Court Rejects Protest Over Costs to Huge Settlement

ST. LOUIS (CN) - Attorneys involved in a record $350 million derivative settlement with UnitedHealth Group can keep $175,000 in computer research costs, the 8th Circuit ruled.

S. Michael Scheeringa, a UnitedHealth shareholder, filed an objection over the attorneys' allegedly excessive expenses two weeks after the objection deadline. A Minnesota federal judge signed off on the award, and the federal appeals panel voted to affirm over the untimely challenge.

"The district court did not err by declining to consider Scheeringa's objection, which was filed 20 days after the objection deadline and less than 24 hours before the settlement hearing," Judge C. Arlen Beam wrote for the court's three-judge panel.

As the court mulled Scheeringa's appeal, the shareholder withdrew his argument that the notice UnitedHealth sent to shareholders about the settlement did not satisfy the elaborate notice requirements under federal civil procedure laws since the requirements guide certified class actions and do not apply to shareholder derivative suits.

"Aside from the withdrawn argument, Scheeringa's brief contains no argument that his objection should have been considered timely filed," the ruling states.

Even if Scheeringa's objection had been filed in a timely manner, the court ruled that the attorneys are allowed to recover the computer costs.

"The district court did not abuse its discretion in reimbursing derivative counsel for online-research costs in this case," Beam wrote. "The Supreme Court has noted that reasonable attorneys' fees include litigation expenses when it is 'the prevailing practice in a given community' for lawyers to bill those costs separately from their hourly rates."

Scheeringa's objection is related to the largest derivative settlement in U.S. history for $350 million reached in November 2009. As approved by the judge, the settlement also awarded more than $29.2 million in attorney's fees, plus more than half a million in litigation expenses and the $175,000 for computer research costs.

The agreement concluded a three-year lawsuit over UnitedHealth's reimbursement practices for health care services provided by out-of-network providers.

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