WellPoint Inc. closed the book on its longstanding class action lawsuit against its Anthem unit last Friday. The health insurer agreed to a $90 million settlement with former members and owners of Anthem Insurance, a former mutual insurer that demutualized in 2001.
The class, which consisted of more than 700,000 Connecticut, Indiana, Kentucky and Ohio residents, had filed suit against WellPoint in 2005, claiming it did not fairly compensate them when the mutual insurer converted to a stock company.
Pending approval from an Indiana federal judge, the settlement will resolve all claims asserted in the lawsuit. The settlement would avoid a jury trial, which was scheduled to begin today in Indianapolis.
"While Anthem was prepared to vigorously defend itself at trial, we are pleased that we have reached an agreement to settle this dispute," an Anthem spokeswoman said in a statement, Reuters reports. "We continue to believe that in all ways the company acted appropriately and in the best interests of its former members. 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."
According to the court filings, under the proposed settlement, class members would be notified of the pact, and checks would be mailed beginning when the settlement becomes final.
After news of the settlement broke, however, WellPoint lowered its full-year profit forecast by 8 cents per share in a regulatory filing, and is now expected to post 2012 earnings of $7.57 per share—down 8 cents from its prior forecast and less than the $7.78 average Wall Street estimate.
For more on the story, read Reuters.