Aetna 2013 Annual Report Download - page 140

Annual Report- Page 134
entertainment expenses, as well as the investigations by, and subpoenas and requests from, attorneys general and
others described above under “Out-of-Network Benefit Proceedings.”
Over 35 states are investigating life insurers' claims payment and related escheat practices, and these investigations
have resulted in significant charges to earnings by other life insurers in connection with related settlements. We
have received requests for information from a number of states, and certain of our subsidiaries are being audited,
with respect to our life insurance claim payment and related escheat practices. In the fourth quarter of 2013, we
made changes to our life insurance claim payment practices (including related escheatment practices) based on
evolving industry practices and regulatory expectations and interpretations, including expanding our existing use of
the Social Security Administration's Death Master File to identify additional potentially unclaimed death benefits
and locate applicable beneficiaries. As a result of these changes, in the fourth quarter of 2013, we increased our
estimated liability for unpaid life insurance claims with respect to insureds who passed away on or before
December 31, 2013, and recorded in current and future benefits a charge of $35.7 million ($55.0 million pretax).
Given the legal and regulatory uncertainty with respect to life insurance claim payment and related escheat
practices, it is reasonably possible that we may incur additional liability related to those practices, whether as a
result of further changes in our business practices, litigation, government actions or otherwise, which could
adversely affect our operating results and cash flows.
There also continues to be heightened review by regulatory authorities of, and increased litigation regarding, our
and the rest of the health care and related benefits industry’s business and reporting practices, including premium
rate increases, utilization management, development and application of medical policies, complaint, grievance and
appeal processing, information privacy, provider network structure (including the use of performance-based
networks and termination of provider contracts), delegated arrangements, rescission of insurance coverage, limited
benefit health products, student health products, pharmacy benefit management practices, sales practices, and claim
payment practices (including payments to out-of-network providers and payments on life insurance policies).
As a leading national health and related benefits company, we regularly are the subject of government actions of the
types described above. These government actions may prevent or delay us from implementing planned premium
rate increases and may result, and have resulted, in restrictions on our business, changes to or clarifications of our
business practices, retroactive adjustments to premiums, refunds or other payments to members, beneficiaries, states
or the federal government, assessments of damages, civil or criminal fines or penalties, or other sanctions, including
the possible loss of licensure or suspension or exclusion from participation in government programs.
Estimating the probable losses or a range of probable losses resulting from litigation, government actions and other
legal proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the
matters involve indeterminate claims for monetary damages, may involve fines, penalties or punitive damages that
are discretionary in amount, involve a large number of claimants or regulatory authorities, represent a change in
regulatory policy, present novel legal theories, are in the early stages of the proceedings, are subject to appeal or
could result in a change in business practices. In addition, because most legal proceedings are resolved over long
periods of time, potential losses are subject to change due to, among other things, new developments, changes in
litigation strategy, the outcome of intermediate procedural and substantive rulings and other parties’ settlement
posture and their evaluation of the strength or weakness of their case against us. Except as specifically noted above
under “Out-of-Network Benefit Proceedings” and “Other Litigation and Regulatory Proceedings,” we are currently
unable to predict the ultimate outcome of, or reasonably estimate the losses or a range of losses resulting from, the
matters described above, and it is reasonably possible that their outcome could be material to us.
Other Obligations
We have operating leases for office space and certain computer and other equipment. Rental expenses for these
items were $170 million, $142 million and $133 million in 2013, 2012 and 2011, respectively. The future net
minimum payments under non-cancelable leases for 2014 through 2018 are estimated to be $157 million, $116
million, $92 million, $64 million and $44 million, respectively.