SelectQuote Faces Legal Challenges Amid DOJ Investigation into Medicare Sales Practices

SelectQuote Inc. (NYSE: SLQT), a prominent digital insurance platform specializing in Medicare Advantage plans, has found itself embroiled in legal troubles following the U.S. Department of Justice's (DOJ) intervention in a whistleblower lawsuit. Allegations against the company suggest deceptive sales practices that could have serious implications for its reputation and operational integrity.

Overview of the Allegations

The DOJ's scrutiny stems from claims made in the whistleblower lawsuit, which accuses SelectQuote of misleading both customers and investors about its business model and the integrity of its sales practices. The lawsuit suggests that the company misrepresented its services by claiming to offer “unbiased advice” while allegedly steering customers towards plans that provided the highest commissions to the company. The allegations indicate that SelectQuote not only failed to comply with industry standards but also engaged in practices that could be in violation of federal laws, including the False Claims Act.

The whistleblower lawsuit highlights that between 2016 and 2021, SelectQuote allegedly accepted tens of millions in improper payments while neglecting less profitable customers, directing them away from lower-margin plans, which raises concerns about its ethical sales practices.

On May 1, 2025, news of the DOJ's involvement triggered an immediate market reaction, resulting in a staggering 19% drop in SelectQuote's share price in just one day. Investors have expressed their concerns over the company's status, with shares falling over 40% in the past six months, reflecting the growing trepidation surrounding the company's legal accountability and potential reputational damage.

Class-Action Lawsuit Filed

In light of these developments, a class-action lawsuit has been launched on behalf of investors who purchased SelectQuote stock between September 9, 2020, and May 1, 2025. The suit, titled Pahlkotter v. SelectQuote Inc. et al., alleges that SelectQuote misled the market about its business practices, thereby manipulating the company's perceived value and revenue potential. The implications of this lawsuit could be far-reaching as it challenges not only the company’s financial reporting but also its operational strategies.

Hagens Berman's Investigation

As part of the growing legal scrutiny, Hagens Berman, a well-known shareholder rights law firm, is actively investigating whether SelectQuote's revenues were artificially inflated through deceptive practices. Reed Kathrein, a partner at the firm, emphasized the seriousness of the DOJ's intervention, suggesting that this situation has escalated from what may have been perceived as a routine business dispute into a significant federal matter. Hagens Berman is urging any investors who have experienced substantial losses to come forward and join the class action.

Whistleblower Opportunities

As this investigation unfolds, potential whistleblowers with non-public information are encouraged to consider their options in contributing to the investigation. Under the SEC Whistleblower program, those who provide original information could be rewarded with up to 30% of any successful recovery made by the SEC from the investigation. This could prove to be a crucial opportunity for individuals within or connected to SelectQuote who possess knowledge pertinent to the allegations.

Conclusion

The situation surrounding SelectQuote is developing rapidly and highlights the vulnerabilities faced by companies in the insurance sector, especially regarding compliance with regulations and ethical marketing practices. As the class-action lawsuit progresses and further investigations unfold, the impact of these legal challenges on SelectQuote's long-term viability remains to be seen. Investors, in particular, are advised to stay informed and gauge their positions carefully as the story continues to evolve.