Aetna 2011 Annual Report Download - page 113

Annual Report- Page 107
Other Litigation and Regulatory Proceedings
We are involved in numerous other lawsuits arising, for the most part, in the ordinary course of our business
operations, including employment litigation and claims of bad faith, medical malpractice, non-compliance with
state and federal regulatory regimes, marketing misconduct, failure to timely or appropriately pay medical and/or
group insurance claims (including post-payment audit and collection practices), rescission of insurance coverage,
improper disclosure of personal information, patent infringement and other intellectual property litigation and other
litigation in our Health Care and Group Insurance businesses. Some of these other lawsuits are or are purported to
be class actions. We intend to vigorously defend ourselves against the claims brought in these matters.
In addition, our operations, current and past business practices, current and past contracts, and accounts and other
books and records are subject to routine, regular and special investigations, audits, examinations and reviews by,
and from time to time we receive subpoenas and other requests for information from, CMS, the U.S. Department of
Health and Human Services, various state insurance and health care regulatory authorities, state attorneys general
and offices of inspector general, the Center for Consumer Information and Insurance Oversight, the Office of the
Inspector General, the Office of Personnel Management, committees, subcommittees and members of the U.S.
Congress, the U.S. Department of Justice, the Federal Trade Commission, U.S. attorneys and other state and federal
governmental authorities. These government actions include inquiries by, and testimony before, certain members,
committees and subcommittees of the U.S. Congress regarding certain of our current and past business practices,
including our overall claims processing and payment practices, our business practices with respect to our small
group products, student health products or individual customers (such as market withdrawals, rating information,
premium increases and medical benefit ratios), executive compensation matters and travel and entertainment
expenses, as well as the investigations by, and subpoenas and requests from, attorneys general and others described
above under “Out-of-Network Benefit Proceedings.” There also continues to be heightened review by regulatory
authorities of and increased litigation regarding the health care and related benefits industry’s business and
reporting practices, including premium rate increases, utilization management, complaint and grievance processing,
information privacy, provider network structure (including the use of performance-based networks), delegated
arrangements, rescission of insurance coverage, limited benefit health products, student health products, pharmacy
benefit management practices, sales practices, and claim payment practices (including payments to out-of-network
providers and payments on life insurance policies). For example, New York is one of over 35 states that are
investigating life insurers' claims payment and related escheat practices, and we have received requests for
information from New York, Connecticut and Minnesota with respect to our life insurance claim payment and
related escheat practices. As a leading national health and related benefits company, we regularly are the subject of
such government actions. These government actions may prevent or delay us from implementing planned premium
rate increases and may result, and have resulted, in restrictions on our business, changes to or clarifications of our
business practices, retroactive adjustments to premiums, refunds or other payments to members, beneficiaries or
states, assessments of damages, civil or criminal fines or penalties, or other sanctions, including the possible loss of
licensure or suspension or exclusion from participation in government programs, such as the intermediate sanctions
previously imposed on us by CMS that are described above under “CMS Actions.”
Estimating the probable losses or a range of probable losses resulting from litigation, government actions and other
legal proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the
matters involve indeterminate claims for monetary damages, may involve fines, penalties or punitive damages that
are discretionary in amount, involve a large number of claimants or regulatory authorities, represent a change in
regulatory policy, present novel legal theories, are in the early stages of the proceedings, are subject to appeal or
could result in a change in business practices. In addition, because most legal proceedings are resolved over long
periods of time, potential losses are subject to change due to, among other things, new developments, changes in
litigation strategy, the outcome of intermediate procedural and substantive rulings and other parties’ settlement
posture and their evaluation of the strength or weakness of their case against us. Except as specifically noted above
under “CMS Actions” with respect to the two ongoing RADV audits for the 2007 contract year, we are currently
unable to predict the ultimate outcome of, or reasonably estimate the losses or a range of losses resulting from, the
matters described above, and it is reasonably possible that their outcome could be material to us.