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WellPoint prevails in shareholder suit over 2001 restructuring

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A federal judge has dismissed a shareholder class-action lawsuit against WellPoint stemming from the company’s 2001 conversion from a mutual insurer to a publicly traded company.

U.S. District Court Judge Tanya Walton Pratt granted summary judgment in favor of WellPoint on Dec. 23. She sided with attorneys for Indianapolis-based WellPoint who had argued that plaintiff Jeffrey D. Jorling’s claims should be barred by a federal law, which is designed to prevent state-law claims in cases involving securities transactions.

Jorling, who filed his case in 2009, alleged that policyholders of the company, then known as Anthem, who received stock in the restructuring weren't adequately compensated.

"We are pleased that the court has ... found that the plaintiffs' claims fail as a matter of law," WellPoint said in a prepared statement. "Anthem strongly believes that the demutualization was conducted properly and in a manner that was fair, reasonable, and equitable to Anthem’s former members. It was one of the most closely reviewed transactions in Indiana history and was approved by a special committee of Anthem’s Board of Directors, the Board itself, and by government regulators."

The Jorling case was an offshoot of a similar, class-action lawsuit filed in 2005 by Mary D. Ormond, which is still pending before Pratt.  The Ormond lawsuit covers Anthem policyholders who opted for cash, rather than stock, in the conversion.

Because mutual insurers are owned by their policyholders, they were due compensation when the company restructured and launched its initial public offering in October 2001. That conversion resulted in Anthem's shelling out nearly $2.1 billion in cash to more than 740,000 policyholders.

The court already sided with WellPoint on half the Ormond case. Eric Zagrans, a Cleveland attorney representing Jorling and Ormond, noted that the remaining claim in the Ormond case, which represents hundreds of millions of dollars in damages, is scheduled to be heard at trial in June.

 

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