DOJ Sues SelectQuote Over Medicare Advantage Kickbacks, Stock Drops 19%
On May 1, 2025, SelectQuote (NYSE:SLQT) faced a significant legal challenge when the U.S. Department of Justice (DOJ) filed a lawsuit alleging violations of the False Claims Act. This lawsuit targets SelectQuote, alongside other insurance brokers and major health insurance companies, for purportedly steering Medicare Advantage (MA) plan enrollments through improper financial incentives. The DOJ’s complaint claims that from 2016 to at least 2021, SelectQuote and associated insurers like Aetna, Anthem, and Humana engaged in practices that compromised the impartiality of broker recommendations, favoring plans that paid higher kickbacks regardless of beneficiaries' needs.
The allegations include that SelectQuote received substantial payments from insurers to enroll beneficiaries in specific MA plans, incentivized agents to prioritize these plans, created specialized sales teams focused on high-kickback plans, and in some cases, excluded plans from insurers offering lower or no kickbacks. The lawsuit also raises concerns about discriminatory practices against beneficiaries with disabilities within the MA plan selection process. These claims question the accuracy of SelectQuote's previous assertions of providing unbiased, customer-oriented insurance guidance, particularly within their Senior business segment.
Following the DOJ announcement, SelectQuote’s stock price dropped over 19%, reflecting investor apprehension about the potential financial and reputational impact of the litigation. The case underscores increasing regulatory scrutiny on broker compensation models and their effect on Medicare Advantage plan enrollment integrity, emphasizing compliance risks for insurance brokers and payers alike.
Investors who incurred losses due to this litigation are being advised by legal counsel to submit claims, and the investigation is also encouraging insiders to come forward. The case illustrates the broader challenges in the Medicare Advantage market where broker incentives can influence plan selection, attracting regulatory enforcement actions under the False Claims Act.
The ongoing scrutiny aligns with heightened regulatory focus on transparency and ethical sales practices in the health insurance sector, particularly around Medicare-related products. The outcomes of this litigation could affect broker business models, insurer-broker relationships, and compliance frameworks related to Medicare Advantage plan marketing and enrollment procedures. SelectQuote’s case serves as a pivotal example of the evolving landscape of regulatory enforcement concerning broker conduct and financial disclosures in the U.S. health insurance industry.