Government probes could test the hardy immune system of

UnitedHealth

(UNH) - Get Report

.

Already, federal prosecutors have begun examining a transaction -- described as a kickback -- involving the giant health insurer. Meanwhile, a veteran health care analyst has warned that New York Attorney General Eliot Spitzer could single out UnitedHealth in his own examination of kickbacks inside the insurance industry.

In court documents filed late last month, the U.S. attorney's office in Philadelphia announced plans to question Gino Tenace -- later identified as a UnitedHealth employee -- as part of a big whistleblower investigation of pharmacy benefit manager

Medco

(MHS)

. The feds portrayed Tenace as "the most knowledgeable individual about Medco's offer of a kickback in excess of $200 million to a large managed care organization for its business."

UnitedHealth both identified Tenace as a current employee and defended its arrangements with Medco in a

Wall Street Journal

article on Monday. For its part, Medco also has portrayed the $200 million payment as justified.

"The government received documents from an unnamed health plan central to its cavalier charge of a $200 million 'kickback,'" a recent court filing by Medco states. "These documents ... confirm that the $200 million, payable monthly, for certain data over five years of the contract, was not an improper kickback."

Medco's stock remained unchanged at $38.22 on Monday. But UnitedHealth -- a resilient stock market standout -- took a hit, slipping 2.1% to $80.60 halfway through Monday's session.

Past Precedent

Fulcrum analyst Sheryl Skolnick senses possible trouble. To be fair, Skolnick says "there is a legitimate business purpose" for PBMs to seek data from health insurance companies. Moreover, she says, PBMs would probably view UnitedHealth -- one of the nation's largest health insurers -- as an especially valuable source of such information. Still, she stops short of describing the $200 million payment in question as justified.

"It's possible," she concedes, "but it doesn't look good."

Heating Up
UnitedHealth surges

For one thing, Skolnick says, federal prosecutors already have cracked down on a similar arrangement. In late July, U.S. Attorney Patrick Meehan -- whose office is now leading the Medco probe -- fined

Schering-Plough

(SGP)

$345 million for making questionable payments to

Cigna

(CI) - Get Report

in exchange for business.

"Schering used terms like 'data fee' and 'value added' as camouflage for what was nothing more than an old-fashioned kickback," Meehan stated at the time. "This case serves as an example that the consequences of stepping over

the line can be costly."

Skolnick points to that case as a precedent, adding that Medco's payment to UnitedHealth is "precisely the kind of business transaction you would expect the Department of Justice to look at" now.

Spitzer Fears

In the current case, however, the feds have so far accused only Medco -- and not UnitedHealth -- of engaging in improper behavior. Still, Skolnick believes that UnitedHealth could prove susceptible to Spitzer's more sweeping probe of the insurance industry.

Indeed, Skolnick downgraded UnitedHealth from buy to neutral in mid-October due to her worries about the Spitzer investigation. Skolnick reasons that Spitzer's probe, which started with insurance broker

Marsh & McLennan

(MMC) - Get Report

, will spread throughout the insurance industry to include health care companies. And she fears that a "messy state exam" could make UnitedHealth especially vulnerable.

Specifically, Skolnick says that UnitedHealth failed to file its so-called plan of broker commissions for at least two years in New York. Moreover, she notes, health insurers are relying on such plans to justify commissions as legitimate payments instead of improper kickbacks.

"But if UNH didn't file the plan during the time period clearly under scrutiny in the

Spitzer probe, then how can UNH use this as a defense?" Skolnick wonders. "And if the business was so sloppily run from a regulatory filing perspective, how can we be sure that no other problems will be uncovered under further review? We can't be. ... Hence, our downgrade."

To be fair, Skolnick does make clear that UnitedHealth already corrected the filing problem in New York. She also portrays UnitedHealth as "the best-run company in the business." And she praises UnitedHealth for discussing the situation with her at some length.

Through her dialogue with the company, interestingly enough, Skolnick learned that the state of New York had ordered both UnitedHealth and Oxford Health to "start with a 'clean slate'" before they could join forces. Coincidentally, the feds have singled out just two companies -- later identified as UnitedHealth and Oxford -- when levying kickback allegations against Medco.

But Skolnick has expressed more concern about the Spitzer investigation. And her fears are only compounded by UnitedHealth's policy of declining to comment on subpoenas.

"Frankly, we think that tends to be more materially damaging to the shareholders' investment than disclosing the subpoenas as soon as possible," Skolnick wrote last month. And "as UNH is a significant player in ... New York, at least, we find it hard to believe that UNH did not already receive

the demand for information about its broker commissions and relationships that its peers have received."

Ultimately, she worries what Spitzer will learn.

"When state investigators look for things," Skolnick wrote, "they tend to find them."