is a
Managed Health Care company. It is the parent of
United Healthcare , 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.
In 2005,
William W. McGuire , M.D., its CEO, earned $124 million. His compensation in the five years 2001-2005 was $341 million. He was the CEO from 1989 -- when annual revenues were just over $400 million -- to
1 December 2006 , when he was replaced as CEO by Stephen Hemsley due to allegations of
Options Backdating done to favor UHC executives such as McGuire (see Options Backdating section below).
In 1995, the company acquired The MetraHealth Companies Inc. for $1.65 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.
In July 2004 United Health Group acquired Oxford Health Plans and all of United Healthcare's ny small group contracts (2-49 lives) 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 United Health 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.
Business Services
See Also: Options backdating
In 2006, the
Securities And Exchange Commission began investigating the conduct of United Health's management and directors, 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 apparent
Backdating of hundreds of millions of dollars' worth of stock optionsby United Health 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.
"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, 2006Joe 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 On 15 October 2006, Dr. McGuire was forced to resign, and relinquish hundreds of millions of dollars in stock options.
The American Chiropractic Association has filed a national class action lawsuit against ACN, ( American Chiropractic Network) which is owned by United Healthcare and administers chiropractic benefits, and United Healthcare for alleged practices in violation of the federal RICO act.
- UNH is one of Mad Money host Jim Cramer 's favorite stocks (and one he owns for his charitable trust). He frequently refers to himself as "Doctor UNH".
- Even though they are based in Minnesota, they are not allowed to sell insurance within Minnesota. This is because state law limits that to non-profit organizations (e.g., Blue Cross, Blue Shield)
