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SEC UnitedHealth Settles Backdating Allegation

December 29, 2008
Related Topics: Miscellaneous Legal Issues, Benefit Design and Communication, Policies and Procedures, Latest News

UnitedHealth Group has agreed to settle charges that it violated the reporting, books and records, and internal controls provisions of federal securities laws, without admitting or denying the allegations or paying a monetary penalty, according to the Securities and Exchange Commission, which filed the settlement.

In a separate settlement with the SEC, David Lubben, former UnitedHealth Group general counsel, consented to an anti-fraud injunction, a $575,000 penalty and a five-year officer and director bar. Lubben also admitted to no wrongdoing as part of the agreement.

“UnitedHealth engaged in a long-running scheme to hide over a billion dollars in executive compensation,” said Linda Chatman Thomsen, director of the SEC's enforcement division, in a written statement. “By materially misstating these expenses for over a decade, UnitedHealth breached its duty to shareholders to accurately report its financial results.”
The company overstated its net income from 1994 through 2005 by almost $1.53 billion, according to the complaint, filed in U.S. District Court for the District of Minnesota.

The SEC did not charge UnitedHealth or Lubben with fraud, as it did former company CEO William McGuire in a prior case. The agency also did not seek a monetary penalty because of the company’s “extraordinary cooperation” in the investigation, the SEC said.

The SEC oversaw a $468 million settlement between McGuire and UnitedHealth Group, which was granted preliminary approval by federal and state judges last week.

UnitedHealth Group officials could not be reached for comment.

Filed by Rebecca Vesely of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail

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