United Healthcare 2006 Annual Report Download - page 105

claims under Sections 10(b), 14(a), 20(a) and 20A of the Securities and Exchange Act of 1934 and Sections 11
and 15 of the Securities Act of 1933. The action seeks unspecified money damages and equitable relief.
Defendants moved to dismiss the consolidated amended complaint on February 6, 2007. We intend to vigorously
defend against the action.
On June 6, 2006, a purported class action captioned Zilhaver v. UnitedHealth Group Incorporated, was filed
against the Company and certain of our current and former officers and directors in the United State District
Court for the District of Minnesota. This action alleges that the fiduciaries to the Company-sponsored 401(k)
plan violated ERISA by allowing the plan to continue to hold company stock. Defendants filed a motion to
dismiss on February 6, 2007. We intend to vigorously defend against the action.
On August 28, 2006, we received a purported notice of default from persons claiming to hold certain of our debt
securities alleging a violation of our indenture governing our debt securities. This follows our announcement that
we would delay filing our quarterly report on Form 10-Q for the quarter ended June 30, 2006. On October 25,
2006, we filed an action in the United States District Court for the District of Minnesota, captioned UnitedHealth
Group Incorporated v. Cede & Co. and the Bank of New York, seeking a declaratory judgment that we are not in
default under the terms of the indenture. On or about November 2, 2006, we received a purported notice of
acceleration from the holders who previously sent the notice of default that purports to declare an acceleration of
our 5.80% Senior Unsecured Notes due March 15, 2036 as a result of our announcement that we would delay
filing our quarterly report on Form 10-Q for the quarter ended June 30, 2006. Immediately prior to the filing of
the Form 10-K, we filed our quarterly reports on Form 10-Q for the quarters ended June 30, 2006 and
September 30, 2006, as well as an amendment to our quarterly report on Form 10-Q for the quarter ended
March 31, 2006. Should the Company ultimately be unsuccessful in this matter, we may be required to retire all
or a portion of the $850 million of Senior Unsecured Notes due March 2036. We intend to vigorously prosecute
the declaratory judgment action.
In addition, we may be subject to additional litigation or other proceedings or actions arising out of the
Independent Committee’s review, the Special Litigation Committee’s review and the related restatement of our
historical financial statements. Litigation and any potential regulatory proceeding or action may be time
consuming, expensive and distracting from the conduct of our business. The adverse resolution of any specific
lawsuit or any potential regulatory proceeding or action could have a material adverse effect on our business,
financial condition and results of operations.
In addition, other adjustments for non-operating cash charges may be required in connection with the resolution
of stock option-related matters arising under litigation, and regulatory reviews by the SEC, IRS, U.S. Attorney,
U.S. Congressional committees and Minnesota Attorney General, the amount and timing of which are uncertain,
but which could be material.
Other Legal Matters
Because of the nature of our businesses, we are routinely made party to a variety of legal actions related to the
design and management of our service offerings. We record liabilities for our estimates of probable costs
resulting from these matters. These matters include, but are not limited to, claims relating to health care benefits
coverage, medical malpractice actions, contract disputes and claims related to disclosure of certain business
practices.
Beginning in 1999, a series of class action lawsuits were filed against both UnitedHealthcare and PacifiCare, and
virtually all major entities in the health benefits business. In December 2000, a multidistrict litigation panel
consolidated several litigation cases involving the Company and our affiliates in the Southern District Court of
Florida, Miami division. Generally, the health care provider plaintiffs allege violations of ERISA and the
Racketeer Influenced Corrupt Organization Act (RICO) in connection with alleged undisclosed policies intended
to maximize profits. Other allegations include breach of state prompt payment laws and breach of contract claims
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