United Healthcare 2014 Annual Report Download - page 28

We are routinely subject to various litigation actions due to the nature of our business, which could
damage our reputation and, if resolved unfavorably, could result in substantial penalties or monetary
damages and materially and adversely affect our results of operations, financial position and cash flows.
We are routinely made party to a variety of legal actions related to, among other matters, the design, management
and delivery of our product and service offerings. These matters have included or could in the future include
matters related to health care benefits coverage and payment claims (including disputes with enrollees,
customers, and contracted and non-contracted physicians, hospitals and other health care professionals), tort
claims (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), whistleblower claims (including claims under the False Claims Act or similar statutes),
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
operate 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. Although we record liabilities for our estimates of the probable
costs resulting from self-insured matters, it is possible that the level of actual losses will significantly exceed the
liabilities recorded.
We cannot predict the outcome of significant legal actions in which we are involved and 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 some
markets and businesses.
Any failure by us to manage successfully our strategic alliances or complete, manage or integrate
acquisitions and other significant strategic transactions or relationships 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 Medicare beneficiaries. If we fail to meet the needs of our alliance or joint venture
partners, including by developing additional products and services, providing high levels of service, pricing our
products and services competitively or responding effectively to applicable federal and state regulatory changes,
our alliances and joint ventures 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 successfully complete
transactions that further our strategic objectives, we may be required to expend resources to develop products and
technology internally, we may be placed 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. Success in completing acquisitions is also dependent upon efficiently integrating
the acquired business into our existing operations, including our internal control environment, or otherwise
leveraging its operations, which may present challenges that are different from those presented by organic growth
and that may be difficult for us to manage. If we cannot successfully integrate these acquisitions and to realize
contemplated revenue growth opportunities and cost savings, our business, prospects, results of operations,
financial position and cash flows could be materially and adversely affected.
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