As alleged in the complaint, Wells Fargo was a critical customer and financier for UnitedHealth and, UnitedHealth’s executive leadership personally intervened to keep the poorly performing Wells Fargo Target Fund Suite on UnitedHealth’s 401(k) Plan to garner favor with, and benefit, Wells Fargo. UnitedHealth has denied these allegations and contends that their monitoring and selection processes complied with the fiduciary standards under ERISA.
 
In March, a federal judge denied UnitedHealthGroup’s motion for summary judgment in the class-action lawsuit, filed on behalf of the insurer's 200,000 current and former employees, alleging CFO John Rex interfered with the company's decision to drop "one of the worst-performing target date options in the entire market.”

The class action lawsuit was brought by Kim Snyder, who worked for UnitedHealth as a nurse, who filed the lawsuit in April 2021. The suit alleged the company's 401(k) retirement plan invested in low-performing target-date funds; that CFO John Rex gave preferential priority to UnitedHealth's relationship with Wells Fargo, which managed the funds; and kept those interests even when they underperformed.

The claim said that "United had breached its duty of loyalty and prudence in retaining the Wells Fargo Target Date Suite, one of the worst-performing target date options in the entire market," according to a statement from Sanford Heisler Sharp.

The suit claimed that the Wells Fargo funds underperformed against six benchmarks over an 11-year period and had "a lower cumulative return and lower annualized return than every other comparator." The suit further alleges that Rex personally overruled removing Wells Fargo funds from the plan after an independent investment consultant and the company's investment committee recommended doing so.

"This is a tremendous and historic result for our Plaintiff and Plan participants," said class counsel Charles H. Field of Sanford Heisler Sharp McKnight. “Our Plaintiff took a leading and decisive part in the litigation and fought with courage and strength against a major corporation to obtain an outstanding result for the Plan and its participants.”
 

Related: UnitedHealth CFO named ERISA lawsuit over ‘underforming’ 401(k) funds

"This opinion sends a strong message that retirement plan fiduciaries cannot run `headfirst' into conflicts of interest and escape the consequences, regardless of their position in the company," said Leigh Anne St. Charles, a partner in the law firm.