Humana 2011 Annual Report Download - page 31

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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;
• claims arising from any adverse medical consequences resulting from our recommendations about the
appropriateness of providers’ proposed medical treatment plans for patients;
• 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;
• qui tam litigation brought by individuals who seek to sue on behalf of the government, alleging that we,
as a government contractor, submitted false claims to the government;
• claims related to the failure to disclose some business practices;
• claims relating to customer audits and contract performance;
• claims relating to dispensing of drugs associated with our in-house mail-order pharmacy; and
• professional liability claims arising out of the delivery of healthcare and related services to the public,
including urgent care.
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
enough to cover the damages awarded. In addition, some types of damages, like punitive damages, may not be
covered by insurance. In some jurisdictions, coverage of punitive damages is prohibited. Insurance coverage for
all or some forms of liability may become unavailable or prohibitively expensive in the future.
The health benefits industry continues to receive significant negative publicity reflecting the public
perception of the industry. This publicity and perception have been accompanied by increased litigation,
including some large jury awards, legislative activity, regulation, and governmental review of industry practices.
These factors may adversely affect our ability to market our products or services, may require us to change our
products or services, may increase the regulatory burdens under which we operate, and may require us to pay
large judgments or fines. Any combination of these factors could further increase our cost of doing business and
adversely affect our results of operations, financial position, and cash flows.
See “Legal Proceedings and Certain Regulatory Matters” in Note 15 to the consolidated financial statements
included in Item 8. – Financial Statements and Supplementary Data. We cannot predict the outcome of these
suits with certainty.
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