Health Net 2010 Annual Report Download - page 52

Disasters, including earthquakes, fires and floods, could severely damage or interrupt our systems and
operations and result in an adverse effect on our business, financial condition or results of operations.
Disasters such as fires, floods, earthquakes, tornados, power losses, virus outbreaks, telecommunications
failures, break-ins or similar events could severely damage or interrupt our systems and operations, result in loss
of data, and/or delay or impair our ability to service our members and providers. We have in place a disaster
recovery plan which is intended to provide us with the ability to recover our critical systems in the event of a
natural disaster utilizing various alternate sites provided by a national disaster recovery vendor. However, there
can be no assurance that such adverse effects will not occur in the event of a disaster. Any such disaster or
similar event could have a material adverse effect on our business, financial condition and results of operations.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
We lease office space for our principal executive offices in Woodland Hills, California. Our executive
offices, comprising approximately 125,315 square feet, are occupied under a lease that will expire on
December 31, 2014. A significant portion of our Western Region Operations is also housed in Woodland Hills, in
a separate 333,954 square foot leased facility. The lease for this two-building facility expires December 31, 2011.
We also lease an aggregate of approximately 548,807 square feet of office space in Rancho Cordova,
California which is used in our Western Region Operations and Government Contracts segments. The related
leases expire at various dates ranging from 2011 to 2018. We also lease a total of approximately 67,293 square
feet of office space in San Rafael, California for certain specialty services operations in our Western Region
Operations and Government Contracts segments.
On March 29, 2007 we sold our 68-acre commercial campus in Shelton, Connecticut (the “Shelton
Property”) to The Dacourt Group, Inc. (“Dacourt”), dba HN Property Owner, LLC, and leased it back from the
buyer under an operating lease agreement for an initial term of ten years with an option to extend for two
additional terms of ten years each. Under the Shelton Property lease agreement and other lease agreements, we
lease an aggregate of approximately 492,673 square feet of office space in Shelton, Connecticut primarily used
for the provision of administrative services to United and certain of its affiliates as part of our Northeast
Operations. These leases expire at various dates ranging from 2016 to 2017.
In addition to the office space referenced above, we lease approximately 75 sites in 23 states, totaling
approximately 809,232 square feet of space, which is used in all of our segments. We also own a facility in
Rancho Cordova, California comprising approximately 82,000 square feet of space, which is used to support all
of our segments.
We believe that our ownership and rental costs are consistent with those associated with similar space in the
applicable local areas. Our properties are well maintained, adequately meet our needs and are being utilized for
their intended purposes.
Item 3. Legal Proceedings.
Litigation Related to the Sale of Businesses
AmCareco Litigation
We are a defendant in two related litigation matters pending in Louisiana and Texas state courts, both of
which relate to claims asserted by three separate state receivers overseeing the liquidation of three health plans in
Louisiana, Texas and Oklahoma that were previously owned by our former subsidiary, Foundation Health
Corporation (“FHC”), which merged into Health Net, Inc. in January 2001. In 1999, FHC sold its interest in these
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