June 16--In an eleventh-hour settlement of a class-action lawsuit that was set for trial Monday, health insurer WellPoint has agreed to pay $90 million to more than 700,000 former Anthem policyholders.
The surprise settlement, announced Friday, came after WellPoint had fought the lawsuit for seven years in court.
The lawsuit alleged that WellPoint's Anthem subsidiary underpaid policyholders who opted to receive cash instead of stock when the Blue Cross-Blue Shield franchisee converted in 2001 into a stock company.
It was one of the largest stock sales of an Indiana company. Claims could have run into the hundreds of millions of dollars if the case had gone to trial.
Indianapolis-based WellPoint, the nation's second-largest health insurer, didn't admit any wrongdoing as part of the settlement.
"We continue to believe that in all ways the company acted appropriately and in the best interests of its former members," the company said in a statement, adding, "Anthem's demutualization was one of the most heavily regulated transactions in Indiana's history and was praised widely as a successful transaction by and for all of Anthem's constituents."
Judge Tanya Walton Pratt, who is overseeing the case Ormond v. Anthem Inc. in U.S. District Court in Indianapolis, must review the settlement before it can become final.
The payouts by check to former policyholders may not happen until next year, given the legal processes that the deal still must go through in court, said Eric Zagrans, Elyria, Ohio, an attorney for the plaintiffs.
Plaintiffs co-counsel Kathleen DeLaney, Indianapolis, said the $90 million settlement is one of the largest settlements of its kind reported in Indiana. Other class members mostly are from Ohio, Kentucky and Connecticut.
If split equally among 700,000 people, the settlement payout would come to about $128 a person. But payouts will vary depending on the cash awards to which policyholders were entitled. In addition, attorney fees and costs will eat up a large chunk. Typically, attorney fees and costs run 20 percent to 40 percent of the settlement amount in large class-action cases.
WellPoint won a court dismissal last year of a similar lawsuit by policyholders who received stock in the demutualization.
WellPoint faces no other lawsuits over the Anthem demutualization, WellPoint spokesman Tony Felts said.
Information about the settlement is at www.anthemcashclass .com.
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