Investing.com -- Shares of SelectQuote (NYSE:SLQT) plummeted 40%, while shares of eHealth (NASDAQ:EHTH) tumbled 13% following a False Claims Act complaint filed by the United States against three national health insurance companies and three brokers, including SelectQuote. The complaint alleges that from 2016 through at least 2021, illegal kickbacks were paid by insurers to brokers in exchange for enrollments into the insurers’ Medicare Advantage plans.
The lawsuit, which implicates some of the largest health insurance companies such as Aetna, Elevance Health (formerly known as Anthem (NYSE:ELV)), and Humana (NYSE:HUM), also names insurance brokers eHealth, GoHealth, and SelectQuote. The brokers are accused of directing Medicare beneficiaries to plans that paid the highest kickbacks, irrespective of the plans’ suitability for the beneficiaries’ needs.
According to the complaint, brokers were incentivized to prioritize sales of plans from insurers offering the highest kickbacks. They allegedly set up teams dedicated to selling only those plans and at times outright refused to sell plans of insurers who did not pay enough. Furthermore, it’s alleged that Aetna and Humana conspired with brokers to discriminate against disabled Medicare beneficiaries perceived as less profitable by threatening to withhold kickbacks, leading brokers to divert these beneficiaries away from their plans.
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