Aetna 2009 Annual Report Download - page 84

Annual Report – Page 78
Guaranty Fund Assessments, Market Stabilization and Other Non-Voluntary Risk Sharing Pools
Under guaranty fund laws existing in all states, insurers doing business in those states can be assessed (up to prescribed
limits) for certain obligations of insolvent insurance companies to policyholders and claimants. Our assessments
generally are based on a formula relating to our premiums in the state compared to the premiums of other insurers.
Certain states allow recoverability of assessments as offsets to premium taxes. While we have historically recovered
more than half of guaranty fund assessments through statutorily-permitted premium tax offsets, significant increases in
assessments could jeopardize future recovery of these assessments. Some states have similar laws relating to HMOs.
HMOs in certain states in which we do business are subject to assessments, including market stabilization and other
risk-sharing pools for which we are assessed charges based on incurred claims, demographic membership mix and
other factors. We establish liabilities for these assessments based on applicable laws and regulations. In certain states,
the ultimate assessments we pay are dependent upon our experience relative to other entities subject to the assessment
and the ultimate liability is not known at the balance sheet date. While the ultimate amount of the assessment is
dependent upon the experience of all pool participants, we believe we have adequate reserves to cover such
assessments.
Litigation and Regulatory Proceedings
Out-of-Network Benefit Proceedings
We are named as a defendant in several purported class actions and individual lawsuits arising out of our practices
related to the payment of claims for services rendered to our members by health care providers with whom we do not
have a contract (“out-of-network providers”). Other major health insurers are also the subject of similar litigation or
have settled similar litigation. Among other things, these lawsuits charge that we paid too little to our health plan
members and/or providers for these services, among other reasons, because of our use of data provided by Ingenix,
Inc., a subsidiary of one of our competitors (“Ingenix”).
Various plaintiffs who are health care providers or medical associations seek to represent nationwide classes of out-of-
network providers who provided services to our members during the period from 2001 to the present. Various
plaintiffs who are members in our health plans seek to represent nationwide classes of our members who received
services from out-of-network providers during the period from 2001 to the present. Taken together, these lawsuits
allege that we violated state law, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the
Racketeer Influenced and Corrupt Organizations Act and federal antitrust laws, either acting alone or in concert with
our competitors. The purported classes seek reimbursement of all unpaid benefits, recalculation and repayment of
deductible and coinsurance amounts, unspecified damages and treble damages, statutory penalties, injunctive and
declaratory relief, plus interest, costs and attorneys’ fees, and seek to disqualify us from acting as a fiduciary of any
benefit plan that is subject to ERISA. Individual lawsuits that generally contain similar allegations and seek similar
relief have been brought by a health plan member and by out-of-network providers.
The first class action case was commenced on July 30, 2007. The federal Judicial Panel on Multi-District Litigation
(the “MDL Panel”) has consolidated these class action cases in federal district court in New Jersey under the caption In
re: Aetna UCR Litigation, MDL No. 2020 (“MDL 2020”). A purported member class action lawsuit which makes the
same allegations as the other consolidated member class action lawsuits is pending in federal court in California. In
addition, the MDL Panel has transferred the individual lawsuits to MDL 2020. Discovery has commenced in MDL
2020, and the court has not set a trial date. We intend to vigorously defend ourselves against the claims brought in
these cases.
On January 15, 2009, Aetna and the New York Attorney General announced an agreement relating to an industry-wide
investigation into certain payment practices with respect to out-of-network providers. In October 2009, pursuant to the
agreement, we contributed $20 million towards the establishment of an independent database system to provide fee
information regarding out-of-network reimbursement rates. When the new database is operational, we will cease using
databases owned by Ingenix and will use the new database for a period of at least five years in connection with out-of-
network reimbursements in those benefit plans that employ a reasonable and customary standard for out-of-network
reimbursements. During 2009, we also agreed to pay approximately $7.5 million in claims and administrative
penalties in connection with our out-of-network benefit payment practices as a result of agreements with state
attorneys general and a state insurance department.
We also have received subpoenas and/or requests for documents and other information from attorneys general and
other state and/or federal regulators, legislators and agencies relating to our out-of-network benefit payment practices.