UnitedHealth Group Inc has agreed to a $69 million settlement to resolve allegations that it breached fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA).
The class action lawsuit, which has been pending for over three years, involved the company’s 401(k) savings plan.
The settlement addresses claims that UnitedHealth “imprudently and disloyally” selected, retained, and monitored the Wells Fargo Target Fund Suite as an investment option for its 401(k) plan participants. Legal filings describe the Wells Fargo Target Fund Suite as “a suite of poorly performing funds.”
In a report from AM Best, UnitedHealth defended its position during litigation, stating that its monitoring and selection processes met ERISA’s fiduciary standards and that the Wells Fargo Target Fund Suite “was a reasonable investment option during the class period.”
The agreement will provide financial relief to more than 300,000 current and former plan participants who invested in the plan since April 23, 2015, according to the settlement terms.
The class action was brought by plan participant Kim Snyder and was represented by law firm Sanford, Heisler, Sharp, McKnight.
In a statement, the firm alleged that “the Wells Fargo Target Fund Suite was one of the worst-performing target-date options in the entire market” and claimed UnitedHealth’s executive leadership intervened to retain the funds to benefit Wells Fargo, described as a “critical customer and financier.”
The lawsuit was initially filed in 2021. The court denied UnitedHealth’s motions for summary judgment twice, leading the parties to engage in further negotiations. A settlement in principle was reached in September 2023, with a final agreement secured in December.
Recently, the troubled health insurer also released a statement regarding allegations of denied insurance claims, saying that it approves and pays about 90% of medical claims upon submission, and that around 0.5% of the claims that required further review are due to medical or clinical reasons.
The statement comes amid multiple reports that the company allegedly uses algorithms to deny treatments and refuse coverage for many patients – an issue that was unraveled after the slaying of CEO Brian Thompson in Manhattan a couple of weeks ago.
What are your thoughts on this story? Please feel free to share your comments below.
