promotional "puffery" that cannot support fraud claims, STAT reported. But on the 2024 transactions, the judge wrote, "CalPERS argues that defendants made strategic omissions and misleading statements to investors regarding the reason for and nature of the transactions. ... The court agrees with CalPERS."
UnitedHealth welcomed the narrowing. The company said it was "pleased that the court dismissed with prejudice virtually all of the alleged misstatements at the heart of this baseless case, and we look forward to defending ourselves on the merits as to the limited claims that remain," according to Bloomberg. A CalPERS spokesperson had no immediate comment.
Upcoding and the Federal Audits
Medicare pays private Medicare Advantage plans more for members who appear sicker. Plans submit diagnosis codes, and those codes raise each member's risk score. Upcoding refers to recording diagnoses that are unsupported or exaggerated to raise those payments.
Although the upcoding claims did not survive this lawsuit, federal auditors continue to examine the practice. A September 2026 HHS Office of Inspector General audit of UnitedHealthcare Benefits of Texas reviewed 230 sampled cases from 2020 and 2021 involving high-risk diagnoses such as stroke, heart attack, cancer, and sepsis.
In 172 of those cases, the OIG found that "the medical records that United provided did not support the diagnosis codes or United could not locate the medical records." It estimated United received at least $24.4 million in overpayments and recommended a refund. United disagreed with some findings and asked the OIG to withdraw its recommendations, arguing the audit reviewed clinical criteria rather than coding. A separate September OIG audit of a UnitedHealthcare plan in Wisconsin estimated at least $46.9 million in overpayments, which the company also disputed.
The Justice Department has been conducting criminal and civil investigations into aspects of UnitedHealth's Medicare business, which the company confirmed in July 2025. Those probes have not been resolved, and no charges have been announced.
Regulators have also expanded their checks. In May 2025, the Centers for Medicare & Medicaid Services announced it would audit all eligible contracts each year, about 550, up from roughly 60, and increase its medical coders from 40 to about 2,000.
The Cost to Medicare and Beneficiaries
Coding differences carry a large price tag. The Medicare Payment Advisory Commission estimates that Medicare will spend about $76 billion more in 2026 for Medicare Advantage enrollees than it would if they were in traditional Medicare, with $22 billion of that tied to coding.
MedPAC says those higher plan payments will raise Part B premiums by about $11 billion in 2026, or roughly $14.61 per beneficiary per month. That cost reaches people in traditional Medicare too, not only Medicare Advantage members.
UnitedHealth has defended its practices. When it confirmed the Justice Department probes in 2025, the company said, "Independent CMS audits confirm that the Company's practices are among the most accurate in the industry."
For seniors, the ruling does not change coverage or benefits. Medicare Advantage members shopping during open enrollment, which begins Oct. 15, can compare plans on Medicare.gov and ask about doctor networks and prior authorization rules. Anyone who sees diagnoses they don't recognize on a bill or visit summary can ask the provider to explain or correct the records and report suspected fraud to 1-800-MEDICARE.
The remaining investor claims now move into discovery, where both sides exchange evidence. MedicalDaily will follow the case, the OIG refund requests, and any action from the Justice Department.
Key Questions Answered
What did the judge decide? He let CalPERS pursue claims that UnitedHealth misled investors about $3.3 billion in 2024 transactions but dismissed claims tied to 43 of 48 challenged statements, including upcoding allegations.
Has UnitedHealth been found liable? No. The surviving claims are allegations, and UnitedHealth calls the case baseless.
What is upcoding? It is recording diagnoses that are unsupported or exaggerated to increase payments from Medicare.
What did the federal audit find? The OIG said records did not support codes in 172 of 230 sampled Texas cases and estimated $24.4 million in overpayments. United disputes the findings.
Does this affect my Medicare Advantage coverage? No. Benefits are unchanged, but you can compare plans during open enrollment beginning Oct. 15.
How can I report suspected Medicare fraud? Call 1-800-MEDICARE or contact the HHS Office of Inspector General hotline.
Published by Medicaldaily.com
