Cigna 2010 Annual Report Download - page 40

CIGNA CORPORATION  2010 Form 10K
20
PARTI
ITEM 1 Business
Licensing Requirements
Pharmacy Licensure Laws
Certain CIGNA subsidiaries are pharmacies, which dispense
prescription drugs to participants of benefi t plans administered or
insured by CIGNA subsidiary HMOs and insurance companies.  ese
pharmacy-subsidiaries are subject to state licensing requirements and
regulation.
International Licensure Laws
CIGNA International subsidiaries are often required to be
licensed when entering new markets or starting new operations in
certain jurisdictions.  e licensure requirements for these CIGNA
subsidiaries vary by country and are subject to change.
Claim Administration, Utilization Review and Related
Services
Certain CIGNA subsidiaries contract for the provision of claim
administration, utilization management and other related services
with respect to the administration of self-insured benefi t plans.
 ese CIGNA subsidiaries may be subject to state third-party
administration and other licensing requirements and regulation.
International Regulations
An increasing portion of CIGNA’s revenue is derived from operations
outside the United States, which exposes the Company to laws of
multiple jurisdictions and the rules and regulations of various
governing bodies and regulators, including those related to fi nancial
and other disclosures, corporate governance, privacy, data protection,
data mining, data transfer, labor and employment, consumer
protection and anti-corruption.  e operations in countries outside
the United States:
•are subject to local regulations in the place in which CIGNA
subsidiaries conduct business;
•in some cases, are subject to regulations in the places in which
customers are located; and
•in all cases are subject to FCPA.
FCPA prohibits off ering, promising, providing or authorizing others
to give anything of value to a foreign government offi cial to obtain
or retain business or otherwise secure a business advantage. CIGNA
is also subject to applicable anti-corruption laws in the jurisdictions
in which it operates. Additionally, in many countries outside of the
U.S., health care professionals are employed by the government.
 erefore, CIGNA’s dealings with them are subject to regulation
under the FCPA. Violations of the FCPA and other anti-corruption
laws may result in severe criminal and civil sanctions as well as other
penalties and the SEC and Department of Justice have increased their
enforcement activities with respect to FCPA.  e UK Bribery Act
of 2010 is an anti-corruption law that applies to all companies with
a nexus to the United Kingdom and whose scope is even broader
than the FCPA. It is yet to be seen how the UK Bribery Act will be
implemented and enforced, but any voluntary disclosures of FCPA
violations may be shared with the UK authorities, thus potentially
exposing companies to liability and potential penalties in multiple
jurisdictions. CIGNA has internal control policies and procedures
and has implemented training and compliance programs for its
employees to deter prohibited practices. However, if CIGNA’s
employees or agents fail to comply with applicable laws governing
its international operations, the Company may face investigations,
prosecutions and other legal proceedings and actions which could
result in civil penalties, administrative remedies and criminal
sanctions. See the Risk Factors section beginning on page 22 for a
discussion of the risks related to operating globally.
Federal Regulations
Employee Retirement Income Security Act
CIGNA subsidiaries sell most of their products and services to
sponsors of employee benefi t plans that are governed by ERISA.
CIGNA subsidiaries are subject to requirements imposed by ERISA
aff ecting claim and appeals procedures for health plans and are
expected to comply with these requirements on behalf of the dental,
disability, life and accident plans they administer.
Medicare Regulations
Several CIGNA subsidiaries engage in businesses that are subject to
federal Medicare regulations such as:
•those off ering individual and group Medicare Advantage (HMO)
coverage in Arizona;
•contractual arrangements with the federal government for the
processing of certain Medicare claims and other administrative
services; and
•those off ering Medicare Pharmacy (Part D) and Medicare Advantage
Private Fee For Service products that are subject to federal Medicare
regulations.
Several CIGNA subsidiaries are also subject to reporting requirements
pursuant to Section 111 of the Medicare, Medicaid and SCHIP
Extension Act of 2007.
Federal Audits of Government Sponsored Health Care
Programs
Participation in government sponsored health care programs subjects
CIGNA to a variety of federal laws and regulations and risks
associated with audits conducted under these programs.  ese audits
may occur in years subsequent to CIGNA providing the relevant
services under audit.  ese risks may include reimbursement claims
as well as potential fi nes and penalties. For example, the federal
government requires Medicare and Medicaid providers to fi le detailed
cost reports for health care services provided.  ese reports may be
audited in subsequent years. CIGNA HMOs that contract to provide
community-rated coverage to participants in the Federal Employees
Health Benefi t Plan may be required to reimburse the federal
government if, following an audit, it is determined that a federal
employee group did not receive the benefi t of a discount off ered by a
CIGNA HMO to one of the two groups closest in size to the federal
employee group. See “Health Care” in Section D beginning on
page 2 of this Form 10-K for additional information about CIGNA’s
participation in government health-related programs.