Employees have now filed two separate 401(k) lawsuits against UnitedHealth Group (UHG), claiming that the company misused forfeited 401(k) funds from employees to reduce employer contributions into the plan. First, employees sued UHG in Kotalik et al. v. UnitedHealth Group Inc. et al., reportedly alleging that the company used the forfeited funds to pay employer contributions rather than defray administrative expenses, in violation of the Employee Retirement Income Security Act (ERISA). The second suit, Holly Hendrickson v. UnitedHealth Group, also alleges that UHG improperly retained forfeited employee funds to lower its costs.
Plans receive forfeited funds when employees leave their companies before becoming fully vested in their retirement plans. When this situation occurs, plans can claw back matching funds that they previously contributed to the employees' retirement accounts. Between 2019 and 2023, UHG allegedly used $19 million in forfeited funds to reduce its matching contributions. Plan participants claim this violated fiduciary duties under ERISA. Plan participants claim that the plan's use of forfeited funds in this manner violates its fiduciary duties under ERISA. According to the U.S. Department of Labor, UHG's 401(k) plan holds $22 billion in assets and serves 267,000 plan participants.
Last year, following three years of litigation, UHG settled another 401(k) class action lawsuit for $69 million. That class action, entitled Snyder v. UnitedHealth Group, et al., arose from UHG's prioritization of low-performing target-date funds to maintain its relationships with Wells Fargo.
UHG has increasingly been under public scrutiny after the murder of its CEO, Brian Thompson, in December 2024. Investors have now filed a lawsuit over allegedly misleading statements concerning company stock performance after Thompson's death. In May 2025, UHG CEO Andrew Witty abruptly resigned. A Wall Street Journal report soon thereafter accused the company of being under criminal investigation by the U.S. Department of Justice for potential Medicare fraud, a claim the company denied.
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