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SelectQuote Under Legal Fire

SelectQuote Inc. (NYSE: SLQT), a well-known digital insurance platform specializing in Medicare Advantage plans, has found itself in a legal storm following intervention from the U.S. Department of Justice (DOJ) in a whistleblower lawsuit that alleges deceptive sales practices. This federal scrutiny has had immediate repercussions, causing a notable 19% decline in SelectQuote's stock price on May 1, 2025. The legal issues have since escalated, prompting investors to file a securities class-action lawsuit against the company.

Overview of the Lawsuit

The class-action lawsuit, identified as Pahlkotter v. SelectQuote Inc. et al., encompasses all investors who purchased SelectQuote stock from September 9, 2020, to May 1, 2025. These investors claim that SelectQuote misled the market regarding its operational model and the regulatory risks it faced, creating an inflated perception of the company's value.

Allegations of Misconduct

The core of these allegations points to claims that SelectQuote misrepresented its sales practices associated with Medicare Advantage. The lawsuit contends that although SelectQuote marketed itself as providing 'unbiased advice' and 'neutral plan comparisons,' in reality, it directed customers to those Medicare plans that offered the highest commissions for the company. This is paired with serious allegations of accepting illegal kickbacks in exchange for preferential treatment and violating federal regulations, specifically the False Claims Act.

The DOJ's complaint details that from 2016 to at least 2021, SelectQuote received excessive payments amounting to tens of millions of dollars and occasionally directed customers away from lower-margin plans, disregarding the potential welfare of those consumers.

Stock Performance and Market Reaction

The ramifications of the DOJ’s involvement were swift and severe. Following the announcement, SelectQuote’s shares plummeted nearly 20% in a single trading session. Over a span of six months, the stock price has seen a steep decline of over 40%, indicating growing concerns amongst investors regarding the company’s legal vulnerabilities and damage to its reputation. The class-action lawsuit claims that SelectQuote failed to disclose substantial risks related to its sales practices, leading investors to incorrectly assess the growth prospects and financial integrity of the company.

Investigation into Revenue Manipulation

In the midst of these unfolding events, Hagens Berman, a law firm representing affected shareholders, is probing whether SelectQuote artificially inflated its revenue through misleading practices. Reed Kathrein, a partner at the firm, remarked, "The DOJ's intervention elevates this from a simple business issue to a serious federal investigation. We're looking into whether SelectQuote's purported 'unbiased' approach was merely a front for a kickback-fueled sales model."

Investors who have sustained significant losses or possess insights that could aid in the investigation are encouraged to come forward.

Whistleblower Opportunities

Additionally, the firm emphasizes that individuals with insider information related to SelectQuote should consider their options under the SEC Whistleblower program. Those providing original information could receive rewards amounting to up to 30% of any recovery achieved by the SEC. For further inquiries regarding this investigation, interested parties can reach out to Reed Kathrein directly at 844-916-0895.

About Hagens Berman

Hagens Berman is a prominent global plaintiffs' rights litigation firm that focuses on ensuring corporate accountability. With a strong reputation for voicing the concerns of investors, whistleblowers, and consumers, the firm prides itself on achieving tangible results for those affected by corporate malpractice, boasting recoveries of over $2.9 billion across various cases. For continual updates and information about the firm’s endeavors, follow @ClassActionLaw on social media.