United Healthcare 2005 Annual Report Download - page 37

Legal Matters
Because of the nature of our businesses, we are routinely made party to a variety of legal actions related to the
design and management of our service offerings. We record liabilities for our estimates of probable costs
resulting from these matters. These matters include, but are not limited to, claims relating to health care benefits
coverage, medical malpractice actions, contract disputes and claims related to disclosure of certain business
practices.
Beginning in 1999, a series of class action lawsuits were filed against both UnitedHealthcare and PacifiCare, and
virtually all major entities in the health benefits business. In December 2000, a multidistrict litigation panel
consolidated several litigation cases involving UnitedHealth Group and our affiliates, including PacifiCare, in the
Southern District Court of Florida, Miami division. Generally, the health care provider plaintiffs allege violations
of ERISA and the Racketeer Influenced Corrupt Organization Act (RICO) in connection with alleged
undisclosed policies intended to maximize profits. Other allegations include breach of state prompt payment laws
and breach of contract claims for failure to timely reimburse providers for medical services rendered. The
consolidated suits seek injunctive, compensatory and equitable relief as well as restitution, costs, fees and interest
payments. The trial court granted the health care providers’ motion for class certification and that order was
reviewed by the Eleventh Circuit Court of Appeals. The Eleventh Circuit affirmed the class action status of the
RICO claims, but reversed as to the breach of contract, unjust enrichment and prompt payment claims. During
the course of the litigation, there have been co-defendant settlements. Through a series of motions and appeals,
all direct claims against us have been compelled to arbitration. A trial date has been set for September 2006. The
trial court has ordered that the trial be split into separate liability and damage proceedings. In August 2005, the
capitation-related claims were dismissed from litigation. On January 31, 2006, the trial court dismissed all
remaining claims against PacifiCare. A March 14, 2006 hearing date has been scheduled for our summary
judgment motion.
On March 15, 2000, the American Medical Association filed a lawsuit against the company in the Supreme Court
of the State of New York, County of New York. On April 13, 2000, we removed this case to the United States
District Court for the Southern District of New York. The suit alleges causes of action based on ERISA, as well
as breach of contract and the implied covenant of good faith and fair dealing, deceptive acts and practices, and
trade libel in connection with the calculation of reasonable and customary reimbursement rates for non-network
providers. The suit seeks declaratory, injunctive and compensatory relief as well as costs, fees and interest
payments. An amended complaint was filed on August 25, 2000, which alleged two classes of plaintiffs, an
ERISA class and a non-ERISA class. After the Court dismissed certain ERISA claims and the claims brought by
the American Medical Association, a third amended complaint was filed. On October 25, 2002, the court granted
in part and denied in part our motion to dismiss the third amended complaint. On May 21, 2003, we filed a
counterclaim complaint in this matter alleging antitrust violations against the American Medical Association and
asserting claims based on improper billing practices against an individual provider plaintiff. On May 26, 2004,
we filed a motion for partial summary judgment seeking the dismissal of certain claims and parties based, in part,
due to lack of standing. On July 16, 2004, plaintiffs filed a motion for leave to file an amended complaint,
seeking to assert RICO violations.
Although the results of pending litigation are always uncertain, we do not believe the results of any such actions
currently threatened or pending, including those described above, will, individually or in aggregate, have a
material adverse effect on our consolidated financial position or results of operations.
Quantitative and Qualitative Disclosures About Market Risks
Market risk represents the risk of changes in the fair value of a financial instrument caused by changes in interest
rates or equity prices. The company’s primary market risk is exposure to changes in interest rates that could
impact the fair value of our investments and long-term debt.
35