NEW YORK (Reuters) - New York Attorney General Andrew Cuomo plans on Wednesday to announce the launch of an industrywide investigation into health-care insurers, his office said.
Cuomo also plans to announce his intent to sue one of the largest U.S. health insurers, his office said. The target is publicly traded, and will be accused of deceptive practices, a person familiar with the situation said on Tuesday.
The attorney general scheduled a news conference for noon (1700 GMT) at his office in lower Manhattan.
Shares of large U.S. health insurers traded lower ahead of the news conference. Humana was off about 5 percent, Aetna was down 4 percent, while UnitedHealth Group and WellPoint were off about 3 percent each.
Option volatilities of many of those insurers also were up as “shares sell off on the New York Attorney General report,” said Paul Foster, options strategist at Web information site theflyonthewall.com.
The rise in implied option volatilities indicates a heightened sense of uncertainty among traders looking forward, Foster said.
Wachovia analyst Matt Perry said he would not be surprised if the alleged wrongdoing involved marketing of Medicare health plans considering recent congressional and media scrutiny of Medicare, the U.S. government health plan for the elderly.
“It would seem logical that the ‘deceptive practices’ could involve individual products — either commercial or Medicare — because those products focus on 1-on-1 marketing with sales agents/brokers,” Perry wrote in a research note.
Reporting by Jonathan Stempel, Lewis Krauskopf and Doris Frankel; Editing by Gerald E. McCormick and Dave Zimmerman