WellPoint will pay $90 million to settle a class-action lawsuit that alleged its subsidiary Anthem Insurance Companies underpaid members when it converted from a mutual company to a stock company.
As part of Anthem's conversion process in 2001, the insurer provided cash compensation to its members, who formerly owned the company. However, the 700,000 class action members claimed Anthem didn't pay the fair value of their membership interests. Anthem paid $39.60 per share, but they said the price should have been a dollar value in the mid-40s, Crain's Cleveland Business reported.
The settlement was a surprise, made in the last few hours before the jury trial was set to start on Monday. WellPoint has been fighting the lawsuit for seven years, according to the Indianapolis Star.
"While Anthem was prepared to vigorously defend itself at trial, we are pleased that we have reached an agreement to settle this dispute," WellPoint spokeswoman Kristin Binns told Reuters. "We continue to believe that in all ways the company acted appropriately and in the best interests of its former members." She added that the Indiana Department of Insurance reviewed the transaction in detail and found it to be "fair, reasonable and equitable" to Anthem's members.
The settlement now awaits the judge's final approval.