United Healthcare 2001 Annual Report Download - page 55

PAGE 54 UnitedHealth Group
dated operating results or financial position. Examinations for the 1996 and 1997 tax years have been
completed and did not have a significant impact on our consolidated operating results or financial position.
[1 1 ]COMMITMENTS AND CONTINGENCIES
LEASES
We lease facilities, computer hardware and other equipment under long-term operating leases that are non-
cancelable and expire on various dates through 2011. Rent expense under all operating leases was $135 million
in 2001, $132 million in 2000 and $129 million in 1999.
At December 31, 2001, future minimum annual lease payments, net of sublease income, under all
noncancelable operating leases were as follows (in millions):
2002 2003 2004 2005 2006 Thereafter
$99 $90 $77 $68 $60 $224
SERVICE AGREEMENTS
In 1995 and 1996, we entered into three separate contracts for certain data center operations and support, and
network and voice communication services, each with an approximate term of 10 years. Expenses incurred in
connection with these agreements were $196 million in 2001, $182 million in 2000 and $172 million in 1999.
LEGAL MATTERS
Because of the nature of our businesses, we are routinely party to a variety of legal actions related to
the design, management and offerings of our services. These matters include: claims relating to health
care benefits coverage; medical malpractice actions; allegations of anti-competitive and unfair business
activities; disputes over compensation and termination of contracts including those with physicians
and other health care providers; disputes related to our administrative services, including actions
alleging claim administration errors and failure to disclose rate discounts and other fee and rebate
arrangements; disputes over benefit copayment calculations; claims related to disclosure of certain
business practices; and claims relating to customer audits and contract performance.
In 1999, a number of class action lawsuits were filed against us and virtually all major entities in the health
benefits business. The suits are purported class actions on behalf of certain customers and physicians for
alleged breaches of federal statutes, including the Employee Retirement Income Security Act of 1974, as
amended (ERISA), and the Racketeer Influenced Corrupt Organization Act (RICO). Although the results
of pending litigation are always uncertain, we do not believe the results of any such actions, including those
described above, currently threatened or pending will, individually or in aggregate, have a material adverse
effect on our results of operations or financial position.
GOVERNMENT REGULATION
Our business is regulated domestically at federal, state and local levels, and internationally. The laws and rules
governing our business are subject to frequent change, and agencies have broad latitude to administer those
regulations. State legislatures and Congress continue to focus on health care issues as the subject of proposed
legislation. Existing or future laws and rules could force us to change how we do business, restrict revenue and
enrollment growth, increase our health care and administrative costs and capital requirements, and increase
our liability related to coverage interpretations or other actions. Further, we must obtain and maintain
regulatory approvals to market many of our products.
We are also subject to various governmental reviews, audits and investigations. However, we do not
believe the results of any of the current audits, individually or in the aggregate, will have a material
adverse effect on our financial position or results of operations.
[1 2 ]SEGMENT FINANCI AL I NFORMATION
Factors used in determining our reportable business segments include the nature of operating activities,
existence of separate senior management teams, and the type of information presented to the company’s
chief operating decision-maker to evaluate our results of operations.