UnitedHealth Group avoids shareholder vote on coverage denial audits in wake of CEO killing

UnitedHealth Group has avoided shareholder resolutions that would have asked investors at an upcoming meeting whether the company should audit how often it denies paying for members’ health care, following an outpouring of public anger last year.

One proposal from a group representing faith-based shareholders asked the Eden Prairie-based health care giant to develop a report on the human and economic toll that stems from limiting or delaying access to health care by denying payments via its insurance arm, UnitedHealthcare.

The proposal was withdrawn earlier this month, however, after UnitedHealth Group sought regulatory support for excluding the question from shareholder materials. Proponents said they believe they’ll have a better chance for success by resubmitting next year.

A second proposal sought third-party audits of denials to determine if correspondence with families included factually incorrect and insensitive information. But UnitedHealth Group said investor Chris Mueller missed the deadline for submissions.

Neither proposal was listed in materials distributed last week in advance of the UnitedHealth Group annual meeting scheduled for June 2, when shareholders will vote on resolutions about executive compensation including a new push for investors to approve “golden parachute” severance or termination payments.

All health insurance companies deny some claims. But the issue of excessive and/or inappropriate denials from UnitedHealthcare dominated public discussion in the wake of the Dec. 4 killing of company executive Brian Thompson as he was walking on a sidewalk to a company investor conference in New York City.

The alleged shooter in the case did not have coverage from UnitedHealth Group’s massive health insurance division UnitedHealthcare, yet one of the bullet casings recovered from the crime scene allegedly had the word “deny” scrawled on it. The company’s status as the nation’s largest carrier as well as limited data on denials has kept United at the center of the issue.

Denials of insurance payment often have the effect of denying access to services, given the high cost of medical care. In other cases, retroactive payment denials can stick patients with large, unexpected costs that compound the toll of illness.

In the lead-up to annual meetings, publicly traded companies have discretion on whether to include all shareholder resolution proposals in materials. But they often seek advance assurances from the Securities and Exchange Commission (SEC) on whether decisions to exclude certain proposals won’t prompt an enforcement action.

In January, UnitedHealth Group told the SEC that it planned to exclude the proposal for a report on denying access to care because it was “impermissibly vague and indefinite.”

“The company hereby respectfully requests that the [SEC] staff concur in its view that the proposal may be excluded ... because the proposal pertains to the ordinary business of the company and seeks to impermissibly micromanage the company,” UnitedHealth Group told the agency in a Jan. 31 correspondence.

The proposal was submitted by the Durocher Fund in conjunction with a group called the Interfaith Center on Corporate Responsibility (ICCR). They were calling on UnitedHealth Group to study “how often prior authorization requirements or denials of coverage lead to delay or abandonment of medical treatment and serious adverse events for patients.”

But the ICCR announced earlier this month that supporters would pull the submission “to avoid jeopardizing the chance to re-file the proposal next year.”

Meg Jones-Monteiro, a senior director with the New York-based ICCR, said after her group’s resolution was filed late last year, the SEC announced it would look at shareholder proposals in terms of “enterprise risk,” a standard the group hadn’t considered.

“Our resolution focused more on systemic risk,” Jones-Monteiro said. “Based on some of the recent decisions from the SEC in light of the new rule it was likely that the SEC would rule in favor of the company.”

She added: “Our members will not be dropping the topic. ... We will still keep dialoging with the company.”

The alleged shooter of former UnitedHealthcare CEO Brian Thompson has been championed by some as exacting a measure of revenge on a health care system where insurers amass huge profits while sometimes refusing to pay bills for patient care.

For decades, researchers have decried the lack of comprehensive public data on the frequency of coverage denials and why they happen.

One of the few sources on the subject comes from the individual health insurance market under the federal Affordable Care Act, where a January report found UnitedHealthcare and two nonprofit insurers using the Blue Cross Blue Shield brand had the highest claim-denial rates in 2023 among insurers selling on the federal government’s HealthCare.gov platform.

UnitedHealth Group called the findings “grossly misleading” if applied to the entirety of its health insurance business, because the report was based on a small sample representing just 2% of the company’s total claims volume.

The company said it pays the vast majority of claims received for eligible members when submitted in a timely manner with complete, nonduplicate information. About 2% of claims are not approved, United said, often because services did not meet the benefit criteria established by the employers or government agencies that hire the company to run their health plans.