UnitedHealth’s $69M 401(k) Settlement: A Wake-Up Call for Fiduciary Oversight

A massive class-action lawsuit against UnitedHealth Group is nearing its conclusion—and it comes with a $69 million price tag. The case, which alleges the health care giant knowingly funneled employees into poorly performing retirement funds, offers more than just a lesson in fiduciary failure. It’s a cautionary tale for any financial institution, HR department, or marketer tasked with promoting investment products or retirement benefits.

The Origin: How a Retirement Plan Became a Legal Minefield

The lawsuit traces back to 2021, when plaintiff Kim Snyder filed suit claiming UnitedHealth breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA). At the heart of the allegation: the company retained a suite of Wells Fargo target-date funds as the default 401(k) investment option—even after those funds were flagged internally as underperforming.

According to court records, these Wells Fargo funds were consistently ranked among the worst-performing options in the market. Despite warnings from its own investment committee and recommendations to switch to better-performing alternatives, UnitedHealth allegedly chose to keep them, citing Wells Fargo’s status as a major business partner.

In short: the company allegedly prioritized its corporate relationships over the financial well-being of its employees—compromising the retirement outcomes of more than 350,000 plan participants.

How the $69M Will Be Distributed

Pending final approval, the $69 million settlement will be distributed proportionally based on how much each participant had invested in the Wells Fargo funds and the extent of underperformance over time.

• Current employees will receive direct deposits into their retirement accounts
  
  

• Former employees will get mailed checks or have the option to roll over funds into new retirement accounts

So far, engagement has been high: over 3,000 rollover forms have been submitted and nearly 160,000 unique users have visited the settlement site. Notably, there were no formal objections to the settlement—a rarity in large class-action cases.

Calls for Age-Weighted Distribution—and Legal Pushback

Although there were no objections, some former employees wrote to the court requesting an “age-weighted distribution,” arguing that older employees with less time to recover financial losses were disproportionately impacted. However, Snyder’s legal team defended the flat distribution formula, and the presiding judge, John R. Tunheim, has indicated no intent to deviate from the current method.

As for the legal team, they’re requesting $23 million—about one-third of the total settlement—for attorney fees. Snyder, the class’s lead plaintiff, has also requested a $50,000 class service award for spearheading the case.

A Cautionary Tale for Financial Marketers

The UnitedHealth case isn’t just about retirement plan mismanagement—it’s about how decisions around financial products get made, marketed, and communicated. And that has massive implications for anyone in financial services, HR, or fintech:

1. Fiduciary Duty Doesn’t Stop at Fund Selection

UnitedHealth’s biggest failure wasn’t offering a bad fund—it was knowingly continuing to offer it after internal red flags. That’s a breach of duty that regulators and plaintiffs’ lawyers are increasingly aggressive about pursuing.

Takeaway: Any product or partnership you promote—whether it's a 401(k) plan, investment portfolio, or savings app—should be subject to regular performance reviews and clear justification.

2. Marketing May Involve Implicit Endorsements

When a company chooses a “default” investment, it’s often seen by consumers as a recommendation. If those funds underperform or aren’t aligned with fiduciary standards, even implicit promotions can lead to legal exposure.

Takeaway: Disclosures, disclaimers, and transparency are critical. What you market—or default consumers into—must live up to the claims and expectations you create.

3. Corporate Relationships Shouldn’t Cloud Judgment

The UnitedHealth case exposed how legacy relationships (in this case, with Wells Fargo) can create real conflicts of interest. If that bias ends up costing consumers money, you’re looking at lawsuits, not just reputational damage.

Takeaway: Marketing teams should work closely with compliance and legal teams to vet vendor partnerships and ensure no perceived or actual conflicts make it into customer-facing materials.

A Broader Reckoning on Retirement Products

While UnitedHealth’s settlement may soon be finalized, it raises an uncomfortable question for the broader industry: How many other companies are still defaulting employees into outdated, underperforming, or self-serving investment products?

For fintechs offering robo-advisors, retirement tools, or embedded financial services, this is an especially important moment to examine:

• How are your default settings chosen?
  
  

• Are your risk disclosures aligned with performance data?
  
  

• Are your partner affiliations transparent to end users?