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Administration August 12, 2009
Judge Approves $925M UnitedHealth Backdating Suit Settlement
August 12, 2009 (PLANSPONSOR.com) - UnitedHealth
Group Inc. and its former chief executive William McGuire
will pay $925 million to resolve an investor class-action
lawsuit accusing the health insurer of improperly backdating
stock options, Reuters reports.
Reported by Rebecca Moore
Under the agreement, the company will pay $895 million, McGuire will pay $30 million, and former general counsel David Lubben will pay $500,000. McGuire will also relinquish options to buy 3.68 million UnitedHealth shares, the news report said.
Given that there was “significant risk” to the plaintiffs recovering nothing had the case been fully tried, “the $925.5 million settlement amount is substantial,” U.S. District Court Judge James Rosenbaum wrote in his 26-page order dated August 10, according to Reuters. He had granted preliminary approval for the settlement in December (see Court Gives Preliminary OK to UnitedHealth $900M Options Settlement ).
Judge Rosenbaum also awarded legal fees of about $64.8 million. The lead plaintiff in the case is the California Public Employees’ Retirement System (CalPERS), the nation’s largest public pension fund.
According to the news report, a UnitedHealth spokesman said the company welcomed approval of the agreement “and the closure it brings to these matters.” McGuire said in a statement that he is pleased with the settlement’s approval, and he now plans to focus on business and philanthropic interests.