UnitedHealth Group Incorporated NYSE: UNH is a managed health care and health insurance company. According to its company literature, UnitedHealth Group is a diversified health and well-being company dedicated to making health care work better. Headquartered in Minnetonka, Minnesota, UnitedHealth Group offers a broad spectrum of products and services through seven operating businesses: UnitedHealthcare, Ovations, AmeriChoice, Uniprise, OptumHealth, Ingenix, and Prescription Solutions. Through its family of businesses, UnitedHealth Group serves approximately 70 million individuals nationwide. In 2008, the company posted a net income of $3 billion.[1]
UnitedHealth Group is the parent of UnitedHealthcare, one of the largest health insurers in the U.S. It was created in 1977, as UnitedHealthCare Corporation (it renamed itself in 1998), but traces its origin to a firm it acquired in 1977, Charter Med Incorporated, which was founded in 1974. In 1979, it introduced the first network-based health plan for seniors. In 1984, it became a publicly traded company.
Acquisitions
In 1995, the company acquired The MetraHealth Companies Inc. for $1.75 billion. MetraHealth was a privately held company formed by combining the group health care operations of The Travelers Insurance Company and Metropolitan Life Insurance Company also known as MetLife.
In July 2004, UnitedHealth Group acquired Oxford Health Plans and all of United Healthcare's New York-based small group contracts are now Oxford Health Plans products. In December 2005, the company received final regulatory approval for its $9.2 billion purchase of PacifiCare Health Systems. It agreed to divest parts of PacifiCare's commercial health insurance business in Tucson, Arizona and Boulder, Colorado to satisfy antitrust regulator concerns, and also agreed to end its network access agreement with Blue Shield of California.
In March 2007, UnitedHealth Group signed a definitive agreement to acquire Sierra Health Services Inc. for $2.6 billion. Sierra provided health benefits and services to 310,000 members in Nevada and another 320,000 people in senior and government programs throughout the United States.
In a recent insurance industry publication, Business Insurance, United was named "readers choice" winner 2007 for "Best Managed care organization".[2]
To contrast with that, however, in a recent non-insurance industry survey of health care executives who have dealt with the company, United received a 91% unfavorable rating—the worst ranking among all listed.[3]
In June 2009, Ingenix, a UHG subsidiary, acquired AIM Healthcare. AIM is the leading data mining and insurance claim auditing service in the US. https://www.aimhealth.com/
In July 2009, UnitedHealth Group Inc. agreed to acquire Health Net Inc.'s (HNT) Northeast licensed subsidiaries for up to $570 million in payments spread out over a two year period.[4]
Legal issues
In 2006, the Securities and Exchange Commission (SEC) began investigating the conduct of UnitedHealth Group's management and directors, for backdating of stock options. Investigations were also begun by the Internal Revenue Service and prosecutors in the U.S. attorney's office for the Southern District of New York, who subpoenaed documents from the company. The investigations came to light after a series of probing stories in the Wall Street Journal in May 2006, discussing apparent backdating of hundreds of millions of dollars' worth of stock options by UHC management. The backdating apparently occurred with the knowledge and approval of the directors, according to the Journal. Major shareholders have filed lawsuits accusing former New Jersey governor Thomas Kean and UHC's other directors of failing in their fiduciary duty.[5][6] On October 15, 2006, CEO William W. McGuire was forced to resign, and relinquish hundreds of millions of dollars in stock options. On December 6, 2007, the SEC announced a settlement under which McGuire will repay $468 million, as a partial settlement of the backdating prosecution. Legal actions filed by the SEC against UnitedHealth Group itself are still pending. [7]
In June 2006, the American Chiropractic Association filed a national class action lawsuit against the American Chiropractic Network (ACN), which is owned by UnitedHealth Group and administers chiropractic benefits, and against UnitedHealth Group itself, for alleged practices in violation of the federal Racketeer Influenced and Corrupt Organizations Act (RICO).[8]
Ingenix
In February 2008, New York State Attorney General Andrew M. Cuomo announced an industry-wide investigation into a scheme by health insurers to defraud consumers by manipulating reasonable and customary rates. The announcement included a statement that Cuomo intended "to file suit against Ingenix, Inc., its parent UnitedHealth Group, and three additional subsidiaries." Cuomo asserted that his investigation found that rates found in a database of health care charges maintained by Ingenix were lower than what he determined was the actual cost of certain medical expenses. Cuomo said this inappropriately allowed health insurance companies to deny a portion of provider claims, thereby pushing costs down to members. [9]
On January 13, 2009, UnitedHealth Group and Ingenix announced an agreement with the New York State attorney settling the probe into the independence of the health pricing database. Under the settlement, UnitedHealth Group and Ingenix would pay $50 million to finance a new, non-profit entity that would develop a new health care pricing database. Ingenix would discontinue its medical pricing databases when the new entity makes its product available. The company acknowledge the appearance of a conflict of interest, but admitted no wrongdoing.[10]
On January 15, 2009, UnitedHealth Group announced a $350 million settlement of three class action lawsuits filed in Federal court by the American Medical Association, UnitedHealth Group members, healthcare providers, and state medical societies for not paying out-of-network benefits. This settlement came two days after a similar settlement with Cuomo.[11]
On October 27, 2009, Cuomo announced the creation FAIR Health, the independent, non-profit organization that will develop a nationwide database for consumer reimbursement, as well as a website where consumers will be able to compare prices before they choose doctors. To fund FAIR Health, the Attorney General's office secured nearly $100 million from insurers such as Aetna Inc, UnitedHealth Group Inc and WellPoint Inc. [12]
Options backdating investigations and lawsuits
In 2006, the SEC began investigating the conduct of UnitedHealth Group's management and directors, including Dr. McGuire, as did the Internal Revenue Service and prosecutors in the U.S. attorney's office for the Southern District of New York, who have subpoenaed documents from the company.
The investigations came to light after a series of probing stories in the Wall Street Journal in May 2006, discussing the apparent backdating of hundreds of millions of dollars' worth of stock options—in a process called options backdating—by UnitedHealth Group management. The backdating apparently occurred with the knowledge and approval of the directors, according to the Journal. Major shareholders have filed lawsuits accusing former New Jersey governor Thomas Kean and UnitedHealth Group's other directors of failing in their fiduciary duty.[5][13]
Resignation of McGuire
On October 15, 2006, it was announced that McGuire would step down immediately as chairman and director of UnitedHealth Group, and step down as CEO on December 1, 2006 due to his involvement in the employee stock options scandal. Simultaneously, it was announced that he would be replaced as CEO by Stephen Hemsley, who has served as President and COO and is a member of the board of directors. [14] McGuire's exit compensation from UnitedHealth, expected to be around $1.1 billion, would be the largest golden parachute in the history of corporate America.[15]
McGuire's compensation became controversial again on May 21, 2009, when Elizabeth Edwards, speaking on The Daily Show, used it to support her argument for a public alternative to commercial insurance[16]. Edwards stressed the importance of restoring competition in health insurance markets noting that at one point, "the President of United Health made so much money, that one of every $700 that was spent in this country on health care went to pay him":
Estimates of McGuire's 2005 compensation range from $59,625,444 [17] to $124.8 million[18], and the revenue of United Health Care was then $71 billion. It has therefore been suggested that Mrs Edwards may have meant to say that one of every $700 that was spent on United Health Care premiums went to pay McGuire.
McGuire's settlement with SEC
On 6 December 2007, the SEC announced a settlement under which McGuire was to repay $468 million, including a $7 million civil penalty, as a partial settlement of the backdating prosecution. He was also barred from serving as an officer or director of a public company for ten years.[19][20][21] This was the first time in which the little-used "clawback" provision under the Sarbanes-Oxley Act was used against an individual by the SEC. The SEC continued its investigations even after it in 2008 settled legal actions against both United Health Care itself and its former general counsel.[22].
Businesses
Business Services
Health Care Services
Knowledge & Information Services
Specialized Care Services
Lewin Group
The Lewin Group is a policy research and consulting firm that provides economic analysis of health care and human services issues and policies.[23] The organization has existed for about 40 years and has maintained a nonpartisan reputation through its many ownership changes that have occurred over the years.[24] The Lewin Group was purchased in 2007 by Ingenix, a subsidiary of UnitedHealth Group, but maintains editorial and analytical independence from its parent company.[25] The Lewin Group discloses its ownership in its reports and on its web site. While the Lewin Group does not advocate for or against any legislation, both Democratic and Republican politicians frequently cite the firm's studies to argue for and against various U.S. healthcare reform proposals.[26] For example, Democratic Senator Ron Wyden uses Lewin Group estimates to cite the feasibility of his Healthy Americans Act.[27] Representative Eric Cantor, the House Republican Whip, has referred to the organization as "the nonpartisan Lewin Group" in arguing against government-funded health insurance proposals. Recently, several Lewin studies have been used to argue both for and against the inclusion of a public option in national health reform. Lewin clients who often cite its findings include The Commonwealth Fund which recently held up a Lewin study it commissioned to advocate for a public plan. The report showed that legislative proposals would achieve nearly universal coverage and "estimated that a public plan could offer small businesses insurance that is at least 9 percent cheaper than current small-business policies."[28] However, The Lewin Group has acknowledged that clients sometimes choose not to publicize the results of studies they have commissioned. Indeed, Lewin Group Vice President John Sheils told the Washington Post "sometimes studies come out that don't show exactly what the client wants to see. And in those instances, they have [the] option to bury the study."[29]
Foundations
UnitedHealth Group has two foundations, the United Health Foundation and UnitedHealthcare Children’s Foundation which were formed in 1999.[30]
References
- ^ 2008 Annual Form 10-K on file with the SEC at http://www.sec.gov/Archives/edgar/data/731766/000119312509025587/d10k.htm#toc55188_13
- ^ "UnitedHealth relies on innovation to stay ahead of the pack" Gloria Gonzalez, Business Insurance 2007 Readers Choice Award
- ^ "Health insurers get poor marks from hospitals", Los Angeles Times, March 6, 2008
- ^ http://online.wsj.com/article/BT-CO-20090720-715367.html
- ^ a b "A Board With Its Back To The Wall: UnitedHealth directors aren't ready to oust embattled CEO McGuire. Here's why", Business Week, July 10, 2006
- ^ Joe Conason, Jersey hustler: Why did former Gov. Kean, once a respected statesman, mislead the public and the press about the accuracy of ABC's 'Path to 9/11'?", Salon magazine, September 15, 2006
- ^ [1] Associated Press via Yahoo News
- ^ "American Chiropractic Association Files Lawsuit Against ACN in Federal Court", press release, American Chiropractic Association, June 13, 2006, retrieved March 7, 2008
- ^ "Cuomo Announces Industry-Wide Investigation into Health Insurer's Fraudulent Reimbursement Scheme", press release, Office of the Attorney General, New York State, February 13, 2008, retrieved March 7, 2008
- ^ "UnitedHealth settles New York reimbursement probe"
- ^ "UnitedHealth Group Settles for $350 Million", Reuters, January 13, 2009
- ^ "Cuomo sets healthcare reimbursement reform", Reuters, October 27, 2009
- ^ Loren Steffy, "How William McGuire earned that fat paycheck", Houston Chronicle newspaper, November 7, 2006
- ^ [2]
- ^ [3]
- ^ WonkRoom page including embedded clip from The Daily Show
- ^ UnitedHealth Group Case Study, 2005 AFL-CIO estimate of McGuire compensation
- ^ United Health CEO earned $124.8 million in 2005 Health Care Economist, February 14, 2006
- ^ Securities and Exchange Commission v. William W. McGuire, M.D., Civil Action No. 07-CV-4779-JMR/FLN (D. Minn. 2007)U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 20387 / December 6, 2007
- ^ Former UnitedHealth Group CEO/Chairman Settles Stock Options Backdating Case for $468 Million SEC Press release 2007-255
- ^ Dr. William McGuire Settles with the SEC and the UnitedHealth Group Special Litigation Committee on Stock Options Matter Latham and Watkins, LLP, Press release, December 6, 2007
- ^ SEC Files Settled Enforcement Actions Against UnitedHealth Group and Former General Counsel in Stock Options Backdating Case SEC Press release 2008-302]
- ^ Becker, Cinda. (June 18, 2007), "Ingenix Acquires Lewin Group", Modern Healthcare, http://www.modernhealthcare.com/article/20070618/SUB/70615029
- ^ Becker, Cinda. (June 18, 2007), "Ingenix Acquires Lewin Group", Modern Healthcare, http://www.modernhealthcare.com/article/20070618/SUB/70615029
- ^ Becker, Cinda. (June 18, 2007), "Ingenix Acquires Lewin Group", Modern Healthcare, http://www.modernhealthcare.com/article/20070618/SUB/70615029
- ^ Hilzenrath, David S. (2009-07-23). "Insurer-Owned Consulting Firm Often Cited in Health Debate". Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2009/07/22/AR2009072203696.html.
- ^ Independent Health Reform Analysis: Middle Class Wins Under Healthy Americans Act, http://wyden.senate.gov/newsroom/record.cfm?id=303144
- ^ Hoover, Kent (July 22, 2009), "Small-biz divided on health-care reform", Business Journal, http://www.bizjournals.com/buffalo/stories/2009/05/04/story14.html?b=1241409600^1820494
- ^ Hilzenrath, David S. (July 22, 2009), "Research Firm Cited by GOP Is Owned by Health Insurer", The Washington Post, http://www.washingtonpost.com/wp-dyn/content/article/2009/07/22/AR2009072202216.html?sub=AR
- ^ UnitedHealth Group Foundations
External links
