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UNITEDHEALTH GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
reporting, books and records and internal accounting control provisions of the federal securities laws. This
settlement is subject to approval by the U.S. District Court for the District of Minnesota.
On May 17, 2006, the Company received a subpoena from the U.S. Attorney for the Southern District of New
York requesting documents from 1999 to the date of the subpoena relating to its historical stock option practices.
On May 17, 2006, the Company received a document request from the Internal Revenue Service (IRS) seeking
documents relating to its historical stock option grants and other compensation for the persons who from 2003 to
May 2006 were the named executive officers in the Company’s annual proxy statements. As previously disclosed
in the Company’s 2006 Annual Report on Form 10-K, the Company believed that compensation expense related
to prior exercises of certain stock options by certain of the Company’s executive officers would no longer qualify
as deductible performance-based compensation in accordance with Internal Revenue Code Section 162(m)
(Section 162(m)) as a result of the revision of measurement dates that occurred as part of the Company’s review
of its historical stock option practices. In December 2007, the Company reached an agreement with the IRS
resolving Section 162(m) issues in connection with tax years through 2005. Pursuant to this agreement, the
Company paid $106 million in 2007 and an additional $20 million in the first quarter of 2008.
On June 6, 2006, the Company received a Civil Investigative Demand from the Minnesota Attorney General
requesting documents from January 1, 1997 to the date of the response concerning the Company’s executive
compensation and historical stock option practices. The Company filed an action in Ramsey County Court, State
of Minnesota, captioned UnitedHealth Group Incorporated vs. State of Minnesota, by Lori Swanson, Attorney
General, seeking a protective order, which was denied. The Company appealed the denial of the protective order
to the Minnesota Court of Appeals. On December 4, 2007, the Minnesota Court of Appeals acknowledged
limitations on the Minnesota Attorney General’s authority to issue a Civil Investigative Demand, but affirmed the
denial of a protective order. On February 27, 2008, the Minnesota Supreme Court declined to review the matter,
and the Company has since produced relevant and responsive materials.
The Company has also received requests for documents from U.S. Congressional committees relating to its
historical stock option practices and compensation of executives.
At the conclusion of any unresolved regulatory inquiries, the Company could be subject to regulatory or criminal
fines or penalties as well as other sanctions or other contingent liabilities, which could be material.
Litigation Matters. On March 29, 2006, the first of several shareholder derivative actions was filed against
certain of the Company’s current and former officers and directors in the United States District Court for the
District of Minnesota. The action has been consolidated with six other actions and is captioned In re
UnitedHealth Group Incorporated Shareholder Derivative Litigation. The consolidated amended complaint is
brought on behalf of the Company by several pension funds and other shareholders and names certain of the
Company’s current and former officers and directors as defendants, as well as the Company as a nominal
defendant. The consolidated amended complaint generally alleges that the defendants breached their fiduciary
duties to the Company, were unjustly enriched, and violated the securities laws in connection with the
Company’s historical stock option practices. The consolidated amended complaint seeks unspecified money
damages, injunctive relief and rescission of certain options. On June 26, 2006, the Company’s Board of Directors
created a Special Litigation Committee under Minnesota Statute 302A.241, consisting of two former Minnesota
Supreme Court Justices, with the power to investigate the claims raised in the derivative actions and shareholder
demands, and determine whether the Company’s rights and remedies should be pursued.
A consolidated derivative action, reflecting a consolidation of two actions, is also pending in Hennepin County
District Court, State of Minnesota. The consolidated complaint is captioned In re UnitedHealth Group
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