Health Net 2009 Annual Report Download - page 43

substantial. See “—We must comply with restrictions on patient privacy and information security, including
taking steps to ensure compliance by our business associates with HIPAA” for additional information on
requirements and restrictions related to the use, storage, transmission and disclosure of PHI.
We depend, in part, on independent brokers and sales agents to market our products and services, and
recent regulatory investigations have focused on certain brokerage practices, including broker compensation
arrangements and bid quoting practices.
We market our products and services both through sales people employed by us and through independent
sales agents. Independent sales agents typically do not work with us on an exclusive basis and may market health
care products and services of our competitors. We face intense competition for the services and allegiance of
independent sales agents and we cannot assure you that these agents will continue to market our products at a
reasonable cost. Although we have a number of sales employees and agents, if key sales employees or agents or a
large subset of these individuals were to leave us, our ability to retain existing customers and members could be
impaired.
There have been a number of investigations and enforcement actions against insurance brokers and insurers
over the last several years regarding allegedly inappropriate or undisclosed payments made by insurers to brokers
for the placement of insurance business. For example, CMS has increased its scrutiny of insurance brokers and
insurers regarding allegedly improper sales and marketing practices in connection with the sale of Medicare
products. While we are not aware of any unlawful practices by the Company or any of our agents or brokers in
connection with the marketing and sales of our products and services, investigations by state attorneys general,
CMS and other regulators, as well as regulatory changes initiated in several states in response to allegedly
inappropriate broker conduct and broker payment practices, could result in changes in industry practices that
could have an adverse effect on our ability to market our products.
We have historically experienced significant turnover in senior management. If we are unable to manage
the succession of our key executives, it could adversely affect our business.
We have experienced a high turnover in our senior management team in recent years. Although we have
succession plans in place and have employment arrangements with our key executives, these do not guarantee
that the services of these key executives will continue to be available to us. We would be adversely affected if we
fail to adequately plan for future turnover of our senior management team.
Our forecasts and other forward-looking statements are based on a variety of assumptions that are subject
to significant uncertainties. Our performance may not be consistent with these forecasts and forward-looking
statements.
From time to time in press releases and otherwise, we publish forecasts or other forward-looking statements
regarding our future results, including estimated revenues, net earnings and other operating and financial metrics.
Any forecast of our future performance reflects various assumptions. These assumptions are subject to significant
uncertainties, and, as a matter of course, any number of them may prove to be incorrect.
The achievement of any forecast depends on numerous risks and other factors, including those described in
this Annual Report, many of which are beyond our control. In addition, the volatility in the financial markets and
challenging economic conditions may make it particularly difficult to forecast our future performance. As a
result, we cannot assure that our performance will meet any management forecasts or that the variation from such
forecasts will not be material and adverse. You are cautioned not to base your entire analysis of our business and
prospects upon isolated predictions, but instead are encouraged to utilize the entire mix of publicly available
historical and forward-looking information, as well as other available information affecting us, our services, and
our industry when evaluating our forecasts and other forward-looking statements relating to our operations and
financial performance.
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