A Minnesota federal judge has given preliminary approval to UnitedHealth's agreement to pay $69 million to settle a class-action lawsuit alleging the company prioritized its business relationship with Wells Fargo over concerns that its 401(k) plan contained low-performing target-date funds.
A fairness hearing has been scheduled for June 12 to assess the settlement, according to a Jan. 24 order from U.S. District Judge John Tunheim.
A nurse working for UnitedHealth Group first filed the lawsuit in April 2021 against the company, its board of directors and members of the company’s investment committee. She alleged they breached their fiduciary duties under the Employee Retirement Income Security Act by continuing to offer the target-date funds managed by Wells Fargo Asset Management.
UnitedHealth Group agreed to the settlement in December.
The proposed agreement is the largest-ever ERISA settlement for alleged breach of fiduciary duty for failure to remove underperforming investment options, according to the Dec. 13 filing. The proposal comprises 20.3% to 25% of potential damages, "which is well within the range of settlement recoveries that have been approved in other ERISA class-action settlements."
A UnitedHealth Group spokesperson told Becker's in December that, "our 401(k) plan fiduciaries have always acted in the best interests of plan participants, and we strongly deny any allegations to the contrary. If approved by the court this settlement will enable all parties to put this matter behind them and move forward."