Entenza’s wife named in lawsuit

07/17/2006

BY PATRICK SWEENEY
Pioneer Press

Lois Quam, the wife of Minnesota attorney general candidate Matt Entenza, is one of 18 officers and directors of UnitedHealth Group named as defendants in a civil lawsuit alleging they misled investors or profited from illegal insider trading involving the firm’s stock options.

The class action suit was filed last week in U.S. District Court in St. Paul. The plaintiff is the California Public Employees Retirement System, which owns 6.7 million shares in the Minnetonka-based UnitedHealth.

Quam is CEO of Ovations, a UnitedHealth division. The suit alleges she and many of the other officers and directors named as defendants “reaped illegal insider trading proceeds” when they sold shares acquired through stock options. The complaint asserts that Quam received $8.8 million.

The suit alleges generally that the company and the officers and directors named as defendants illegally misled investors about UnitedHealth’s financial prospects. It also alleges that many of the officers and directors — including Quam, CEO William McGuire and Stephen Hemsley, the company’s chief operating officer — benefited by receiving improper back-dated stock options or options awarded just prior to news that drove up share prices.

But the suit does not specifically accuse Quam of making misleading statements or allege she had any role in awarding stock options. Mark Lindsay, a UnitedHealth spokesman, said Tuesday that thousands of UnitedHealth employees received and exercised stock options from the company.

“Lois Quam has been arbitrarily included because she is a senior officer who sold her shares,” Lindsay said of the lawsuit. “And there is no particularized allegation of wrongdoing made against her.”

In mid-June, state Rep. Jeff Johnson of Plymouth, the Republican candidate for attorney general, called on Entenza, a Democrat who also is a state representative, to say how he would deal with a potential conflict of interest involving a state investigation of UnitedHealth. Entenza said at the time that, if elected, he would separate himself from the investigation begun by the current attorney general, Mike Hatch.

In addition to Hatch’s probe, UnitedHealth is being investigated by the federal Securities and Exchange Commission, the Internal Revenue Service and a federal prosecutor in New York.

On Tuesday, Johnson said he had no way of knowing whether Quam did anything wrong. “But it does raise the question again,” he said. “How could an attorney general Entenza investigate a UnitedHealth Group’s practices, if it’s the same practices that funded his campaign and support his lifestyle?”

Entenza has refused to accept public funding for his campaign and the spending limits the public money would require. A number of UnitedHealth executives contributed to his campaign committee last year.

John Van Hecke, a spokesman for Entenza, said Quam did nothing wrong. “Anybody who’s alleging that is just trying to make political hay,” he said.