Aetna 2011 Annual Report Download - page 111

Annual Report- Page 105
one of its subsidiaries (collectively, “Penn Treaty”) in rehabilitation, an intermediate action before insolvency, and
has petitioned a state court for liquidation. We cannot predict when a decision will be made, although we believe it
is likely that the state court will rule within the next twelve months. If Penn Treaty is declared insolvent and placed
in liquidation, we and other insurers likely would be assessed over a period of years by guaranty associations for the
payments the guaranty associations are required to make to Penn Treaty policyholders. We are currently unable to
predict the ultimate outcome of, or reasonably estimate the loss or range of losses resulting from, this potential
insolvency because we cannot predict when the state court will render a decision, the amount of the insolvency, if
any, the amount and timing of associated guaranty association assessments or the amount or availability of potential
offsets, such as premium tax offsets. It is reasonably possible that in future reporting periods we may record a
liability and expense relating to Penn Treaty or other insolvencies which could have a material adverse effect on our
operating results, financial position and cash flows. While we have historically recovered more than half of
guaranty fund assessments through statutorily permitted premium tax offsets, significant increases in assessments
could lead to legislative and/or regulatory actions that may limit future offsets.
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”). Among other things, these lawsuits allege 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”). Other major health insurers are the
subject of similar litigation or have settled similar litigation.
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 health plan members and 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 the U.S. District Court for the District of New Jersey
(the “New Jersey District Court”) under the caption In re: Aetna UCR Litigation, MDL No. 2020 (“MDL 2020”).
In addition, the MDL Panel has transferred the individual lawsuits to MDL 2020. On May 9, 2011, the New Jersey
District Court dismissed the physician plaintiffs from MDL 2020 without prejudice. The New Jersey District
Court’s action followed a ruling by the United States District Court for the Southern District of Florida (the “Florida
District Court”) that the physician plaintiffs were enjoined from participating in MDL 2020 due to a prior settlement
and release. The physician plaintiffs have attempted to appeal the Florida District Court’s ruling to the United
States Court of Appeals for the Eleventh Circuit.