Judge advances lawsuit against UnitedHealth’s retirement plan

A federal judge on Thursday dismissed UnitedHealth Group’s petition to dismiss a lawsuit alleging the healthcare giant failed to effectively oversee the management of its pension plan for its 200,000 employees and their families.

Minnesota U.S. District Court Judge John Tunheim ruled that a plan member’s claims were strong enough to move forward. His complaint pointed out that UnitedHealth Group’s 401 (k) plans have underperformed against industry benchmarks for the past 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 administrative and investment committees of the company’s employee benefit plan of violating their fiduciary duty under of the Federal Employee Retirement Income Security Act.

The plan holds around $ 15 billion in employee-contributed assets matched by UnitedHealth Group, according to the opinion. Plan members can choose from a variety of investment options for their 401 (k), including a target date retirement fund managed by Wells Fargo.

The lawsuit alleges that Wells Fargo’s target date retirement funds from 2010 to 2060 each chronically underperformed six key industry benchmarks over the eleven years. The initial lawsuit compiled 33 charts comparing the performance of UnitedHealth Group’s retirement portfolio against other plan managers, like Morningstar.

UnitedHealth Group attributed its slowness to a more conservative investment strategy meant to withstand economic downturns, questioning its reliability and ability to compare 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 those of other plan managers, the judge said.

The plaintiff and the group seek reimbursement of losses resulting from the underperforming plan, the divestiture of reckless investments and the dismissal of managers who have violated their obligations under ERISA.

UnitedHealth Group did not immediately respond to a request for an interview.

Correction: An earlier version of this story incorrectly stated that the case had been granted class action status. This error has been corrected.

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