Aetna 2014 Annual Report Download - page 137

Annual Report- Page 131
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 claims of or relating to bad faith, medical malpractice, non-compliance with state and federal
regulatory regimes, marketing misconduct, failure to timely or appropriately pay or administer claims and benefits
in our Health Care and Group Insurance businesses (including our post-payment audit and collection practices and
reductions in payments to providers due to sequestration), provider network structure (including the use of
performance-based networks and termination of provider contracts), rescission of insurance coverage, improper
disclosure of personal information, anticompetitive practices, patent infringement and other intellectual property
litigation, other legal proceedings in our Health Care and Group Insurance businesses and employment
litigation. 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.
Awards to us and others of certain government contracts, particularly in our Medicaid business, are subject to
increasingly frequent protests by unsuccessful bidders. These protests may result in awards to us being reversed,
delayed or modified. The loss or delay in implementation of any government contract could adversely affect our
operating results. We will continue to defend vigorously contract awards we receive.
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, OIG, the Office of
Personnel Management, the U.S. Department of Labor, the U.S. Department of the Treasury, the U.S. Food and
Drug Administration, 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, federal and international 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.”
A significant number of 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
settlements. 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
existing use of the Social Security Administration’s Death Master File to identify additional potentially unclaimed
death benefits and locate applicable beneficiaries. As a result of these changes, in the fourth quarter of 2013, we
increased our estimated liability for unpaid life insurance claims with respect to insureds who passed away on or
before December 31, 2013, and recorded in current and future benefits a charge of $35.7 million ($55.0 million
pretax). Given the legal and regulatory uncertainty with respect to life insurance claim payment and related escheat
practices, it is reasonably possible that we may incur additional liability related to those practices, whether as a
result of further changes in our business practices, litigation, government actions or otherwise, which could
adversely affect our operating results and cash flows.
There also continues to be a heightened level of review by regulatory authorities of, and increased litigation
regarding, our and the rest of the health care and related benefits industry’s business and reporting practices,
including premium rate increases, utilization management, development and application of medical policies,
complaint, grievance and appeal processing, information privacy, provider network structure (including provider
network adequacy, the use of performance-based networks and termination of provider contracts), calculation of