UCare spent $5.5 million on legal fight with University of Minnesota

UCare, a nonprofit HMO, spent $5.5 million in response to litigation brought in late 2022 by the University of Minnesota over control of its board.

This means the two sides collectively spent more than $7.7 million on a legal fight that concluded in August. The U agreed to relinquish its board majority. UCare said it would use its foundation to make $100 million worth of investments in health care initiatives jointly selected with the university.

“The University of Minnesota initiated the lawsuit,” UCare added. “We procured legal services to help defend our position. It was in the best interest of UCare and the communities we serve to expand the diversity, consumer representation and business expertise of our board.”

The HMO said it had vacant positions and members of its internal legal team on leave, which forced more spending than usual on external expertise.

In September, the Star Tribune reported on the U of M’s legal fees in the case, which now stand at about $2.26 million, according to data obtained through a public records request.

When the U first filed its lawsuit, the office of Minnesota Attorney General Keith Ellison said it had pushed for a resolution of the dispute without litigation because “the public interest would be best served if the parties could avoid a costly public dispute,” according to a court filing at the time.

This spring, UCare listed in a regulatory filing total external legal expenses in 2023 of about $7.5 million — a much higher annual sum than during any year since 2014, according to a Star Tribune review of filings. Asked if the big increase stemmed from the U of M litigation, UCare said: “Our total net expenses related to the settlement were about $5.5 million.”

UCare said the spending is far less than 1% of the HMO’s total revenue of $6.16 billion last year. Some expenses were “recovered through risk-management strategies such as insurance,” the HMO said.

The U of M’s lawsuit, which tried to stop the HMO from changing the composition of its board, suggested at least some university officials had used their board positions to question UCare’s plan to expand into health insurance markets beyond Minnesota.

But in a statement to the Star Tribune, UCare said “our board (including U of M members) has consistently approved UCare’s expansion plans.”

UCare employs about 1,700 people and stands as Minnesota’s fifth largest nonprofit group. The health insurer was founded in the 1980s by University of Minnesota family medicine doctors as a Medicaid HMO. Later, the nonprofit expanded into the Medicare Advantage and individual health insurance markets.

“We are pleased that the settlement enabled us to evolve our collaboration with the University of Minnesota,” UCare said, “by investing in the community to strengthen health care services for many Minnesotans who need them most.”