LITIGATION
UnitedHealth Reaches $69 Million Settlement Over 401(k) Violations
MINNETONKA, Minn. //BestWire// - UnitedHealth Group Inc. has agreed to pay $69 million to settle a lawsuit over alleged violations of the Employee Retirement Income Security Act of 1974.
The settlement resolves allegations that UnitedHealth violated its fiduciary duties by "imprudently and disloyally selecting, retaining, and monitoring" the Wells Fargo Target Fund Suite for UnitedHealth Group's 401(k) Savings Plan's investment menu, according to legal documents. In the settlement, the Wells Fargo Target Fund is described as "a suite of poorly performing funds."
During the litigation, UnitedHealth contended that its "monitoring and selection process complied with the fiduciary standards under ERISA," and that "Wells Fargo Target Fund Suite was a reasonable investment option during the class period."
The settlement provides relief to more than 300,000 current and former plan participants who invested in the plan beginning on April 23, 2015, according to a copy of the settlement. The class action suit has been pending for more than three years.
"The Wells Fargo Target Fund Suite was one of the worst-performing target-date options in the entire market," said law firm Sanford, Heisler, Sharp, McKnight, in a post on its website. "Wells Fargo was a critical customer and financier for UnitedHealth, and UnitedHealth's executive leadership personally intervened to keep Wells Fargo Target Fund Suite on UnitedHealth's 401(k) Plan to garner favor with, and benefit, Wells Fargo."
The law firm represented plan participant Kim Snyder, who brought the case on behalf of herself and others who invested in the plan.
UnitedHealth didn't respond to a request for comment.
The suit was initially filed in 2021, and the court twice denied UnitedHealth's motion for summary judgement, according to the settlement copy. Following the second denial, the parties continued to negotiate before reaching a settlement in principle in September, and a final settlement in December.
Underwriting entities of UnitedHealth Group Inc. have current Best’s Financial Strength Ratings of A+ (Superior) and A (Excellent).
Shares of UnitedHealth Group Inc. (NYSE: UNH) were trading at $500.39 on the afternoon of Dec. 16, down 3.86% from the previous close.
(By Anthony Bellano, associate editor, Best's Review: anthony.bellano@ambest.com)