AG urges review of stock case: Lori Swanson wants a court to weigh in on a UnitedHealth settlement with its ex-CEO

Minnesota's attorney general weighed in Friday on a blockbuster settlement between UnitedHealth Group Inc. and its former chief executive, saying it should be reviewed in court for "fairness, accuracy and reasonableness."

The settlement was assumed to be a done deal when it was announced in early December, though subject to approval by a judge. But U.S. District Judge James Rosenbaum later asked to what extent he could review its merits, an unexpected twist in the high-profile case over stock options that's dogged the country's biggest health insurer for close to two years.

An answer from the Minnesota Supreme Court is pending. The fact the question was asked at all raised the possibility Rosenbaum may try to modify the settlement.

Now Attorney General Lori Swanson has jumped in.

"The reviewing court should be entitled to critically evaluate the SLC's findings and decision based on all the facts and circumstances in the case, including whether settlement will permit the defendant to retain improper benefits," Swanson said in a court filing.

The SLC, or "special litigation committee," was appointed by UnitedHealth to weigh its legal options. A settlement was announced Dec. 6 requiring former CEO William McGuire to surrender $420 million in stock options and other benefits he got while he ran Minnetonka-based UnitedHealth. That was in addition to $198 million he gave up after his options were repriced last year.

McGuire also agreed to pay a record $7 million fine to the Securities and Exchange Commission (SEC) to settle an investigation into charges that he misled investors by pricing options to artificially inflate gains.

That would leave him with $874 million in stock options, which are frozen as the California Public Employees Retirement System pursues its own suit against UnitedHealth.

Karl Cambronne, lead attorney in the consolidated shareholder lawsuits against UnitedHealth, which was part of the settlement, described the deal as "a darn good resolution."

"We're absolutely convinced and confident that when the court looks at what happened, [Rosenbaum] is going to be inclined to approve it as fair, relevant and adequate," he said.

In a separate development, the Minnesota Supreme Court denied a move by UnitedHealth to block a probe by Swanson into the stock options case. Swanson wants access to the same documents being sought by federal regulators.