SelectQuote Faces Class Action Lawsuit Due to Allegations of Deceptive Sales Practices

SelectQuote Faces Legal Scrutiny and Class Action Lawsuit

SelectQuote Inc. (NYSE: SLQT), a prominent player in the digital insurance arena, particularly known for its Medicare Advantage plans, has recently found itself under severe legal scrutiny. The company is facing a securities class-action lawsuit triggered by its alleged deceptive sales practices. This development follows the U.S. Department of Justice's (DOJ) intervention in a whistleblower lawsuit that raised serious allegations against the firm.

Background and Allegations

On May 1, 2025, SelectQuote's stock price plummeted by 19% in a single day after the DOJ's involvement was made public. The class-action lawsuit, labeled Pahlkotter v. SelectQuote Inc. et al., claims that SelectQuote misled investors about its business model and regulatory challenges. Specifically, the suit targets those who acquired SelectQuote shares between September 9, 2020, and May 1, 2025, arguing that the company's public representations were misleading.

The core of the allegations centers on claims that SelectQuote's sales practices were not as impartial as advertised. While the company promoted its services as providing "unbiased advice" and "neutral plan comparisons," the lawsuit argues the reality was quite different. Key allegations include:
1. Actionable Kickbacks: Claims that SelectQuote directed customers towards plans from insurers offering the largest commissions, thus compromising the neutrality they purportedly offered.
2. Illegal Practices: Accusations that SelectQuote accepted illegal kickbacks to provide preferential treatment to certain plans, undermining the integrity of their services.
3. Federal Violations: It is alleged that the company violated federal regulations, including the False Claims Act, through these deceptive practices.

Consequences on Market and Investors

The repercussions of the DOJ’s involvement have significantly impacted SelectQuote’s market performance. Following the announcement, the company saw its stock decline by nearly 20% in one day. Over the subsequent six months, shares have experienced a staggering drop of over 40%, reflecting heightened investor concerns regarding the company's legal risks and potential reputational harm.

Investors argue that SelectQuote's public disclosures failed to adequately inform them about the material risks associated with its sales tactics. This lack of transparency is believed to have led investors to overestimate the company's growth potential and revenue reliability, leaving many facing substantial financial losses.

Investigation by Hagens Berman

Amid these developments, Hagens Berman, a firm specializing in shareholder rights, is actively investigating claims of revenue manipulation by SelectQuote. Reed Kathrein, a partner at Hagens Berman, suggests that the DOJ's involvement elevates this matter from a standard business transaction to a significant federal inquiry. The firm is currently examining whether the company's purportedly 'unbiased' sales model was merely a facade to facilitate a kickback-driven business structure.

Options for Investors and Whistleblowers

For those who invested in SelectQuote during the specified class period and who have incurred significant losses, Hagens Berman encourages them to submit their claims promptly. If you have further information that might aid in the ongoing investigation, you are also urged to reach out. The firm stresses that whistleblowers with insider knowledge regarding SelectQuote may also benefit from the SEC Whistleblower program, potentially receiving rewards of up to 30% of any successful SEC recovery.

Hagens Berman is known globally for advocating corporate accountability, securing over $2.9 billion in settlements for various plaintiffs, including investors wronged by corporate misconduct. This recent investigation into SelectQuote illustrates the ongoing commitment to fighting for justice on behalf of those affected by corporate malfeasance. With such serious allegations surfacing, both investors and whistleblowers will need to remain vigilant in navigating these legal complexities in the time ahead.

For more information regarding the SelectQuote case or to follow updates, you can visit Hagens Berman's official website.