Judge pushes lawsuit over UnitedHealth’s retirement plan forward
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A federal judge on Thursday denied UnitedHealth Group’s motion to dismiss a lawsuit alleging the healthcare giant failed to effectively oversee management of its retirement plan for its 200,000 employees and their families.
Judge John Tunheim of the U.S. District Court of Minnesota ruled that a plan participant’s claims were strong enough to move forward. Her complaint highlighted that UnitedHealth Group’s 401(k) plans underperformed compared with industry benchmarks over the course of 11 years. Kate Snyder sued UnitedHealth in April, seeking class-action status. She accused the healthcare giant, its board of directors, former CEO David Winchmann and the company’s employee benefit plan investment and administrative committees of violating their fiduciary duty under the federal Employee Retirement Income Security Act.
The plan holds approximately $15 billion in assets contributed by employees and matched by UnitedHealth Group, the opinion said. Plan participants can select from various investment options for their 401(k), one of which is a target date retirement fund that is managed by Wells Fargo.
The lawsuit alleges that Wells Fargo’s target date retirement funds from 2010 through 2060 each chronically underperformed on six key industry benchmarks over the course of eleven years. The original lawsuit compiled 33 tables comparing UnitedHealth Group’s retirement portfolio performance compared with other plan managers, like Morningstar.
UnitedHealth Group had credited its slow performance on a more conservative investment strategy intended to weather economic downturns, questioning the reliability and ability to compare it to other plan managers, the ruling said. At this point, it’s too early to conclude that Wells Fargo’s measures should not be compared to other plan managers, the judge said.
The plaintiff and class seek reimbursement for the losses resulting from the underperforming plan, divestiture of imprudent investments and removal of managers who violated their duties under ERISA.
UnitedHealth Group did not immediately respond to an interview request.
Correction: An earlier version of this story misstated that the case has been granted class-action status. This error has been corrected.