United Healthcare 2012 Annual Report Download - page 32

included or could in the future include claims related to health care benefits coverage and payment (including
disputes with enrollees, customers, and contracted and non-contracted physicians, hospitals and other health care
professionals), tort (including claims related to the delivery of health care services, such as medical malpractice
by health care practitioners who are employed by us, have contractual relationships with us, or serve as providers
to our managed care networks), contract and labor disputes, tax claims and claims related to disclosure of certain
business practices. We are also party to certain class action lawsuits brought by health care professional groups
and consumers. In addition, we periodically acquire businesses or commence operations in jurisdictions outside
of 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 subject to dispute by
customers, government authorities or others. We are largely self-insured with regard to litigation risks. Although
we maintain excess liability insurance with outside insurance carriers for claims in excess of our self-insurance,
certain types of damages, such as punitive damages in some circumstances, are not covered by insurance. We
record liabilities for our estimates of the probable costs resulting from self-insured matters; however, it is
possible that the level of actual losses will significantly exceed the liabilities recorded.
A description of significant legal actions in which we are currently involved is included in Note 12 of Notes to
the Consolidated Financial Statements included in Item 8, “Financial Statements.” We cannot predict the
outcome of these actions with certainty, and we are incurring expenses in resolving these matters. The legal
actions we face or may face in the future could further increase our cost of doing business and materially and
adversely affect our results of operations, financial position and cash flows. In addition, certain legal actions
could result in adverse publicity, which could damage our reputation and materially and adversely affect our
ability to retain our current business or grow our market share in select markets and businesses.
Any failure by us to successfully manage our strategic alliances or complete, manage or integrate
acquisitions and other significant strategic transactions could materially and adversely affect our business,
prospects, results of operations, financial position and cash flows.
As part of our business strategy, we frequently engage in discussions with third parties regarding possible
investments, acquisitions, divestitures, strategic alliances, joint ventures, and outsourcing transactions and often
enter into agreements relating to such transactions. For example, we have a strategic alliance with AARP under
which we provide AARP-branded Medicare Supplement insurance to AARP members and other AARP-branded
products and services to both AARP members and non-members. If we fail to meet the needs of AARP and its
members, including by developing additional products and services, pricing our products and services
competitively or responding effectively to applicable federal and state regulatory changes, our alliance with the
AARP could be damaged or terminated, which in turn could adversely impact our reputation, business and results
of operations. Further, if we fail to identify and complete successfully transactions that further our strategic
objectives, we may be required to expend resources to develop products and technology internally, we may be at
a competitive disadvantage or we may be adversely affected by negative market perceptions, any of which may
have a material adverse effect on our results of operations, financial position or cash flows. For acquisitions,
success is also dependent upon efficiently integrating the acquired business into our existing operations. We are
required to integrate these businesses into our internal control environment, which may present challenges that
are different than those presented by organic growth and that may be difficult to manage. If we are unable to
successfully integrate and grow these acquisitions and to realize contemplated revenue synergies and cost
savings, our business, prospects, results of operations, financial position and cash flows could be materially and
adversely affected.
As we continue to expand our business outside the United States, acquired foreign businesses, such as Amil, will
present challenges that are different from those presented by acquisitions of domestic businesses, including
adapting to new markets, business, labor and cultural practices and regulatory environments that are materially
different from what we have experienced in our U.S. operations. For more information on the Amil acquisition,
see Note 6 of Notes to the Consolidated Financial Statements included in Item 8, “Financial Statements.”
Adapting to these challenges could require us to devote significant senior management and other resources to the
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