SelectQuote Faces Investor Lawsuit After DOJ Medicare Sales Probe

SelectQuote Inc., a digital insurance platform specializing in Medicare Advantage plans, is under increased legal scrutiny following intervention by the U.S. Department of Justice (DOJ) in a whistleblower lawsuit alleging deceptive sales practices. The DOJ's involvement highlights claims that SelectQuote engaged in kickbacks and directed customers away from lower-margin plans to more profitable ones, contradicting its public assertions of providing unbiased and neutral plan comparisons.

This legal development triggered a significant market response, with SelectQuote's stock experiencing a steep 19% decline in a single day and over a 40% drop in the prior six months, reflecting investor concerns about regulatory risks and potential reputational harm. Subsequently, a securities class-action lawsuit was filed, accusing SelectQuote of misleading investors by not fully disclosing the risks associated with its business model and regulatory exposure. Investor rights firm Hagens Berman is investigating allegations of revenue manipulation linked to these sales practices and is encouraging affected investors to submit claims.

The firm also notes the potential for whistleblowers with non-public information to engage with SEC Whistleblower programs, which offer financial incentives for information leading to successful enforcement actions. This situation underscores the growing regulatory focus on transparency and compliance in the Medicare Advantage insurance sales sector, highlighting the critical impact of regulatory compliance and corporate accountability on market performance and investor confidence.