UnitedHealth Group has agreed to pay $69 million to settle an ERISA class action litigation, Snyder v. UnitedHealth Group, et al, it was announced today by law firm Sanford Heisler Sharp McKnight.
“This is a tremendous and historic result for our Plaintiff and Plan participants.”
Charles H. Field, Sanford Heisler Sharp McKnight
The settlement amount is believed to be the largest ever of an ERISA case stemming from poorly performing investment options in a 401(k) plan.
The settlement remains subject to review and approval by Judge John R. Tunheim of the District Court for the District of Minnesota. A hearing date for court approval has yet to be scheduled.
“This is a tremendous and historic result for our Plaintiff and Plan participants,” said class counsel Charles H. Field of Sanford Heisler Sharp McKnight. “Our Plaintiff took a leading and decisive part in the litigation and fought with courage and strength against a major corporation to obtain an outstanding result for the Plan and its participants.”
The case concerns allegations that UnitedHealth violated its fiduciary duties under the federal Employee Retirement Income Security Act of 1974 (ERISA) by imprudently and disloyally selecting, retaining, and monitoring a suite of poorly performing target date funds—the Wells Fargo Target Fund Suite—for the Plan’s investment menu.
The Wells Fargo Target Fund Suite was one of the worst-performing target date options in the entire market, Sanford Heisler Sharp McKnight claims, and the Complaint alleges that UnitedHealth’s decision to keep the Suite as the default investment for the Plan for over a decade violated fiduciary duties of prudence and loyalty under ERISA.
As alleged in the Amended Complaint, Wells Fargo was a critical customer and financier for UnitedHealth and, UnitedHealth’s executive leadership personally intervened to keep the poorly performing Wells Fargo Target Fund Suite on UnitedHealth’s 401(k) Plan to garner favor with, and benefit, Wells Fargo. UnitedHealth has denied these allegations and contends that their monitoring and selection processes complied with the fiduciary standards under ERISA.
To justify keeping the poorly performing Wells Fargo Target Fund Suite, UnitedHealth allegedly kept its decision-making secret and threw out key findings that the Plan’s own Investment Committee had made, while abandoning the Plan’s written criteria for screening investments.
“After years of vigorous litigation, we’re delighted the parties have agreed to resolve their differences,” said class counsel Leigh Anne St. Charles of Sanford Heisler Sharp McKnight. “We are especially pleased to have achieved this historic settlement for the Class and look forward to final approval before the Court.”
Plan participants represented by Sanford Heisler Sharp McKnight LLP and Halunen Law prosecuted the case for over 3 years before reaching the settlement, largely defeating UnitedHealth’s motion for summary judgment, conducting extensive fact and expert discovery, and achieving certification of a class of approximately 300,000 plan participants allegedly harmed by defendants’ conduct.
In addition to Field and St. Charles, other lawyers representing the Class were the firm’s Chairman, David Sanford, Co-Vice Chairman, Kevin Sharp, Brent Hannafan, Shannon Henris, and Susan Coler of Halunen Law.
SEE ALSO:
• $61 Million Settlement Finalized in GE ERISA Case
• Post-Chevron Ruling Toolkit Rolled Out by ERISA Law Firm
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
