United Healthcare 2015 Annual Report Download - page 90

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As of December 31, 2015, the Company had outstanding, undrawn letters of credit with financial institutions of
$30 million and surety bonds outstanding with insurance companies of $1.1 billion, primarily to bond contractual
performance.
Legal Matters
Because of the nature of its businesses, the Company is frequently made party to a variety of legal actions and
regulatory inquiries, including class actions and suits brought by members, care providers, consumer advocacy
organizations, customers and regulators, relating to the Company’s businesses, including management and
administration of health benefit plans and other services. These matters include medical malpractice,
employment, intellectual property, antitrust, privacy and contract claims and claims related to health care benefits
coverage and other business practices.
The Company records liabilities for its estimates of probable costs resulting from these matters where
appropriate. Estimates of costs resulting from legal and regulatory matters involving the Company are inherently
difficult to predict, particularly where the matters: involve indeterminate claims for monetary damages or may
involve fines, penalties or punitive damages; present novel legal theories or represent a shift in regulatory policy;
involve a large number of claimants or regulatory bodies; are in the early stages of the proceedings; or could
result in a change in business practices. Accordingly, the Company is often unable to estimate the losses or
ranges of losses for those matters where there is a reasonable possibility or it is probable that a loss may be
incurred.
Litigation Matters
California Claims Processing Matter. On January 25, 2008, the California Department of Insurance (CDI)
issued an Order to Show Cause to PacifiCare Life and Health Insurance Company, a subsidiary of the Company,
alleging violations of certain insurance statutes and regulations related to an alleged failure to include certain
language in standard claims correspondence, timeliness and accuracy of claims processing, interest payments,
care provider contract implementation, care provider dispute resolution and other related matters. Although the
Company believes that CDI had never before issued a fine in excess of $8 million, CDI advocated a fine of
approximately $325 million in this matter. The matter was the subject of an administrative hearing before a
California administrative law judge beginning in December 2009, and in August 2013, the administrative law
judge issued a nonbinding proposed decision recommending a fine of $11.5 million. The California Insurance
Commissioner rejected the administrative law judge’s recommendation and on June 9, 2014, issued his own
decision imposing a fine of approximately $174 million. On July 10, 2014, the Company filed a lawsuit in
California state court challenging the Commissioner’s decision. On September 8, 2015, in the first phase of that
lawsuit, the California state court issued an order invalidating certain of the regulations the Commissioner had
relied upon in issuing his decision and penalty. The Company cannot reasonably estimate the range of loss, if
any, that may result from this matter given the procedural status of the dispute, the wide range of possible
outcomes, the legal issues presented (including the legal basis for the majority of the alleged violations), the
inherent difficulty in predicting a regulatory fine in the event of a remand, and the various remedies and levels of
judicial review that remain available to the Company.
Government Investigations, Audits and Reviews
The Company has been involved or is currently involved in various governmental investigations, audits and
reviews. These include routine, regular and special investigations, audits and reviews by CMS, state insurance
and health and welfare departments, the Brazilian national regulatory agency for private health insurance and
plans (the Agência Nacional de Saúde Suplementar), state attorneys general, the Office of the Inspector General,
the Office of Personnel Management, the Office of Civil Rights, the Government Accountability Office, the
Federal Trade Commission, U.S. Congressional committees, the U.S. Department of Justice, the SEC, the
Internal Revenue Service, the U.S. Drug Enforcement Administration, the Brazilian federal revenue service (the
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