Aetna 2011 Annual Report Download - page 46

Annual Report- Page 40
throughout the U.S. and are participating providers in Medicare, Medicare Part D and various Medicaid
programs. The pharmacy practice is generally regulated at the state level by state boards of pharmacy. Our
Pharmacies are required to be licensed in the state where they are located, as well as the states that require
registration or licensure of mail order pharmacies with the state's board of pharmacy or similar regulatory
body. Our Pharmacies also must register with the U.S. Drug Enforcement Administration and individual state
controlled substance authorities in order to dispense controlled substances and must comply with applicable
Medicare, Medicaid and other provider rules and regulations, including federal and state false claims and anti-
kickback laws. CVS Caremark's pharmacies are subject to these same licensing requirements and other laws and
regulations. Loss or suspension of any such licenses or registrations could have a material adverse effect on our
ability to meet our commitments to our customers, which could, in turn, have a material adverse effect on our
pharmacy business and/or operating results.
Regulation of Pharmacy Benefit Management Operation
Our PBM services are regulated directly and indirectly at the federal and state levels, including federal and state
false claims and anti-kickback laws. These laws and regulations govern, and proposed legislation may govern,
critical PBM practices, including disclosure, receipt and retention of rebates and other payments received from
pharmaceutical manufacturers, disclosure of data to third parties, drug utilization management practices, the level of
duty a PBM owes its customers and registration or licensing of PBMs. Failure by us or CVS Caremark to comply
with these laws or regulations could result in material fines and/or sanctions and could have a material adverse
effect on our operating results.
Life and Disability Insurance
Our life and disability insurance operations are subject to extensive regulation. Changes in these regulations, such
as expanding the definition of disability or mandating changes to claim payment, determination and/or settlement
practices, could have a material adverse impact on our life insurance and/or disability insurance operations and/or
operating results. In July 2011, New York notified insurers that it expects insurers to, and will be amending its
regulations to require insurers to, regularly consult the U.S. Social Security Administration's Death Master File or a
similar database to determine if unclaimed death benefits may be payable under life insurance and similar products,
to pay any such benefits and to make certain other business process changes. Legislation mandating the use of such
databases has been introduced in at least four other states. New York is one of over 35 states that are investigating
life insurers' claims payment and related escheat practices, and these investigations have resulted in significant
charges to earnings by other life insurers in connection with related settlement agreements. We have received
requests for information from New York, Connecticut and Minnesota with respect to our life insurance claim
payment and related escheat practices.
International Regulation
We continue to expand our Health Care operations that are conducted in foreign countries and currently have
insurance licenses in several countries and do business in over twenty countries. These international operations are
subject to different, and sometimes more stringent, legal and regulatory requirements, which vary widely by
jurisdiction, including anti-corruption laws; various privacy, insurance, tax, tariff and trade laws and regulations;
and corporate, employment, intellectual property and investment laws and regulations. In addition, the expansion
of our operations into foreign countries increases our exposure to the anti-bribery, anti-corruption and anti-money
laundering provisions of U.S. law, including the Foreign Corrupt Practices Act of 1977, and foreign laws, including
the U.K. Bribery Act 2010.
Anti-Money Laundering Regulations
Certain of our lines of business are subject to U.S. Department of the Treasury anti-money laundering
regulations. Those lines of business have implemented anti-money laundering policies designed to insure their
affected products comply with the regulations.