More than 350,000 notices sent over $69M class action settlement at UnitedHealth Group

More than 350,000 current and former employees at UnitedHealth Group have been sent notices about a proposed $69 million settlement in a class action lawsuit alleging workers lost millions in investment returns because the company offered low-performing 401(k) plan options from Wells Fargo.

The settlement notices, which were sent by email or regular mail as of March 24, say a federal judge in Minneapolis will decide during a fairness hearing on June 12 whether to grant the settlement final approval.

Each class member’s proportional share of the net settlement proceeds will be based in part on the balance they invested in certain Wells Fargo Target Date Funds at any time since April 23, 2015, according to a website with settlement details.

“Plaintiff filed a class action complaint … alleging that [UnitedHealth Group] violated ERISA’s fiduciary duties of prudence and loyalty,” according to the settlement notice, which used the abbreviation for the Employee Retirement Income Security Act. “Defendants deny all of the claims made in the complaint [and] deny all allegations of wrongdoing.”

Wells Fargo sold off its asset management business years ago.

First filed in 2021, the lawsuit alleges UnitedHealth Group failed workers by retaining Wells Fargo investment funds as a key option in its employee retirement plan. The funds were relatively poor performers, the lead plaintiff in the case alleges, yet UnitedHealth Group stuck with Wells Fargo due to concerns about the “balance of trade” between the health care company and the big bank.

Judge John Tunheim of the U.S. District Court of Minnesota substantially denied UnitedHealth Group’s motion for summary judgement in the case in March 2024. In his ruling, Tunheim wrote that “a reasonable trier of fact could easily find” the lead plaintiff caught the company “with its hand in the cookie jar.”

The parties announced the $69 million settlement in December.

The fairness hearing is scheduled for June 12 at 10 a.m. at the federal courthouse in Minneapolis.

During the hearing, attorneys representing the class will seek an award of legal fees not to exceed one-third of the $69 million settlement plus their out-of-pocket costs. Legal fees, administrative costs and a proposed incentive award up to $100,000 for the lead plaintiff will reduce total settlement funds available to class members.

Class members don’t need to do anything to receive payment, according to the settlement notice, nor do they need to attend the hearing. Those objecting to the settlement, however, must notify the court and attorneys in writing by May 29 and may speak during the June hearing if they wish.

If the court approves the settlement, class members will get the share of benefits to which they’re entitled, regardless of whether they objected.

“Class members do not have to submit claim forms in order to receive settlement benefits,” the settlement notice states. “The benefits of the settlement will be distributed after the court approves the settlement and/or after any appeals have been resolved in favor of the settlement.”

Current plan participants will receive their share in the form of a deposit into their plan accounts. Payments to former plan participants will be made directly by check unless they elect to receive funds via rollover to a qualified retirement account.

The class excludes defendants in the case, including chief financial officer John Rex and former CEO David Wichmann, as well as members of the company’s board of directors.

UnitedHealth Group this week pointed to a statement it issued in December about the settlement, saying: “Our 401(k) plan fiduciaries have always acted in the best interests of plan participants, and we strongly deny any allegations to the contrary. If given final approval by the court this settlement will enable all parties to put this matter behind them and move forward, which we believe to be in everyone’s best interest.”