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Originally published Friday, August 21, 2009 at 11:56 AM

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Judge OKs another UnitedHealth options settlement

A federal judge has approved a $17-million settlement resolving the last of the lawsuits against managed care company UnitedHealth Group Inc. over its stock option backdating practices.

AP Business Writer

INDIANAPOLIS —

A federal judge has approved a $17-million settlement resolving the last of the lawsuits against managed care company UnitedHealth Group Inc. over its stock option backdating practices.

The case involved retirement savings accounts, and plaintiffs contended among other things that improperly backdated stock options left the insurer's stock overvalued, according to an order from U.S. District Judge James M. Rosenbaum approving the settlement. The order was filed Thursday.

Rosenbaum had granted preliminary approval to the settlement in February.

Problems with options backdating led to several lawsuits and forced William McGuire, the former chairman and CEO of Minnetonka, Minn.-based UnitedHealth, to step down in 2006.

Litigation claimed investors were hurt because UnitedHealth didn't really grant stock options when they said they did in the late 1990s and early 2000s.

Backdating involves manipulating the timing of options grants so they look as though they were made on days when the stock's value was lower. Doing this can boost a recipients' windfall when they sell the stock.

Last month, Rosenbaum approved a separate settlement resolving a derivatives case that pitted UnitedHealth shareholders against McGuire and several other company executives. Earlier this month, Rosenbaum also approved another class-action settlement amounting to more than $925 million.

UnitedHealth will pay $895 million toward that settlement. McGuire contributes $30 million and cancels 3.6 million stock options.

Company spokesman Don Nathan has said UnitedHealth has already accounted for those settlements and the one approved Thursday, so the amounts will not affect future earnings.

"We are pleased to have resolved all these matters and are continuing to focus on serving people and helping them lead healthier lives," he said.

UnitedHealth shares rose 49 cents to $28.87 in Friday afternoon trading.

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