eHealth, GoHealth, SelectQuote Shares Sink On DOJ Medicare Kickback Allegations

Shares of eHealth Inc (NASDAQ:ENTH), GoHealth Inc (NASDAQ:GOCO) and SelectQuote Inc (NYSE:SLQT) plummeted on Thursday following the unsealing of a sweeping federal complaint alleging the companies took part in a multi-year Medicare kickback scheme.

What To Know: The U.S. Department of Justice, in a partial intervention filed in the District of Massachusetts, accuses the insurance brokers and insurers of engaging in an illegal kickback operation aimed at steering elderly and disabled Medicare beneficiaries into specific Medicare Advantage plans.

According to the complaint, from 2016 through at least 2021, SelectQuote, eHealth and GoHealth allegedly accepted hundreds of millions of dollars in unlawful payments from insurers including Aetna, Humana and Anthem.

These payments were allegedly disguised as marketing or administrative service fees but were in fact conditioned on the brokers prioritizing enrollment in the insurers' plans, regardless of quality or patient need. The DOJ also claims the scheme included discriminatory practices to reduce enrollment of disabled beneficiaries perceived as less profitable.

The suit was initially brought by a former eHealth employee under the False Claims Act and later joined in part by the government.

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Price Action:

• eHealth shares declined 5.9%, trading at $5.23 Thursday afternoon.
• GoHealth shares dropped 14.9% to $8.96.
• SelectQuote tumbled 31% to $2.18, marking the steepest loss among the group.

Photo Courtesy: Vinnikava Viktoryia On Shutterstock.com