Aetna 2013 Annual Report Download - page 59

Annual Report- Page 53
govern us and continue to interpret and enforce those laws and regulations more strictly and more aggressively each
year.
Our Medicare, Medicaid, dual eligible, specialty pharmacy and mail order pharmacy products are more highly
regulated than our Commercial products. The laws and regulations governing participation in Medicare, Medicaid
and dual eligible programs are complex, are subject to interpretation and can expose us to penalties for non-
compliance, including penalties under the False Claims Act and state false claims acts. In addition, Health Care
Reform may have expanded the jurisdiction of, and our exposure to, the False Claims Act to products sold on Public
Exchanges, which began to operate in 2014. Claims under federal and state false claims acts can be brought by the
government or by private individuals on behalf of the government through a qui tam or “whistleblower” suit. If we
are convicted of fraud or other criminal conduct in the performance of a health program or if there is an adverse
decision against us under the False Claims Act, we may be temporarily or permanently suspended from
participating in government health care programs, including Medicare, Medicaid and dual eligible programs.
If we fail to comply with laws and regulations that apply to government programs, we could be subject to criminal
fines, civil penalties, premium refunds, prohibitions on marketing or active or passive enrollment of members,
corrective actions, termination of our contracts or other sanctions which could have a material adverse effect on our
ability to participate in Medicare, Medicaid, dual eligible and other programs, cash flows, financial condition and
operating results. For example, from April 2010 through June 2011, we were subject to intermediate sanctions that
CMS imposed on us that required us to suspend the enrollment of and marketing to new members of all Aetna
Medicare Advantage and PDP contracts. As a result of these sanctions, our 2011 Medicare membership and
operating results were adversely affected because we did not participate in the annual enrollment process for 2011
and were not again eligible to receive automatic assignments of low income subsidy PDP members from CMS until
September 2012.
Our business also may be adversely impacted by (i) judicial and regulatory decisions that change and/or expand the
interpretations of existing statutes and regulations, impose medical or bad faith liability, increase our responsibilities
under ERISA or the remedies available under ERISA, or reduce the scope of ERISA pre-emption of state law
claims or (ii) other legislation and regulations, including new legislation or regulations that apply to Private
Exchanges. For more information regarding these matters, refer to “Regulatory Environment” beginning on page 29
and “Litigation and Regulatory Proceedings” in Note 18 of Notes to Consolidated Financial Statements beginning
on page 130.
We frequently are subject to regular and special governmental audits, investigations and reviews that could
result in changes to our business practices, and also could result in material refunds, fines, penalties, civil
liabilities, criminal liabilities and other sanctions.
As one of the largest national health and related benefits providers, we frequently are subject to regular and special
governmental market conduct and other audits, investigations and reviews by, and we receive subpoenas and other
requests for information from, various federal and state agencies, regulatory authorities, attorneys general,
committees, subcommittees and members of the U.S. Congress and other state, federal and international
governmental authorities. Several such audit, investigations and reviews currently are pending, some of which may
be resolved in 2014, and the results of which may be adverse to us.
There continues to be a heightened review by federal, state and international regulators of the health and related
benefits industry's business and reporting practices, including utilization management and payment of providers
with whom the payor does not have a contract and other health and life insurance claim payment practices, as well
as heightened review of the general insurance industry's brokerage, sales and marketing practices. In addition, over
35 states 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 a number of states, and certain of our subsidiaries are being
audited, with respect to our life insurance claim payment and related escheat practices. In the fourth quarter of
2013, we made changes to our life insurance claim payment practices (including related escheatment practices)
based on evolving industry practices and regulatory expectations and interpretations, including expanding our