Judge OKs Depositions in UnitedHealth Lawsuit
U.S. Magistrate Judge Franklin Noel in Minneapolis on Thursday ruled that plaintiff attorneys in a civil lawsuit filed by shareholders against UnitedHealth Group can begin to take depositions of individuals involved with backdated stock options received by company officials, the Minneapolis Star Tribune reports (Phelps, Minneapolis Star Tribune, 5/31).
In November 2006, then-UnitedHealth CEO William McGuire and then-company Chief Operating Officer Stephen Hemsley agreed to return about $390 million in stock option compensation. McGuire in October 2006 agreed to resign after the release of a report that found he likely received backdated stock options. McGuire resigned as chair immediately and since has resigned as CEO. Hemsley replaced McGuire as CEO.
The report, part of an internal investigation conducted by the law firm Wilmer Cutler Pickering Hale & Dorr at the request of the UnitedHealth board, found that 1.5 million stock options, most of which McGuire received from his 1999 contract, were "likely backdated" (California Healthline, 5/2).
Noel limited plaintiff attorney access to the report, which he said is protected by attorney-client privilege because the internal investigation was conducted "for the purpose of obtaining legal services or advice and in anticipation of litigation."
In addition, Noel said that the decision rendered moot a motion filed by the U.S. attorney for Minnesota to limit access to the report to protect a criminal investigation into backdated stock options received by company officials conducted by the office of the U.S. attorney for the Southern District of New York.
Karl Cambronne, lead plaintiff attorney, said that the depositions would begin in the near future, adding, "Now we have the green light to find out what they did and why."
A UnitedHealth spokesperson said the company is "very pleased" with the decision.
A spokesperson for office of the U.S. attorney for the Southern District of New York declined to comment on the decision (Minneapolis Star Tribune, 5/31).