Humana 2009 Annual Report Download - page 29

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We rely on our agreements with customers, confidentiality agreements with employees, and our trade
secrets and copyrights to protect our proprietary rights. These legal protections and precautions may not prevent
misappropriation of our proprietary information. In addition, substantial litigation regarding intellectual property
rights exists in the software industry, including litigation involving end users of software products. We expect
software products to be increasingly subject to third-party infringement claims as the number of products and
competitors in this area grows.
Our business plans also include becoming a quality e-business organization by enhancing interactions with
customers, brokers, agents, providers and other stakeholders through web-enabled technology. Our strategy
includes sales and distribution of health benefit products through the Internet, and implementation of advanced
self-service capabilities, for internal and external stakeholders.
There can be no assurance that our process of improving existing systems, developing new systems to
support our expanding operations, integrating new systems, protecting our proprietary information, and
improving service levels will not be delayed or that additional systems issues will not arise in the future. Failure
to adequately protect and maintain the integrity of our information systems and data may result in a material
adverse effect on our results of operations, financial position, and cash flows.
We are involved in various legal actions, which, if resolved unfavorably to us, could result in substantial
monetary damages. Increased litigation and negative publicity could increase our cost of doing business.
We are a party to a variety of legal actions that affect our business, including employment and employment
discrimination-related suits, employee benefit claims, breach of contract actions, securities laws claims, and tort
claims.
In addition, because of the nature of the health care business, we are subject to a variety of legal actions
relating to our business operations, including the design, management and offering of products and services.
These include and could include in the future:
• claims relating to the methodologies for calculating premiums;
• claims relating to the denial of health care benefit payments;
• claims relating to the denial or rescission of insurance coverage;
• challenges to the use of some software products used in administering claims;
• claims relating to our administration of our Medicare Part D offerings;
• medical malpractice actions based on our medical necessity decisions or brought against us on the
theory that we are liable for providers’ alleged malpractice;
• allegations of anti-competitive and unfair business activities;
• provider disputes over compensation and termination of provider contracts;
• disputes related to ASO business, including actions alleging claim administration errors;
• claims related to the failure to disclose some business practices;
• claims relating to customer audits and contract performance; and
• claims relating to dispensing of drugs associated with our in-house mail-order pharmacy.
In some cases, substantial non-economic or punitive damages as well as treble damages under the federal
False Claims Act, Racketeer Influenced and Corrupt Organizations Act and other statutes may be sought.
While we currently have insurance coverage for some of these potential liabilities, other potential liabilities
may not be covered by insurance, insurers may dispute coverage or the amount of our insurance may not be
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