A long-fought battle over retirement plan mismanagement came to a close Thursday when a Minnesota federal judge granted final approval to a $69 million settlement in a class action targeting UnitedHealth Group’s 401(k) plan for allegedly locking in underperforming Wells Fargo investment funds to maintain business ties.
In a swift eight-minute hearing, U.S. District Judge John R. Tunheim issued a text-only order greenlighting the deal. The package includes $23 million in attorney fees, reimbursement for over $735,000 in legal costs, and a $50,000 service award to Kim Snyder, the former UnitedHealth employee who spearheaded the case.
A Costly Allegiance? Wells Fargo Funds in the Spotlight
Filed in April 2021, the suit alleged UnitedHealth breached its fiduciary duty under ERISA by clinging to poorly performing Wells Fargo funds as the plan’s default investment. These funds, Snyder’s complaint asserted, ranked in the bottom 70% to 90% of comparable offerings for over a decade—eroding potential savings for nearly 350,000 employees.
Why? According to Snyder, UnitedHealth feared that cutting ties with the Wells Fargo fund suite could jeopardize its lucrative commercial relationship with the bank.
Despite denying wrongdoing, UnitedHealth stated Friday,
“Plan fiduciaries have always acted in the best interests of plan participants… This settlement allows all parties to put this matter behind them and move on.”
