Cigna 2009 Annual Report Download - page 60

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A description of material legal actions and other legal matters in which CIGNA is currently involved is included under “Legal
Proceedings” in Item 3 beginning on page 44, Note 23 to CIGNA’s Consolidated Financial Statements beginning on page 163 of this
Form 10-K and “Regulation” in Section J beginning on page 28. The outcome of litigation and other legal matters is always uncertain,
and outcomes that are not justified by the evidence or existing law can occur. CIGNA believes that it has valid defenses to the legal
matters pending against it and is defending itself vigorously.
CIGNA’s business is subject to substantial government regulation, which, along with new regulation, could increase its costs of
doing business and could adversely affect its profitability.
CIGNA’s business is regulated at the international, federal, state and local levels. The laws and rules governing CIGNA’s business
and interpretations of those laws and rules are subject to frequent change. Broad latitude is given to the agencies administering those
regulations. Existing or future laws and rules could force CIGNA to change how it does business, restrict revenue and enrollment
growth, increase health care, technology and administrative costs including pension costs and capital requirements, take other actions
such as changing its reserve levels with respect to certain reinsurance contracts, change business practices in disability payments and
increase CIGNA’s liability in federal and state courts for coverage determinations, contract interpretation and other actions.
CIGNA must comply with the various regulations applicable to its business. In addition, CIGNA must obtain and maintain regulatory
approvals to market many of its products, to increase prices for certain regulated products and to consummate some of its acquisitions
and divestitures. Delays in obtaining or failure to obtain or maintain these approvals could reduce the Company’s revenue or increase
its costs.
For further information on regulatory matters relating to CIGNA, see “Regulation” in Section J beginning on page 28 and “Legal
Proceedings” in Item 3 beginning on page 44 of this Form 10-K.
CIGNA operates a pharmacy benefit management business, primary care clinics and a staff model HMO, which are subject to a
number of risks and uncertainties, in addition to those CIGNA faces with its health care business.
CIGNA's pharmacy benefit management business is subject to federal and state regulation, including federal and state anti-
remuneration laws, ERISA, HIPAA and laws related to the operation of Internet and mail-service pharmacies.
The Company’s pharmacy benefit management business would also be adversely affected by an inability to contract on favorable
terms with pharmaceutical manufacturers and could suffer claims and reputational harm in connection with purported errors by
CIGNA's mail order or retail pharmacy businesses. Disruptions at any of the Company's pharmacy business facilities due to failure of
technology or any other failure or disruption to these systems or to the infrastructure due to fire, electrical outage, natural disaster, acts
of terrorism or some other catastrophic event could reduce CIGNA's ability to process and dispense prescriptions and provide products
and services to customers.
The Company employs physicians, nurse practitioners, nurses and other health care professionals at onsite low acuity and primary care
clinics it operates for the Company’s customers (as well as certain clinics for Company employees). The Company also owns and
operates medical facilities in the Phoenix, Arizona metropolitan area, including multispecialty health care centers, outpatient surgery
and urgent care centers, low acuity clinics, laboratory, pharmacy and other operations that employ primary care as well as specialty
care physicians and other types of health care professionals. As a direct employer of health care professionals and as an operator of
primary and low-acuity care clinics and other types of medical facilities, the Company is subject to liability for negligent acts,
omissions, or injuries occurring at one of its clinics or caused by one of its employees. Even if any claims brought against the
Company were unsuccessful or without merit, it would have to defend against such claims. The defense of any such actions may be
time-consuming and costly, and may distract management’s attention. As a result, CIGNA may incur significant expenses and the
Company’s financial results could be adversely affected.