Judge Rules UnitedHealth Must Face Shareholder Suit by CalPERS

UnitedHealth Group Inc. must defend itself against a slimmed-down lawsuit by a major shareholder that alleges investors were deceived about financial transactions that boosted earnings, a federal judge ruled.

U.S District Judge Jeffrey Bryan said Wednesday that the California Public Employees’ Retirement System, or CalPERS, may proceed with a complaint alleging UnitedHealth misled shareholders about the purpose of deals that added $3.3 billion to earnings in 2024. Bryan said CalPERS adequately pleaded that part of its case, meaning the lawsuit can move forward on those claims.

“CalPERS argues that defendants made strategic omissions and misleading statements to investors regarding the reason for and nature of the transactions,” Bryan wrote in a ruling in federal court in St. Paul, Minnesota. “The court agrees with CalPERS.”

The ruling clears the way for CalPERS to move to evidence-gathering in that part of the case. However, the judge dismissed claims that UnitedHealth, which operates the largest U.S. health insurer, defrauded shareholders through wide-ranging misconduct over four years that led to an historic meltdown of the stock in 2025.

UnitedHealth shares closed down 2.1% in New York, compared to a drop in the S&P 500 Index of less than 1%.

UnitedHealth, in a statement, 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.”

A spokesperson for CalPERS had no immediate comment on the ruling.

The company stumbled badly in 2025 when it reported profit below Wall Street’s expectations for the first time in more than a decade, prompting a share plunge. UnitedHealth faces federal criminal and civil probes and the fallout from a cyberattack that breached data on 190 million Americans. To regain the trust of investors, the company has since replaced its chief executive officer, revamped senior management and made a number of changes throughout the business.

Among the allegations in the lawsuit was that the company engaged in a scheme to misuse medical codes to increase insurance payments, a practice known as upcoding. CalPERS also claimed UnitedHealth engaged in “monopolistic dominance to engage in anti-competitive practices to consolidate its control over healthcare services and eliminate competition,” and that executives engaged in a “massive insider selling spree” after learning about confidential Justice Department investigations.

CalPERS, the nation’s largest public pension fund, sued UnitedHealth in 2024 and amended its complaint several times to add new claims. The defendants included CEO Stephen Hemsley; former CEO Andrew Witty; and Brian Thompson, the former CEO of its UnitedHealthcare insurance unit who was fatally shot in December 2024. The accused shooter, Luigi Mangione, pleaded guilty in August to federal charges related to the shooting.

Company lawyers had argued in its dismissal request that CalPERS failed to identify a “single specific, actionable misrepresentation that defrauded UnitedHealth shareholders.” In its motion to dismiss, UnitedHealth said CalPERS tried to “manufacture” a securities fraud claim by drawing from securities filings, press releases, earnings calls, court filings and other documents. But it failed to show how any of 48 statements cited in the lawsuit were false, the company argued.

Bryan dismissed claims relating to 43 alleged false statements, including those relating to upcoding and insider trading, but allowed CalPERS to proceed on five other statements.

At a hearing last December, UnitedHealth’s outside attorney, Robert Giuffra, said “there’s no question there was a stock drop here.” But he said the lawsuit failed to show company executives knew, for instance, about pervasive upcoding.

“There’s no evidence and no allegation, no particularized facts that the CEO executives of this company knew about pervasive upcoding, and that’s the key linchpin that’s missing in this complaint,” Giuffra argued. “You’ve got to show evidence. So mere allegation doesn’t mean that something is actually going on.”

The case is California Public Employees’ Retirement System v. UnitedHealth, 24-cv-1743, U.S. District Court, District of Minnesota (St. Paul).