Cigna 2014 Annual Report Download - page 51

PART I
ITEM 1A. Risk Factors
The health care industry also is regularly subject to negative media business and reporting practices within the health care and disability
attention, including as a result of the political environment and the insurance industry and increased scrutiny by other state and federal
ongoing debate concerning Health Care Reform. Such publicity may governmental agencies (such as state attorney general offices)
adversely affect our stock price and reputation in certain markets. empowered to bring criminal actions in circumstances that could have
previously given rise only to civil or administrative proceedings. These
For more information on regulation, see ‘‘Business – Regulation’’ in regulatory audits or reviews or actions by other governmental agencies
Part I, Item 1 of this Form 10-K. See also the description of Health could result in changes to or clarifications of our business practices,
Care Reform’s minimum medical loss ratio and customer rebate retroactive adjustments to certain premiums, significant fines,
requirements in the ‘‘Business – Global Health Care’’ section penalties, civil liabilities, criminal liabilities or other sanctions,
beginning on page 2 of this Form 10-K. including restrictions on our ability to operate, that could have a
material adverse effect on our business, results of operation, financial
We face risks related to litigation, regulatory audits
condition and liquidity.
and investigations.
A description of material pending legal actions and other legal matters
We are routinely involved in numerous claims, lawsuits, regulatory is included in Note 23 to our Consolidated Financial Statements
audits, investigations and other legal matters arising in the ordinary included in this Form 10-K. The outcome of litigation and other legal
course of business, including that of administering and insuring matters is always uncertain, and outcomes that are not justified by the
employee benefit programs. These could include benefit claims, evidence or existing law can occur.
breach of contract actions, tort claims, claims disputes under federal
or state laws and disputes regarding reinsurance arrangements,
Future performance of our business will depend on
employment and employment discrimination-related suits, anti-trust
our ability to execute our strategic and operational
claims, employee benefit claims, wage and hour claims, tax, privacy,
initiatives effectively.
intellectual property and real estate disputes. In addition, we have
incurred and likely will continue to incur liability for practices and The future performance of our business will depend in large part on
claims related to our health care business, such as marketing our ability to effectively implement and execute our strategic and
misconduct, failure to timely or appropriately pay for or provide operational initiatives including: (1) driving growth in targeted
health care, provider network structure, poor outcomes for care geographies, product lines, customer buying segments and
delivered or arranged, provider disputes, including disputes over distribution channels; (2) improving our strategic and financial
compensation or contractual provisions, and claims related to flexibility; and (3) pursuing additional opportunities in high-growth
self-funded business. There are currently, and may be in the future, markets with particular focus on individuals. Successfully executing
attempts to bring class action lawsuits against the industry or, absent a these initiatives depends on a number of factors, including our ability
class action, individual plaintiffs may bring multiple claims regarding to:
the same subject matter against us and other companies in our differentiate our products and services from those of our
industry. competitors;
Court decisions and legislative activity may increase our exposure for develop and introduce new products or programs, particularly in
any of these types of claims. In some cases, substantial non-economic response to government regulation and the increased focus on
or punitive damages may be sought. We seek to procure insurance consumer-directed products;
coverage to cover some of these potential liabilities. However, certain
potential liabilities may not be covered by insurance, insurers may grow our commercial product portfolio, including expanded
dispute coverage or the amount of insurance may be insufficient to participation in the public health insurance exchanges;
cover the entire damages awarded. In addition, certain types of identify and introduce the proper mix or integration of products
damages, such as punitive damages, may not be covered by insurance, that will be accepted by the marketplace;
and insurance coverage for all or certain forms of liability may become
unavailable or prohibitively expensive in the future. It is possible that attract and retain sufficient numbers of qualified employees;
the resolution of current or future legal matters and claims could attract, develop and maintain collaborative relationships with a
result in losses material to our results of operations, financial sufficient number of qualified partners, including physicians and
condition and liquidity. other health care providers in an environment of growing shortages
We are frequently the subject of regulatory market conduct and other of primary care professionals and consolidation within the provider
reviews, audits and investigations by state insurance and health and industry;
welfare departments, attorneys general, CMS and the OIG and transition health care providers from volume-based fee for service
comparable authorities in foreign jurisdictions. With respect to our arrangements to a value-based system;
Medicare Advantage business, CMS and OIG perform audits to
determine a health plan’s compliance with federal regulations and improve medical cost competitiveness in targeted markets;
contractual obligations, including compliance with proper coding manage our medical and administrative costs effectively;
practices and fraud and abuse enforcement practices through audits
designed to detect and correct improper payments. There also manage our balance sheet exposures effectively, including our
continues to be heightened review by federal and state regulators of pension funding obligations; and
CIGNA CORPORATION - 2014 Form 10-K 19
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