United Healthcare 2008 Annual Report Download - page 101

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UNITEDHEALTH GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Company has the right to terminate the settlement in the event that a certain number of class members elect to
opt-out of the settlement.
NYAG Investigation. On February 13, 2008, the Office of the Attorney General of the State of New York
(NYAG) announced that it was conducting an industry-wide investigation into out-of-network provider
reimbursement practices of health insurers, including the Company, and served the Company with a notice of
intent to initiate litigation. On January 13, 2009, the Company announced it had reached an agreement with the
NYAG regarding the investigation. Under the terms of the agreement, the Company will pay $50 million to fund
a not-for-profit entity to develop and own a new, independent database product to replace the Prevailing Health
Charges System (PHCS) and Medical Data Research (MDR) database products owned by the Company’s
subsidiary Ingenix, Inc. Both products are used by a number of health plans and employers as tools that help
determine the amount to reimburse members who receive physician services outside their managed care
networks. When the new database product is ready, the Company will cease using the PHCS and MDR databases
and will use the new database for a period of at least five years in connection with out-of-network reimbursement
in those benefit plans that employ a reasonable and customary standard for out of network reimbursements.
Shareholder Derivative Litigation. On January 16, 2009, a shareholder derivative action was filed against certain
of the Company’s current and former directors and officers and Company subsidiary PacifiCare Health Systems
(PacifiCare) in the Orange County, California, Superior Court. The complaint generally alleges that the
defendants breached their fiduciary duties to the Company and were unjustly enriched by failing to prevent and
remedy certain alleged claims processing and payment regulatory violations, including violations allegedly
associated with the integration of PacifiCare. The complaint seeks unspecified money damages, injunctive relief,
disgorgement of profits, and attorneys’ fees. The Company is vigorously defending this lawsuit.
Government Regulation
The Company’s business is regulated at federal, state, local and international levels. The laws and rules
governing the Company’s business and interpretations of those laws and rules are subject to frequent change.
Broad latitude is given to the agencies administering those regulations. State legislatures and Congress continue
to focus on health care issues as the subject of proposed legislation. Existing or future laws and rules could force
us to change how the Company does business, restrict revenue and enrollment growth, increase the Company’s
health care and administrative costs and capital requirements, and increase the Company’s liability in federal and
state courts for coverage determinations, contract interpretation and other actions. Further, the Company must
obtain and maintain regulatory approvals to market many of its products.
The Company has been and is currently involved in various governmental investigations, audits and reviews.
These include routine, regular and special investigations, audits and reviews by CMS, state insurance and health
and welfare departments, state attorneys general, the Office of the Inspector General, the Office of Personnel
Management, the Office of Civil Rights, U.S. Congressional committees, the U.S. Department of Justice, U.S.
Attorneys, the SEC, the IRS, the U.S. Department of Labor and other governmental authorities.
For example, in 2007, the California Department of Insurance examined the Company’s PacifiCare health
insurance plan in California. The examination findings related to claims processing accuracy and timeliness;
accurate and timely interest payments; timely implementation of provider contracts; timely, accurate provider
dispute resolution; and other related matters. To date, the California Department of Insurance has not levied a
financial penalty related to its findings. The Company is working closely with the department to resolve any
outstanding issues arising from the findings of its examination.
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