business
WellPoint settles lawsuit over Anthem conversion for $90 million
NEWS IN BRIEF — Posted July 9, 2012
Eleven years after the merger that created Indianapolis-based WellPoint, the company has reached an agreement with former investors who sued in federal court over the way the deal happened. WellPoint will pay $90 million to settle the case, according to a June 15 filing with the U.S. Securities and Exchange Commission.
The plaintiffs in the case were members of Anthem, which at the time was a mutual corporation. They claimed that the company misinformed them about the relative advantages of accepting cash or stock in the new company as WellPoint prepared for its initial public offering, that the company had set the IPO price too low, and that it diluted Anthem members’ equity in the new company.
WellPoint estimated that the settlement would reduce its quarterly earnings by about 23 cents per share.
When Anthem and WellPoint Health Networks merged in 2004, the new company became the largest publicly traded health plan in the country, a distinction it held until last year, when its membership was eclipsed by UnitedHeath Group.
Note: This item originally appeared at http://www.ama-assn.org/amednews/2012/07/09/bibf0709.htm.
