United Healthcare 2006 Annual Report Download - page 104

On May 17, 2006, we received a subpoena from the U.S. Attorney for the Southern District of New York
requesting documents from 1999 to the present relating to our stock option practices.
On June 6, 2006, we received a Civil Investigative Demand from the Minnesota Attorney General requesting
documents from January 1, 1997 to the present concerning our executive compensation and stock option
practices. After filing an action in Ramsey County Court, State of Minnesota, captioned UnitedHealth Group
Incorporated vs. State of Minnesota, by Lori Swanson, Attorney General, we filed a Motion for Protective Order
which was denied by the trial court. We are pursuing a stay of the Civil Investigative Demand as well as an
appeal of the Order denying the Protective Order.
On December 19, 2006, we received from the Enforcement Division staff of the SEC a formal order of
investigation into the Company’s historic stock option practices.
We have also received requests for documents from U.S. Congressional committees relating to our historical
stock option practices and compensation of executives. With the exception of the Civil Investigative Demand
from the Minnesota Attorney General, we have generally cooperated and will continue to cooperate with the
regulatory authorities. At the conclusion of these regulatory inquiries, we 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 our 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 our current and former directors and officers as
defendants, as well as the Company as a nominal defendant. The consolidated amended complaint generally
alleges that defendants breached their fiduciary duties to the Company, were unjustly enriched, and violated the
securities laws in connection with our historic stock option practices. The consolidated amended complaint seeks
unspecified money damages, injunctive relief and rescission of the options. On June 26, 2006, our Board of
Directors created a Special Litigation Committee, consisting of two former Minnesota Supreme Court Justices,
under Minnesota Statute 302A.241 with the power to investigate the claims raised in the derivative actions and a
shareholder demand, and determine whether the Company’s rights and remedies should be pursued. Based on the
existence of our Special Litigation Committee, defendants have moved to dismiss or in the alternative to stay the
litigation pending resolution of the Special Litigation Committee process. 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 Incorporated Derivative Litigation. The
action was brought by two individual shareholders and names certain of our current and former officers and
directors as defendants, as well as the Company as nominal defendant. On February 6, 2007, the State Court
Judge entered an order staying the action pending resolution of the Special Litigation Committee process.
On May 5, 2006, the first of seven putative class actions alleging a violation of the federal securities laws was
brought by an individual shareholder against certain of our current and former officers and directors in the United
States District Court for the District of Minnesota. On December 8, 2006 a consolidated amended complaint was
filed consolidating the actions into a single action. The action is captioned In re UnitedHealth Group
Incorporated PSLRA Litigation. The action was brought by lead plaintiff California Public Employees
Retirement System against the Company and certain of our current and former officers and directors. The
consolidated amended complaint alleges that defendants, in connection with the same alleged course of conduct
identified in the shareholder derivative actions described above, made misrepresentations and omissions during
the period between January 20, 2005 and May 17, 2006, in press releases and public filings that artificially
inflated the price of our common stock. The consolidated amended complaint also asserts that during the class
period, certain defendants sold shares of our common stock while in possession of material, non-public
information concerning the matters set forth in the complaint. The consolidated amended complaint alleges
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