A managed care company says it has agreed to pay $895 million into a settlement fund to resolve a suit involving allegations about the company’s old executive stock option program.
UnitedHealth Group Inc., Minnetonka, Minn., says it has “reached an agreement in principle” with the lead plaintiff in the federal securities class action suit, the California Public Employees’ Retirement System, and the plaintiff class representative, Alaska Plumbing and Pipefitting Industry Pension Trust, Anchorage, Alaska.
Neither UnitedHealth nor any of the individuals named as defendants had admitted to any wrongdoing as part of the proposed settlement agreement, UnitedHealth says.
The plaintiffs filed the suit in December 2006 in the U.S. District Court in Minnesota. The defendants include current and former officers and directors of UnitedHealth as well as the company itself.
The plaintiffs accused UnitedHealth of violating securities laws by giving top company officers too much control over stock option compensation and of not disclosing the stock option program properly.
The proposed settlement is subject to approval by CalPERS’ board, UnitedHealth’s board, and to preliminary and final court approval, UnitedHealth says.
If approved, the proposed settlement will “fully resolve all claims against the company, all current officers and directors named in the lawsuit, and certain former officers and directors named in the lawsuit,” the UnitedHealth says.
The proposed settlement “resolves a major issue before our company in a way that is in the best interests of our shareholders and other stakeholders,” Thomas Strickland, chief legal officer of UnitedHealth, says in a statement. “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.”
In related news, UnitedHealth says it has “reached an agreement in principle” to pay $17 million into a settlement fund to resolve Employee Retirement Income Security Act class action litigation filed in June 2006 in the U.S. District Court in Minnesota.
The ERISA suit, which named UnitedHealth and some current and former officers and directors as defendants, involves allegations that “the fiduciaries to the company-sponsored 401(k) plan violated ERISA by allowing the plan to continue to hold company stock,” according to a description that UnitedHealth gives in its latest quarterly financial report.
Most of the $17 million settlement “will be paid by the company’s insurance carriers, UnitedHealth says.
The proposed settlement is subject to preliminary and final court approval.
If approved, the settlement will resolve all claims against the company and all of the individual defendants in the ERISA class action litigation, UnitedHealth says.