In the announcement, the insurer said it has
reached an agreement in principle with lead plaintiff
California Public Employees’ Retirement System (CalPERS)
and plaintiff class representative Alaska Plumbing and
Pipefitting Industry Pension Trust to settle the federal
securities class action. Under the terms of the
proposed settlement, UnitedHealth Group will pay $895
million into a settlement fund for the benefit of class
In the suit, CalPERS alleged shareholders were hurt when UnitedHealth was forced to restate profits after allegations of backdating were made public (See United Health Options Backdating Suit Gets Class Action Status ). UnitedHealth adjusted profits back to 1994 by $1.5 billion before taxes.
“This is a significant agreement that resolves a
major issue before our company in a way that is in the
best interests of our shareholders and other
stakeholders,” said Thomas L. Strickland, chief legal
officer of UnitedHealth Group, in the announcement.
“The settlement provides UnitedHealth Group with
certainty and closure on this lawsuit, avoids potentially
costly and protracted litigation and allows us to
continue to focus on providing Americans with
high-quality, affordable health care solutions.”
Separately, the company also announced an agreement in principle to resolve the Employee Retirement Income Security Act (ERISA) class action litigation relating to its historical stock options practices that was originally filed on June 2, 2006, against UnitedHealth and certain current and former officers and directors. Under the terms of that settlement, UnitedHealth Group will pay $17 million into a settlement fund for the benefit of class members.
Neither UnitedHealth nor any of the individuals implicated in the suits admit any wrongdoing as part of the proposed settlement agreements.
In December 2007, after an internal investigation into stock options practices, former UnitedHealth Group Chairman and CEO William W. McGuire agreed to give back more than $600 million in stock options and benefits under a settlement reached with the company. The insurer also reached a settlement with former general counsel David J. Lubben (See Settlement with Ex-UnitedHealth Group CEO Worth $600M ).