United Healthcare 2009 Annual Report Download - page 92

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UNITEDHEALTH GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
current and former officers and directors in the United States District Court for the District of Minnesota. The
consolidated amended complaint was brought on behalf of the Company by several pension funds and other
shareholders and named 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 alleged 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. 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, captioned In re UnitedHealth Group Incorporated Derivative Litigation, was
also filed in Hennepin County District Court, State of Minnesota. The action was brought by two individual
shareholders and named certain of the Company’s current and former officers and directors as defendants, as
well as the Company as a nominal defendant.
On December 6, 2007, the Special Litigation Committee concluded its review of claims relating to the
Company’s historical stock option practices and published a report. The Special Litigation Committee reached
settlement agreements on behalf of the Company with its former Chairman and Chief Executive Officer William
W. McGuire, M.D., former General Counsel David J. Lubben, and former director William G. Spears. In
addition, the Special Litigation Committee concluded that all claims against all named defendants in the
derivative actions, including current and former Company officers and directors, should be dismissed. Each
settlement agreement is conditioned upon dismissal of claims in the derivative actions and resolution of any
appeals. Following notice to shareholders, the federal court granted the parties’ motion for final approval of the
proposed settlements on July 1, 2009, and entered final judgment dismissing the federal case with prejudice on
July 2, 2009. The state court granted the parties’ motion for final approval of the proposed settlements and
dismissed the state case with prejudice on May 14, 2009, and entered final judgment on July 17, 2009. The
federal and state courts also awarded plaintiffs’ counsel fees and expenses of $30 million and $6 million,
respectively, which have been paid by the Company. A shareholder has filed an appeal with the U.S. Court of
Appeals for the Eighth Circuit challenging only the federal plaintiffs’ counsel’s fee award. Federal plaintiffs’
counsel is contesting the appeal.
As previously disclosed, the Company also received inquiries from a number of federal and state regulators from
2006 through 2008 regarding its historical stock option practices. Many of those inquiries have been closed,
resolved or inactive since 2008.
The Company may be subject to additional litigation or other proceedings or actions arising out of the
Company’s historical stock option practices and the related restatement of its historical Consolidated Financial
Statements. Litigation and any potential regulatory proceeding or action may be time consuming, expensive and
distracting from the conduct of the Company’s business. The adverse resolution of any specific lawsuit or any
potential regulatory proceeding or action could have a material adverse effect on the Company’s business,
financial condition and results of operations.
Government Regulation
The Company’s business is regulated at federal, state, local and international levels. The laws and rules
governing the Company’s business and interpretations of those laws and rules are subject to frequent change.
Broad latitude is given to the agencies administering those regulations. State legislatures and Congress continue
to focus on health care issues as the subject of proposed legislation. In connection with these activities, the
Company periodically receives inquiries and requests for information from state or federal legislative bodies. For
instance, during the third and fourth quarters of 2009, the Company received requests for information and
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