Judge advances lawsuit against UnitedHealth retirement plan
On Thursday, a federal judge rejected UnitedHealth Group’s motion to dismiss the lawsuit, which alleges that the healthcare giant failed to effectively supervise the retirement plan management of its 200,000 employees and their families.
Judge John Tungheim of the Minnesota District Court ruled that the arguments of the participants in the program were sufficient to keep them moving forward. Her complaint highlighted the poor performance of UnitedHealth Group’s 401(k) plan compared to industry benchmarks over the course of 11 years. In April of this year, Kate Snyder sued UnitedHealth for class action status. She accused the healthcare giant, its board of directors, former CEO David Winchman, and the company’s employee benefit plan investment and management committee for violating fiduciary duties under the Federal Employees Retirement Income Guarantee Act.
According to opinions, the plan holds approximately $15 billion in assets contributed by employees and is matched by UnitedHealth Group. Plan participants can choose from a variety of investment options in their 401(k), one of which is a target date retirement fund managed by Wells Fargo Bank.
The lawsuit alleges that Wells Fargo’s target date retirement funds from 2010 to 2060 have been below six key industry benchmarks for a long period of 11 years. The initial litigation compiled 33 tables that compared UnitedHealth Group’s retirement portfolio performance with other plan managers such as Morningstar.
The ruling stated that UnitedHealth Group attributed its slow performance to a more conservative investment strategy aimed at fending off the economic downturn, and questioned the reliability and ability to compare it with other plan managers. The judge said that at this time it was concluded that it was too early to compare Wells Fargo’s measures with other plan managers.
The plaintiff and the collective demanded compensation for losses caused by poor execution of the plan, the divestiture of careless investments, and the removal of managers who violated ERISA’s responsibilities.
UnitedHealth Group did not immediately respond to an interview request.
Correction: An earlier version of this story misreported that the case had been granted class action status. This error has been corrected.