Aetna 2006 Annual Report Download - page 83

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Litigation
Managed Care Class Action Litigation
From 1999 through early 2003, we were involved in purported class action lawsuits as part of a wave of similar
actions targeting the health care payor industry and, in particular, the conduct of business by managed care
companies. These cases, brought on behalf of health care providers (the “Provider Cases”), alleged generally that
we and other defendant managed care organizations engaged in coercive behavior or a variety of improper business
practices in dealing with health care providers and conspired with one another regarding this purported wrongful
conduct.
Effective May 21, 2003, we and representatives of over 900,000 physicians, state and other medical societies
entered into an agreement (the “Physician Settlement Agreement”) settling the lead physician Provider Case,
which was pending in the United States District Court for the Southern District of Florida (the “Florida Federal
Court”). We believe that the Physician Settlement Agreement, which has received final court approval, resolved
all then pending Provider Cases filed on behalf of physicians that did not opt out of the settlement. During the
second quarter of 2003, we recorded a charge of $75 million ($115 million pretax) (included in other operating
expenses) in connection with the Physician Settlement Agreement, net of an estimated insurance receivable of $72
million pretax. We believe our insurance policies with third party insurers apply to this matter and have been
vigorously pursuing recovery from those insurers in Pennsylvania state court (the “Coverage Litigation”). During
the second quarter of 2006, the Philadelphia, Pennsylvania state trial court issued a summary judgment ruling
dismissing all of our claims in the Coverage Litigation. We have appealed that ruling and intend to continue to
vigorously pursue recovery from our third party insurers. However, as a result of that ruling, we concluded that the
estimated insurance receivable of $72 million pretax that was recorded in connection with the Physician Settlement
Agreement is no longer probable of collection for accounting purposes, and therefore, during the second quarter of
2006, we wrote-off that recoverable. We continue to work with plaintiffs’ representatives in implementing the
Physician Settlement Agreement and the issues that may arise under that agreement.
Several Provider Cases filed in 2003 on behalf of purported classes of chiropractors and/or all non-physician health
care providers also make factual and legal allegations similar to those contained in the other Provider Cases,
including allegations of violations of the Racketeer Influenced and Corrupt Organizations Act. These Provider
Cases seek various forms of relief, including unspecified damages, treble damages, punitive damages and
injunctive relief. These Provider Cases have been transferred to the Florida Federal Court for consolidated pretrial
proceedings. We intend to defend each of these cases vigorously.
Insurance Industry Brokerage Practices Matters
We have received subpoenas and other requests for information from the New York Attorney General, the
Connecticut Attorney General, other attorneys general and various insurance and other regulators with respect to
an industry wide investigation into certain insurance brokerage practices, including broker compensation
arrangements, bid quoting practices and potential antitrust violations. We may receive additional subpoenas and
requests for information from these attorneys general and regulators. We are cooperating with these inquiries.
In connection with this industry wide review, we have received, and may receive, additional subpoenas and
requests for information from other attorneys general and other regulators.
Other Litigation and Regulatory Proceedings
We are involved in numerous other lawsuits arising, for the most part, in the ordinary course of our business
operations, including employment litigation and claims of bad faith, medical malpractice, non-compliance with
state regulatory regimes, marketing misconduct, failure to timely pay medical claims, investment activities, patent
infringement and other intellectual property litigation and other litigation in our Health Care and Group Insurance
businesses. Some of these other lawsuits are or are purported to be class actions. We intend to defend these
matters vigorously.
In addition, our current and past business practices are subject to review by, and from time to time we receive
subpoenas and other requests for information from, various state insurance and health care regulatory authorities
and other state and federal authorities. There also continues to be heightened review by regulatory authorities of
the managed health care industry’ s business practices, including utilization management, complaint and grievance