Cigna 2011 Annual Report Download - page 144

122 CIGNA CORPORATION2011 Form10K
PART II
ITEM 8 Financial Statements and Supplementary Data
pre-conversion accrued benet exceeded the post-conversion benet);
and these conditions are not adequately disclosed in the Plan.
In 2008, the court issued a decision nding in favor of Cigna Corporation
and the Cigna Pension Plan on the age discrimination and wear away
claims. However, the court found in favor of the plaintis on many
aspects of the disclosure claims and ordered an enhanced level of
benets from the existing cash balance formula for the majority of the
class, requiring class members to receive their frozen benets under
the pre-conversion Cigna Pension Plan and their post-1997 accrued
benets under the post-conversion Cigna Pension Plan. e court also
ordered, among other things, pre-judgment and post-judgment interest.
Both parties appealed the court’s decisions to the UnitedStates
Court of Appeals for the Second Circuit which issued a decision on
October6,2009 arming the District Court’s judgment and order
on all issues. On January4,2010, both parties led separate petitions
for a writ of certiorari to the UnitedStates Supreme Court. Cigna’s
petition was granted, and on May16,2011, the Supreme Court issued
its Opinion in which it reversed the lower courts’ decisions and remanded
the case to the trial judge for reconsideration of the remedy. e Court
unanimously agreed with the Company’s position that the lower courts
erred in granting a remedy for an inaccurate plan description under an
ERISA provision that allows only recovery of plan benets. However,
the decision identied possible avenues of “appropriate equitable relief”
that plaintis may pursue as an alternative remedy.
e case is now in the trial court following remand. Briefs have
been led on the remedial issues and oral argument took place on
December9,2011. e Company will continue to vigorously defend its
position in this case. As of December31,2011, the Company continues
to carry a liability of $82million pre-tax ($53million after-tax), that
reects the Company’s best estimate of the exposure.
Ingenix. On February13,2008, State of New York Attorney General
Andrew M. Cuomo announced an industry-wide investigation into the
use of data provided by Ingenix,Inc., a subsidiary of UnitedHealthcare,
used to calculate payments for services provided by out-of-network
providers. e Company received four subpoenas from the New York
Attorney General’s oce in connection with this investigation and
responded appropriately. On February17,2009, the Company entered
into an Assurance of Discontinuance resolving the investigation. In
connection with the industry-wide resolution, the Company contributed
$10million to the establishment of a new non-prot company that
now compiles and provides the data formerly provided by Ingenix.
e Company was named as a defendant in a number of putative
nationwide class actions asserting that due to the use of data from
Ingenix,Inc., the Company improperly underpaid claims, an industry-
wide issue. All of the class actions were consolidated into Franco v.
Connecticut General Life Insurance Company et al., which is pending
in the UnitedStates District Court for the District of New Jersey. e
consolidated amended complaint, led on August7,2009, asserts
claims under ERISA, the RICO statute, the Sherman Antitrust Act
and New Jersey state law on behalf of subscribers, health care providers
and various medical associations. Cigna led a motion to dismiss the
consolidated amended complaint on September9,2009. Plaintis
led a motion for class certication on May28,2010. Fact and expert
discovery have been completed.
On September23,2011, the court granted in part and denied in part
the motion to dismiss the consolidated amended complaint. e court
dismissed all claims by the health care providerand medical association
plaintis for lack of standing to sue, and as a result the case will proceed
onlyon behalf ofsubscribers. In addition, the court dismissed all of the
antitrust claims, the ERISA claims based on disclosure and the New
Jersey state law claims. e court did not dismiss the ERISA claims
for benets and claims under the RICO statute.
On June9,2009, Cigna led motions in the UnitedStates District Court
for the Southern District of Florida to enforce a previous settlement, In
re Managed Care Litigation, by enjoining the RICO and antitrust causes
of action asserted by the provider and medical association plaintis
in the Ingenix litigation on the ground that they arose previously and
were released in the prior settlement. On November30,2009, the
Court granted the motions and ordered the provider and association
plaintis to withdraw their RICO and antitrust claims from the Ingenix
litigation. Plaintis appealed to the Eleventh Circuit and the appeal
is pending. e claims of these provider and association plaintis
have now been dismissed by the Franco court for lack of standing as
described above, and therefore Cigna moved to dismiss the Eleventh
Circuit appeal as moot.
It is reasonably possible that others could initiate additional litigation
or additional regulatory action against the Company with respect to use
of data provided by Ingenix,Inc. e Company denies the allegations
asserted in the investigations and litigation and will vigorously defend
itself in these matters.
Due to numerous uncertain and unpredictable factors presented in
these cases, it is not possible to estimate a range of loss at this time
and, accordingly, no accrual has been recorded in the Company’s
nancial statements.
Karp gender discrimination litigation. On March3,2011, Bretta
Karp led a class action gender discrimination lawsuit against the
Company in the UnitedStates District Court for the District of
Massachusetts. e plainti alleges systemic discrimination against
females in compensation, promotions, training, and performance
evaluations in violation of Title VII of the Civil Rights Act of 1964,
as amended, and Massachusetts law. Plainti seeks monetary damages
and various other forms of broad programmatic relief, including
injunctive relief, backpay, lost benets, and preferential rights to jobs.
e Company led a motion to dismiss the lawsuit on May16,2011,
which is fully briefed and pending. e Company denies the allegations
asserted in the litigation and will vigorously defend itself in this case.
Due to numerous uncertain and unpredictable factors presented in
this case, it is not possible to estimate a range of loss (if any) at this
time, and accordingly, no accrual has been recorded in the Company’s
nancial statements.
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