Health Insurer WellPoint Settling Class-Action Suit for $90 Million

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According to industry sources, Health insurer WellPoint Inc has decided to settle the class-action lawsuit against its Anthem unit by former members of Anthem for a hefty $90 million. The lawsuit filed by former members of Anthem Insurance who claimed that WellPoint did not provide fair compensation to Anthem members when the company was converted from a mutual company to a stock company in 2001. The suit filed in 2005 dragged for the last seven years and until now had little immediate reprieve in sight.

The plaintiffs have proposed to send settlement notices to class members, with checks to be mailed as soon as the settlement becomes full and final. The class represented in the lawsuit included more than 700,000 residents of Indiana, Ohio, Kentucky and Connecticut.

Anthem spokeswoman Kristin Bills said in an e-mailed statement, “While Anthem was prepared to vigorously defend itself at trial, we are pleased that we have reached an agreement to settle this dispute … We continue to believe that in all ways the company acted appropriately and in the best interests of its former members.” She further added, “The Indiana Department of Insurance reviewed every aspect of the transaction and found it to be fair, reasonable and equitable to Anthem’s former members.”

  

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The attorney for the former members of Anthem said, “Our clients were the owners of Anthem before it demutualized in 2001, and they were entitled to receive cash compensation equal to the fair value of their ownership interests when the company converted from a mutual company to a stock corporation.”

Following the news of the settlement, in a regulatory filing, WellPoint lowered its full-year profit forecast by 8 cents per share.

The case is Ormond v. Anthem Inc., U.S. District Court for the Southern District of Indiana, no. 05-cv-01908