A federal judge on Wednesday granted class action status to UnitedHealth Group workers in their fight against the company’s alleged inability to manage their $7 billion retirement accounts.
Judge John Tunheim of the U.S. District Court of Minnesota ruled that the employee’s complaint met federal certification standards, saying that more than 150,000 people enrolled in UnitedHealth Group’s health plan have enough in common to consolidate their complaints into one question of whether they supported trust managers. obligations under the Employee Retirement Act.
Former UnitedHealth Group nurse Kim Snyder sued the healthcare giant in April, alleging the company’s 401(k) plans fell short of industry benchmarks for 11 years. The complaint alleges that UnitedHealth Group, its board of directors, former CEO David Winchmann, and the company’s employee benefit plan investment and administrative committees failed to effectively oversee Wells Fargo, which managed 11 underperforming funds that were part of the workers’ pension package.
UnitedHealth Group believes the case is unfounded and will continue to defend itself, a spokesperson wrote in an email.
Some of the pension investments were in the lower 90th percentile, and all were in the lowest 70th percentile compared to other due date pension funds, according to plaintiff’s attorney Charles Field. Half of the overall plan, or $7 billion, was invested in those plans, which involved tens of thousands of UnitedHealth Group workers who could join the class, he said.
“UnitedHealthcare had quarterly meetings, people met, reviewed plans,” Field said. “But to keep it going, they couldn’t pay close attention to what was going on.”
The original lawsuit produced 33 tables comparing the performance of UnitedHealth Group’s retirement portfolio with other plan managers such as Morningstar. The company and its employees are still arguing about what yardstick should be used to judge the effectiveness of funds, Field says. He believes Wells Fargo investments should be compared to the best-performing plans on the market, but the court could also average out all available funds or be guided by standards set by the S&P Global Ratings Agency. He said his law firm will argue that UnitedHealth Group has been in breach of its fiduciary obligations for six years and expects the company to try to shorten that time period to minimize costs.
Field expects workers to reach a settlement with UnitedHealth Group by October and has estimated damages that could be at least tens of millions of dollars.