UnitedHealth Group Agrees to $69 Million Settlement in ERISA Class Action Lawsuit
From the desk of Jim Eccleston at Eccleston Law
UnitedHealth Group has agreed to pay $69 million to resolve a class action lawsuit alleging violations of its fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA). The settlement, believed to be the largest ever for an ERISA case involving poorly performing 401(k) investment options, ends three years of litigation in Snyder v. UnitedHealth Group, et al.
The lawsuit, filed in April 2021 by former UnitedHealth employee Kim Snyder, alleged that UnitedHealth imprudently retained the Wells Fargo Target Fund Suite in its 401(k)-investment menu despite its poor performance. InvestmentNews reports that the funds significantly underperformed six benchmarks over 11 years, yielding lower cumulative and annualized returns than comparable options.
The suit claimed UnitedHealth prioritized its corporate relationship with Wells Fargo, a major financier and customer, over its fiduciary duty to plan participants. Specifically, it alleged that UnitedHealth executives, including CFO John Rex, intervened to keep the underperforming Wells Fargo funds in the 401(k) plan. These actions, the plaintiffs argued, breached ERISA’s standards of loyalty and prudence.
According to InvestmentNews, this landmark settlement underscores the importance of fiduciary diligence in selecting and monitoring 401(k) investment options. It also highlights the legal risks of prioritizing corporate relationships over participant interests. ERISA requires fiduciaries to act solely in the best interests of plan participants and to make prudent, loyalty-driven decisions regarding investment options.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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