Plaintiffs in a class action lawsuit against UnitedHealth Group Inc. have requested final judicial approval of a $69 million settlement involving alleged fiduciary breaches tied to the company’s 401(k) retirement plan.
The health insurer reached the proposed agreement in December 2024 to settle claims it violated the Employee Retirement Income Security Act of 1974. According to court filings, reported on by Best Wire, plaintiffs accused UnitedHealth of “imprudently and disloyally selecting, retaining and monitoring” a 401(k) investment option that significantly underperformed.
The disputed fund was managed by Wells Fargo & Co. and described by Sanford Heisler Sharp McKnight, the plaintiffs’ legal counsel, as among the worst-performing target-date options in the entire market. The law firm further claimed that UnitedHealth’s leadership continued using the fund due to its relationship with Wells Fargo.
“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 stated.
Court documents allege that UnitedHealth disregarded its investment committee’s findings, discarded established evaluation criteria, and concealed its decision-making process. The funds in question remained part of the plan despite reported evidence of subpar returns.
The proposed distribution would benefit more than 350,000 current and former participants in UnitedHealth’s 401(k) savings plan. Funds will be allocated on a pro rata basis. The US District Court for the District of Minnesota previously deemed the settlement fair, reasonable, and adequate.
According to the memorandum of final approval, no class members objected to the amount or attorney fee requests. Two objections were raised regarding the allocation methodology, with both parties advocating for an age-weighted approach rather than equal distribution.
Judge John R. Tunheim is scheduled to preside over a hearing on June 12 to consider the motion for final settlement approval.
As the current class action nears its conclusion, UnitedHealth continues to face other legal challenges. Federal lawsuits allege the company defrauded Medicare and delayed or denied coverage to elderly policyholders. UnitedHealth has rejected those claims.
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