UnitedHealth Group Settles Class-Action Lawsuit for $69 Million Over 401(k) Plans
Minnetonka, MN – In a significant development in the world of corporate retirement plans, UnitedHealth Group has agreed to a $69 million settlement to resolve allegations of offering subpar 401(k) options to its employees. The lawsuit, initiated by lead plaintiff Kim Snyder over three and a half years ago, claims that the healthcare giant’s actions resulted in substantial financial losses for its workforce.
The allegations suggest that UnitedHealth Group’s Chief Financial Officer (CFO) intervened to retain specific Wells Fargo funds within the company’s 401(k) plan. This decision was reportedly influenced by Wells Fargo’s status as a significant customer of UnitedHealth Group, particularly in relation to its health insurance offerings through UnitedHealthcare.
Evidence presented in court led a Minneapolis judge to suggest that a jury could reasonably conclude that UnitedHealth Group had engaged in questionable practices, with the judge stating that the company was caught with its “hand in the cookie jar.” This remark underscored the severity of the allegations against the company.
As the case progressed, the court granted class certification, which could potentially include over 300,000 employees who participated in the retirement plan. Snyder’s legal team expressed gratitude for her dedication, highlighting her role as the sole class representative in the lawsuit.
“Over the course of three and a half years of litigation, plaintiff Kim Snyder bore the particular burden of being the only class representative in the action,” said Charles Field, an attorney from Sanford Heisler Sharp McKnight. “Ms. Snyder’s commitment to this case was the means of obtaining an outstanding outcome for the plan and the class.”
Despite the settlement, UnitedHealth Group maintains its stance against the allegations. In a public statement, the company asserted that its 401(k) plan fiduciaries have consistently acted in the best interest of employees saving for retirement. “We strongly deny any allegations to the contrary,” the statement read. “If approved by the court, this settlement will enable all parties to put this matter behind them and move forward.”
The legal proceedings took a pivotal turn in March when U.S. District Judge John Tunheim denied a significant portion of UnitedHealth Group’s motion for summary judgment. The motion included the company’s CFO John Rex and former CEO David Wichmann as defendants in the case. Judge Tunheim’s ruling indicated that the evidence was compelling enough to warrant a trial, stating, “Because a reasonable trier of fact could easily find that plaintiff Kim Snyder caught defendant UnitedHealth Group, Inc., with its hand in the cookie jar, the court will substantially deny United’s motion for summary judgment.”
As the case moves toward final resolution, the implications of this settlement resonate beyond just UnitedHealth Group. It highlights the critical importance of transparency and fiduciary responsibility in managing employee retirement plans. The outcome of this case may set a precedent for how large corporations handle their retirement offerings and the potential legal ramifications of failing to act in the best interests of employees.
Wells Fargo, the bank implicated in the lawsuit, did not respond immediately to inquiries regarding the case. Notably, in 2021, Wells Fargo sold its asset management division, which managed the retirement funds in question.
This settlement serves as a reminder for both employees and employers about the significance of choosing retirement plans that are not only compliant with legal standards but also genuinely beneficial for workers’ long-term financial health.
