Aetna 2014 Annual Report Download - page 45

Annual Report- Page 39
Refer to “Litigation and Regulatory Proceedings” in Note 18 of Notes to Consolidated Financial Statements
beginning on page 129 for more information regarding pending audits and investigations.
Federal and State Reporting
We are subject to extensive financial and business reporting requirements, including penalties for inaccuracies and/
or omissions, at both the state and federal level. Health Care Reform significantly expanded these reporting
requirements and added additional penalties for inaccuracies and omissions. In some instances, our ability to
comply with these requirements will depend on receipt of information from third parties that may not be readily
available or reliably provided in all instances. We are and will continue to be required to modify our information
systems, dedicate significant resources and incur significant expenses to comply with these requirements. However,
we cannot eliminate the risks of unavailability of or errors in our reports.
Fraud, Waste and Abuse Laws
Federal and state governments have made investigating and prosecuting health care fraud, waste and abuse a
priority. Fraud, waste and abuse prohibitions encompass a wide range of activities, including kickbacks or other
inducements for referral of members or for the coverage of products (such as prescription drugs) by a plan, billing
for unnecessary medical services by a health care provider, improper marketing, and violations of patient privacy
rights. Companies involved in public health care programs such as Medicare and/or Medicaid are required to
maintain compliance programs to detect and deter fraud, waste and abuse, and are often the subject of fraud, waste
and abuse investigations and audits. The regulations and contractual requirements applicable to us and other
participants in these public-sector programs are complex and subject to change. Although our compliance program
is designed to meet all statutory and regulatory requirements, our policies and procedures are frequently under
review and subject to updates, and our training and education programs continue to evolve. We have invested
significant resources to comply with Medicare and Medicaid program standards. Ongoing vigorous law
enforcement and the highly technical regulatory scheme mean that our compliance efforts in this area will continue
to require significant resources.
Federal and State Laws and Regulations Governing Submission of Information and Claims to Agencies
We are subject to federal and state laws and regulations that apply to the submission of information and claims to
various government agencies. For example, the False Claims Act provides, in part, that the federal government may
bring a lawsuit against any person or entity who the government believes has knowingly presented, or caused to be
presented, a false or fraudulent request for payment from the federal government, or who has made a false statement
or used a false record to get a claim approved. There also is False Claims Act liability for knowingly or improperly
avoiding repayment of an overpayment received from the government and/or failing to promptly report and return
any such overpayment. The federal government, whistleblowers and some courts have taken the position that
claims presented in violation of other statutes, such as the federal anti-kickback statute, may be considered a
violation of the False Claims Act. 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. Violations of the False Claims Act are
punishable by treble damages and penalties of up to a specified dollar amount per false claim. In addition, a special
provision under the False Claims Act allows a private person (for example, a “whistleblower” such as a disgruntled
current or former competitor, member or employee) to bring an action under the False Claims Act on behalf of the
government alleging that a company has defrauded the federal government and permits the private person to share
in any settlement of, or judgment entered in, the lawsuit.
A number of states, including states in which we operate, have adopted their own false claims acts and
whistleblower provisions that are similar to the False Claims Act. From time to time, companies in the health and
related benefits industry, including ours, may be subject to actions under the False Claims Act or similar state laws.
Product Design and Administration and Sales Practices
State and/or federal regulatory scrutiny of life and health insurance company and HMO product design and
administration and marketing and advertising practices, including the filing of insurance policy forms and the
adequacy of disclosure regarding products and their administration, is increasing as are the penalties being imposed
for inappropriate practices. Medicare, Medicaid and dual eligible products and products offering more limited
benefits, such as some of our student health plans, in particular continue to attract increased regulatory scrutiny.