Aetna 2013 Annual Report Download - page 62

Annual Report- Page 56
applicable laws and regulations, we could be subject to significant adverse regulatory actions or suffer
reputational harm which may have a material adverse effect on our business”, beginning on page 52;
• “We may not be able to compete effectively in the HIT business and earn a profit. Our HIT business
increases our risk of patent infringement and other intellectual property litigation and may become subject
to significant regulation in the future”, beginning on page 73; and
• “As we expand our international operations, we will increasingly face political, legal and compliance,
operational, regulatory, economic and other risks that we do not face or are more significant than in our
domestic operations. Our exposure to these risks is expected to increase”, beginning on page 72.
We are routinely subject to litigation and adverse legal proceedings, including class actions. Many of these cases
seek substantial damages which may not be covered by insurance. These cases may be costly to defend, result in
changes in our business practices and cause reputational harm.
We are routinely involved in numerous claims, lawsuits, regulatory audits, investigations and other legal
proceedings arising in the ordinary course of our businesses. Certain of the lawsuits against us are purported to be
class actions. The majority of these proceedings relate to the conduct of our health care operations and allege
various violations of law. The outcome of litigation and other adverse legal proceedings is always uncertain, and
outcomes that are not justifiable by the evidence or existing law or regulation can and do occur.
In addition, litigation may be brought against us by private individuals on behalf of the government through a qui
tam or “whistleblower” suit. When a private individual brings a whistleblower suit, the defendant often will not be
made aware of the suit for many months or even years, until the government commences its own investigation or
determines whether it will intervene. Whistleblower suits have resulted in significant settlements between
governmental agencies and health care companies. The significant incentives and protections provided under the
Dodd-Frank Wall Street Reform and Consumer Protection Act increase the risk of whistleblower suits.
Many of the cases against us seek substantial damages (including non-economic or punitive damages and treble
damages) and may also seek changes in our business practices. For example, during 2012, we settled litigation with
non-participating providers for $120 million, and during 2009, we settled a matter with the New York Attorney
General that caused us to transition to different databases to determine the amount we pay non-participating
providers under certain benefit plan designs. While we currently have insurance coverage for some potential
liabilities, other potential liabilities may not be covered by insurance, insurers may dispute coverage, or the amount
of our insurance may not be enough to cover the damages awarded or costs incurred. In addition, some types of
damages, like punitive damages, may not be covered by insurance, and in some jurisdictions the coverage of
punitive damages is prohibited. Insurance coverage for all or some forms of liability may become unavailable or
prohibitively expensive in the future.
Litigation and other adverse legal proceedings could materially adversely affect our business or operating results
because of reputational harm to us caused by such proceedings, the costs of defending such proceedings, the costs
of settlement or judgments against us, or the changes in our operations that could result from such proceedings.
Refer to “Litigation and Regulatory Proceedings” in Note 18 of Notes to Consolidated Financial Statements
beginning on page 130 for more information.
Our use and disclosure of sensitive member and customer information is subject to complex regulations at
multiple levels. We would be adversely affected if we or our business associates fail to adequately protect
sensitive member and customer information.
We collect, process, maintain, retain and distribute large amounts of personal health and financial information and
other confidential and sensitive data about our members and customers in the ordinary course of our business. The
use and disclosure of such information is regulated at the federal, state and international levels, and these laws, rules
and regulations are subject to change and increased enforcement activity, such as a new audit program implemented
by HHS under HIPAA. In some cases, such laws, rules and regulations also apply to our vendors and require us to
obtain written assurances of their compliance with such requirements or may hold us liable for any violations by our