Aetna 2015 Annual Report Download - page 65

Annual Report- Page 59
regulatory actions or suffer reputational harm which may have a material adverse effect on our business.
Upon completion of the Proposed Acquisition, our exposure to these risks will increase significantly.
Compliance with future laws, regulations and/or judicial decisions may reduce our profitability and limit
our growth”, beginning on page 55;
• “We may not be able to compete effectively in the HIT business and earn a profit. Our HIT business
increases our risk of patent infringement and other intellectual property litigation and may become subject
to significant regulation in the future”, beginning on page 73; and
• “As we expand our international operations, we will increasingly face political, legal and compliance,
operational, regulatory, economic and other risks that we do not face or are more significant than in our
domestic operations. Our exposure to these risks is expected to increase”, beginning on page 78.
We are routinely subject to litigation and adverse legal proceedings, including class actions. Many of these
proceedings seek substantial damages which may not be covered by insurance. These proceedings may be costly
to defend, result in changes in our business practices, harm our reputation and adversely affect our business and
operating results.
We are routinely involved in numerous claims, lawsuits, regulatory audits, investigations and other legal
proceedings arising in the ordinary course of our businesses. Certain of the lawsuits against us are purported to be
class actions. The majority of these proceedings relate to the conduct of our health care operations and allege
various violations of law. In addition, we operate in jurisdictions outside the United States, where contractual rights,
tax positions and applicable regulations may be subject to interpretation or uncertainty to a greater degree than in
the United States, and therefore more likely to be subject to dispute by customers, members, governmental
authorities and others. We are incurring expenses to resolve these proceedings. The outcome of litigation and other
adverse legal proceedings is always uncertain, and outcomes that are not justifiable by the evidence or existing law
or regulation can and do occur.
Litigation may be brought against us by private individuals on behalf of the government through a qui tam or
“whistleblower” suit. When a private individual brings a whistleblower suit, the defendant often will not be made
aware of the suit for many months or even years, until the government commences its own investigation or
determines whether it will intervene. Whistleblower suits have resulted in significant settlements between
governmental agencies and health care companies. The significant incentives and protections provided under the
Dodd-Frank Wall Street Reform and Consumer Protection Act increase the risk of whistleblower suits.
Many of the legal proceedings against us seek substantial damages (including non-economic or punitive damages
and treble damages), and certain of these proceedings also seek changes in our business practices. For example,
since 2007, we have been in class action litigation with non-participating providers over our payments to them, and
during 2009, we settled a matter with the New York Attorney General that caused us to transition to different
databases to determine the amount we pay non-participating providers under certain benefit plan designs. While we
currently have insurance coverage for some potential liabilities, other potential liabilities may not be covered by
insurance, insurers may dispute coverage, or the amount of our insurance may not be enough to cover the damages
awarded or costs incurred. In addition, some types of damages, like punitive damages, may not be covered by
insurance, and in some jurisdictions the coverage of punitive damages is prohibited. Insurance coverage for all or
some forms of liability may become unavailable or prohibitively expensive in the future.
The transition to ICD-10 occurred on October 1, 2015. It is possible that we could be exposed to investigations and
allegations of noncompliance with ICD-10 and related regulations, which could have a material adverse effect on
our results of operations, financial position and cash flows.
Litigation and other adverse legal proceedings could materially adversely affect our business or operating results
because of reputational harm to us caused by such proceedings, the costs of defending such proceedings, the costs
of settlement or judgments against us, or the changes in our operations that could result from such proceedings.
Refer to “Litigation and Regulatory Proceedings” in Note 19 of Notes to Consolidated Financial Statements
beginning on page 139 for more information.