A Medical Device Daily
UnitedHealth Group (Minnetonka, Minnesota) reported that it has reached an agreement with California Public Employees' Retirement System (CalPERS; Sacramento) and plaintiff class representative Alaska Plumbing and Pipefitting Industry Pension Trust (Seattle) to settle the federal securities class-action lawsuit arising from a complaint filed in 2006 relating to UnitedHealth's historical stock options practices.
UnitedHealth Group will pay $895 million into a settlement fund for the benefit of class members.
"This is a significant agreement that resolves a major issue before our company in a way that is in the best interests of our shareholders and other stakeholders," said Thomas Strickland, chief legal officer of UnitedHealth Group. "The settlement provides UnitedHealth Group with certainty and closure on this lawsuit, avoids potentially costly and protracted litigation and allows us to continue to focus on providing Americans with high-quality, affordable health care solutions."
The proposed settlement will fully resolve all claims against the company, all current officers and directors named in the lawsuit, and certain former officers and directors named in the lawsuit.
The settlement is subject to approval by CalPERS' board of directors, UnitedHealth's board of directors, the completion of final documentation, and preliminary and final court approval.
Neither UnitedHealth nor any of the individuals involved in the case admitted any wrongdoing as part of the proposed settlement agreement. In addition to the payment to the settlement fund, UnitedHealth also will supplement the substantial changes that it already has implemented in its corporate governance policies and practices with additional changes and enhancements.
Separately, UnitedHealth said it has reached an agreement in principle to resolve the Employee Retirement Income Security Act (ERISA) class-action litigation relating to the company's historical stock options practices that was filed on June 2, 2006, in the U.S. District Court in Minnesota against the company and certain current and former officers and directors.
Under the terms of the proposed settlement, UnitedHealth Group will pay $17 million into a settlement fund for the benefit of class members, most of which will be paid by the company's insurance carriers. The proposed settlement, which is subject to the completion of final documentation and preliminary and final court approval, will fully resolve all claims against UnitedHealth and all of the individual defendants in the ERISA class-action litigation.
Neither UnitedHealth nor any of the individuals admitted any wrongdoing as part of this proposed settlement agreement.
In other legalities, a Miami resident was sentenced to 130 months in prison for his role in schemes to defraud Medicare, according to the acting Assistant Attorney General Matthew Friedrich of the Criminal Division and U.S. Attorney R. Alexander Acosta of the Southern District of Florida.
Gustavo Smith was sentenced in U.S. District Court for the Southern District of Florida by Judge Marcia Cooke. In addition to the prison sentence, Cooke ordered Smith to serve three years of supervised release following his release from prison, forfeit $287,000 and pay $1,988,969 in restitution to the U.S. Department of Health and Human Services.
At trial, the jury heard testimony that Smith was the owner of Medstar Services and Orthotics Fitters (Miami), two durable medical equipment companies that Smith used to submit more than $4.6 million in fraudulent claims to the Medicare program.