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Stull, Stull & Brody AnnouncesPreliminary Approval of UnitedHealth Group 401(k) ERISA Class Action I. BACKGROUND If you are a current or former participant in the UnitedHealth
Group 401(k) Savings Plan or the PacifiCare Health Systems Inc. Savings
and Profit Sharing Plan whose individual account in such plan(s)
held units of the UnitedHealth Group Stock Fund at any time from
December 21, 2005, through and including May 21, 2006, or if you
are the beneficiary of such a participant, you may be
a member of the Class in Zilhaver vs. UnitedHealth Group Incorporated,
No. 06-C-2237-JMR-FLN (D. Minn.), and your rights may be affected
by a proposed settlement of this litigation. This website is intended
to provide
certain background information regarding the litigation and the
proposed settlement.
II. THE LITIGATION On June 2, 2006, Plaintiff Matthew Zilhaver initiated an action
against the Defendants in the United States District Court, District
of Minnesota,
by complaint styled as Zilhaver v. UnitedHealth Group Inc., et
al.,
and docketed as Index Number Civ. No. 06 CV 2237 (the “Action”),
alleging various violations of Employee Retirement Income Security
Act (ERISA), a federal law which covers a wide range of employee
benefit plans. On March 15, 2007, Plaintiff Sascha Linn intervened
as an additional plaintiff. Together, Plaintiffs Zilhaver and Linn
filed the operative complaint in this action, the Second Amended
ERISA Complaint (Docket Entry No. 57) [please note that a copy of
the docket
and all non-procedural docket entries are available below] which
was filed on May 1, 2007 (the “Complaint”). The Complaint
alleges that UnitedHealth and the other defendants (the “Defendants”)
were fiduciaries of the UnitedHealth 401(k) Savings Plan, a defined
contribution retirement plan for UnitedHealth employees (the “Plan”).
The Complaint further alleges that Defendants violated their fiduciary
duties of prudence and loyalty to the Plan and to participants in
the Plan (“Participants”) by allowing Plan assets to
be invested, in part, in a fund comprised almost entirely of UnitedHealth
common stock (“the UnitedHealth Common Stock Fund”) when
such an investment was not prudent,and by failing to make full disclosure
to Participants of all material risks associated with investing in
the UnitedHealth Common Stock Fund.
The Complaint alleges that UnitedHealth stock, and in consequence,
the UnitedHealth Common Stock Fund, were imprudent investments because
the market of UnitedHealth stock was artificially inflated as a result
of misrepresentations and failures to disclose material adverse information
concerning UnitedHealth’s from December 21, 2005 through May
24, 2006, inclusive (the “Settlement Class Period”).
These misrepresentations and failures to disclose related to the
Company’s executive stock option program and irregularities
therein, as well as resulting accounting and disclosure violations.
The misstatements allegedly caused an artificial inflation in the
Company’s stock price during the proposed Class Period. When
the truth was disclosed, UnitedHealth stock price dropped substantially.
Defendants
responded to the Complaint by filing motions to dismiss and for summary
judgment which argued, in substance, that it was
not imprudent to offer Company stock even if the improprieties alleged
by Plaintiffs were established since the market nonetheless ascribed
substantial value to the common stock and the Company as a whole;
that appropriate disclosures were made to the Participants and, in
particular, that the fiduciaries could not have properly provided
any special notice to the Participants without running afoul of the
rules against selective disclosure; and that the Complaint was insufficient
for a variety of other, additional reasons. On March 31, 2008, the
Court denied Defendants’ motion to dismiss and for summary
judgment (Docket Entry No.118).
Plaintiffs moved to certify as a class all persons who held all
or a portion of their Plan accounts in the UnitedHealth Common Stock
Fund during the Class Period. (Docket
Entry No. 59). Defendants filed their opposition to Plaintiffs’ class
certification motion on August 7, 2007 (Docket Entry 90). Plaintiffs’ motion
for class certification had been scheduled for hearing when the second
mediation in this case resulted in the settlement in principle now
before the Court.
This Settlement is the product of extensive negotiations between
Lead Counsel and the Defendants’ counsel. Throughout the settlement
negotiations, the Named Plaintiffs were advised by various consultants
and experts, including individuals with expertise in ERISA fiduciary
liability issues, insurance coverage issues, and estimating potential
damages in cases involving ERISA fiduciary liability. There were
two mediations in this case. The first mediation conducted by a retired
federal magistrate judge was unsuccessful in resolving the Action
but did advance the settlement process. A second mediation, conducted
separately by a different retired federal judge, was ultimately successful
in enabling the Parties to reach the Settlement described herein.
III. THE SETTLEMENT A Settlement Hearing has been scheduled for May 8, 2009, at 10:30
a.m., in Courtroom 14E of the United States Courthouse before the
Honorable
James M. Rosenbaum, United States District Judge, District of Minnesota,
300 South Fourth Street, Minneapolis, Minnesota. The Settlement
Hearing is to consider the settlement in this case on behalf of
a class defined as: All current and former participants in the Plan (including the
PacifiCare Plan) whose individual accounts in the Plan held units
of the UnitedHealth
Group Stock Fund at any time during the period December 21, 2005,
through and including May 24, 2006, and the beneficiaries of such
participants. The purpose of the Settlement Hearing is to determine: (1) whether
the proposed settlement of the claims in the Action for the sum
of $17,000,000 (the “Settlement Fund”) should be approved
by the Court as fair, reasonable and adequate; (2) whether the Action
should be dismissed with prejudice against the Defendants; (3) whether
the Plan of Allocation of the settlement proceeds is fair, reasonable
and adequate and should be approved; (4) whether the application
of Lead Counsel for the payment of attorneys’ fees and expenses
incurred by Lead Counsel in connection with the Litigation should
be approved; and (5) whether an application for an award of compensation
to the Plaintiffs in the Action should be approved. If you were a participant in the UnitedHealth Group 401(k) savings
Plan or the PacifiCare Health Systems Inc. Savings and Profit Sharing
Plan whose individual account in such plans held units of the UnitedHealth
Group Stock Fund at any time during the period between December 21,
2005, through and including May 21, 2006, or if you are the beneficiary
of such a participant, you may be a Class Member and your rights
may
be affected
by the settlement of the Litigation. If you are a member of the Class and have not received a detailed
Notice of Class Action Settlement (“Notice”), you
may obtain copies of the same by clicking here. You may also
obtain
copies
of these
documents by
contacting Stull, Stull & Brody toll-free at 1-800-337-4983.
No proof of claim is required for class members to recover their
share
of
the
settment proceeds. All distribution amounts under the Court-approved
Plan of Allocation (Exhibit C to Docket No. 129) will be calculated
based upon the Plan’s records. You do not have the right to exclude yourself from the Settlement.
The Action was conditionally certified under Federal Rule of Civil
Procedure 23(b)(1) and 23(b)(2) as a non–“opt-out” class
action because the Court preliminarily determined the requirements
of those rules were satisfied. Thus, it is not possible for any participants
or beneficiaries to exclude themselves from the benefits of the Settlement.
As a Settlement Class member, you will be bound by any judgments
or orders that are entered in the Action for all claims that were
or could have been asserted in the Action or are otherwise included
in the release under the Settlement. Any Class Member may file an objection to the settlement, if he,
she or it has any information why the proposed settlement of the
Litigation should not be approved or why judgment should not be entered
thereon; why any attorneys’ fees, costs, expenses or Plaintiffs
compensation requested by Lead Counsel or Plaintiffs should not be
awarded; or why the
Plan of Allocation should not be approved; provided, however, that
no Class Member may be entitled to appear at the Settlement Hearing
or contest approval of the terms and conditions of the settlement
unless, his, her or its objection or opposition, including the basis
therefore, is made in writing and mailed or delivered such that it
is filed with the Court and served on each of the following no later
than April 17, 2009.
The addresses for filing paper objections with the Court and required
service on counsel are as follows: The Court: Lead Counsel: Defendants’ Counsel: Thomas P. Swigert, Esq. Steve W. Gaskins, Esq. Objections may also be filed via email to the following addresses: The Court: Lead Counsel: Defendants’ Counsel: Thomas P. Swigert, Esq. Steve W. Gaskins, Esq. All documents are .pdf files. Click
here to download Adobe® Reader if you are unable to view the pdf
files below.
All declarations contain all exhibits thereto
in one pdf file unless noted otherwise. Please be patient,
it may take a few minutes for your computer to download
and open some of the declarations, many of which are hundreds
of pages, inclusive of exhibits. Click here
to e-mail Stull, Stull & Brody about the proposed settlement
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