Plaintiffs ask for ‘age-weighted’ payouts from UnitedHealth settlement

At least two plaintiffs are asking a federal court to consider an “age-weighted distribution” of a $69 million UnitedHealth Group settlement over 401(k) options.

The class-action lawsuit alleged that the health care giant cost workers millions in lost gains by forcing them into lower-performing 401(k) options. UnitedHealth Group settled in December and a claims administration firm is busy trying to track down nearly 352,000 class members, it informed the court in an April 23 letter.

Since then, Judge John Tunheim of the U.S. District Court of Minnesota received two additional letters from former employees who say they more reliant on the settlement dollars than other class members.

“My investment percentage was approximately 13% as this was a critical time period in preparation for my retirement,” wrote Lisa Trombley of Aliso Viejo, Calif. “The impact of lost potential investment income is higher than it would be for others not as close to retirement age.”

Trombley worked for UHG from September 2013 to October 2019. Her letter was echoed by Linda Tresca of Gouldsboro, Pa., who worked at UHG from May 2017 to January 2024 and invested 10% in the company retirement plan.

The letters are nearly identical in style and wording. Plaintiffs are represented by Sanford Heisler Sharp McKnight and Kirkland & Ellis.

'Worst performing' options

The 401(k) lawsuit dates to 2021 when lead plaintiff Kim Snyder alleged interference by the company’s CFO to retain certain Wells Fargo funds within the 401(k) plan. The bank was a large customer for UnitedHealth Group, Snyder claimed, including for coverage sold by its large UnitedHealthcare health insurance business.

The Wells Fargo fund was “one of the worst-performing target date options in the entire market,” the law firm alleged. UnitedHealth’s decision to keep the Wells Fargo fund as the default investment for the plan for over a decade violated fiduciary duties of prudence and loyalty under the Employee Retirement Income Security Act (ERISA).

The matter was certified as a class action in February 2022.

In order to justify keeping the poorly performing Wells Fargo Target Fund Suite, Snyder’s attorneys alleged that UnitedHealth “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.”

Early last year, a Minneapolis judge ruled that a jury could conclude, based on evidence discovered during the case, that the company had been caught with its “hand in the cookie jar.”

Age-weighted distribution of settlement funds is an accepted practice, most commonly applied when the age of plaintiffs is a direct point of contention in litigation. For example, a 2009 settlement between the Equal Employment Opportunity Commission and Allstate Insurance Co. Allstate agreed to pay $4.5 million to approximately 90 former employees who were part of a class action lawsuit alleging age discrimination under the Age Discrimination in Employment Act.

The deadline for class members to object to the UHG settlement is May 29, court documents say.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.