2.4.0.82118100 - Disclosure - Contingencies and Healthcare Regulationtruefalsefalse1falsefalsefalseD2013Q4YTDhttp://www.sec.gov/CIK0001045829duration2012-07-01T00:00:002013-06-30T00:00:001true1us-gaap_CommitmentsAndContingenciesDisclosureAbstractus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse02false2us-gaap_CommitmentsAndContingenciesDisclosureTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalseverboseLabel1falsefalsefalse00<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">CONTINGENCIES AND HEALTH CARE REGULATION</font></div><div style="line-height:120%;padding-top:10px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Capital Expenditure Commitments</font></div><div style="line-height:120%;padding-top:10px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">As part of its acquisition of DMC, effective January 1, 2011, the Company committed to spend a total of $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">850.0 million</font><font style="font-family:inherit;font-size:10pt;"> over a </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">five</font><font style="font-family:inherit;font-size:10pt;">-year period, $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">500.0 million</font><font style="font-family:inherit;font-size:10pt;"> of which related to a specific list of expansion projects. As of </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">June 30, 2013</font><font style="font-family:inherit;font-size:10pt;">, the Company had spent approximately $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">321.0 million</font><font style="font-family:inherit;font-size:10pt;"> related to this commitment, including approximately $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">191.5 million</font><font style="font-family:inherit;font-size:10pt;"> related to the specific project list. Under the terms of the DMC acquisition agreement, the Company is required to spend at least $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">80.0 million</font><font style="font-family:inherit;font-size:10pt;"> related to the specific list of expansion projects during each of the five calendar years after the closing of the acquisition. </font></div><div style="line-height:120%;padding-top:10px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">For the calendar year 2011 capital commitment, the </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">$80.0 million</font><font style="font-family:inherit;font-size:10pt;"> specific projects capital commitment was not met; therefore, in February 2012, the Company deposited $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">41.8 million</font><font style="font-family:inherit;font-size:10pt;"> of cash into a restricted escrow account. During the 2012 calendar year, the Company was reimbursed the full $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">41.8 million</font><font style="font-family:inherit;font-size:10pt;"> from the escrow account resulting from capital expenditures made subsequent to December 2011.</font></div><div style="line-height:120%;padding-top:10px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">For the calendar year 2012 capital commitment, the $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">80.0 million</font><font style="font-family:inherit;font-size:10pt;"> specific projects capital commitment was not met; therefore, in February 2013, the Company deposited $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">27.8 million</font><font style="font-family:inherit;font-size:10pt;"> of cash into the restricted escrow account. Since funding the escrow in February 2013, the Company had received the full </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">$27.8 million</font><font style="font-family:inherit;font-size:10pt;"> from the account for reimbursement of capital expenditures related to the specific project list made through June 30, 2013. </font></div><div style="line-height:120%;padding-top:10px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">As of June 30, 2013, the Company had spent approximately $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">31.5 million</font><font style="font-family:inherit;font-size:10pt;"> related to the $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">80.0 million</font><font style="font-family:inherit;font-size:10pt;"> calendar year 2013 specific projects commitment. As of </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">June 30, 2013</font><font style="font-family:inherit;font-size:10pt;">, the Company estimated its remaining commitments, excluding those for DMC, to complete all capital projects in process to be approximately $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">70.4 million</font><font style="font-family:inherit;font-size:10pt;">.</font></div><div style="line-height:120%;padding-top:13px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Contingencies</font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company is presently, and from time to time, subject to various claims and lawsuits arising in the normal course of business. In the opinion of management, the ultimate resolution of these matters is not expected to have a material adverse effect on the Company’s financial position or results of operations, except the matters discussed below under “Governmental Regulation” and "Antitrust Lawsuits" could have a material adverse effect, individually or in the aggregate, on the Company's financial position or results of operations.</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Governmental Regulation</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">ICD Matter</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In September 2010, the Company received a letter, which was signed jointly by an Assistant United States Attorney in the Southern District of Florida and an attorney from the U.S. Department of Justice ("DOJ") Civil Division, stating that, among other things, (1) the DOJ is conducting an investigation to determine whether or not certain hospitals have submitted claims for payment for the implantation of implantable cardioverter defibrillators ("ICDs") which were not medically indicated and/or otherwise violated Medicare payment policy, (2) the investigation covers the time period commencing with Medicare’s expansion of coverage of ICDs in 2003 through the present, (3) the relevant CMS National Coverage Determination excludes Medicare coverage for ICDs implanted for primary prevention in patients who have had an acute myocardial infarction within the past </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">40 days</font><font style="font-family:inherit;font-size:10pt;"> or an angioplasty or bypass surgery within the past </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">three months</font><font style="font-family:inherit;font-size:10pt;">, (4) DOJ’s initial analysis of claims submitted to Medicare indicates that many of the Company's hospitals may have submitted claims for ICDs and related services that were excluded from coverage, (5) the DOJ’s review is preliminary, but continuing, and it may include medical review of patient charts and other documents, along with statements under oath, and (6) the Company and its hospitals should ensure the retention and preservation of all information, electronic or otherwise, pertaining or related to ICDs. Upon receipt of this letter, the Company immediately took steps to retain and preserve all of the Company's information and that of its hospitals related to ICDs.</font></div><div style="line-height:120%;padding-top:13px;text-align:left;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Published sources report that earlier in 2010 the DOJ served subpoenas on a number of hospitals and health systems for this same ICD Medicare billing issue, but that the DOJ appears later in 2010 to have changed its approach, in that hospitals and health systems have since September 2010 received letters regarding ICDs substantially in the form of the letter that the Company received, rather than subpoenas. DMC received its letter from the DOJ in respect of ICDs in December 2010. The Company understands that the DOJ is investigating hundreds of other hospitals, in addition to its hospitals, for ICD billings, as part of a national enforcement initiative.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company has entered into tolling agreements with the DOJ. In addition, the DOJ has advised us that the investigation covers implantations after October 1, 2003, has identified the cases that are the subject of the DOJ’s investigation, and has requested that the Company review the identified cases. The Company understands that the DOJ has made similar requests for self-reviews of the other health systems and hospitals under investigation. The DOJ has issued a set of auditing instructions to all of the hospitals being investigated along with a request that the hospitals self-audit the cases previously identified in accordance with those instructions. The Company's outside medical experts have completed their audit of the cases in accordance with the criteria established by the DOJ and, based on the results of that audit, the Company expects to settle the matter as soon as possible. Pending settlement discussions with the DOJ, Baptist Health System has agreed to extend the current tolling agreement until December 31, 2013.</font></div><div style="line-height:120%;padding-top:13px;text-align:left;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company intends to cooperate fully with the investigation of this matter. To date, the DOJ has not asserted any specific claim of damages against the Company or its hospitals. Because the Company still is in the early stages of this investigation, the Company is unable to predict its timing or outcome at this time. However, as the Company understands that this investigation is being conducted under the federal False Claims Act (“FCA”), the Company is at risk for significant damages under the FCA’s treble damages and civil monetary penalty provisions if the DOJ concludes a large percentage of claims for the identified patients are false claims and, as a result, such damages could materially affect the Company's business, financial condition or results of operations.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;padding-bottom:16px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">United States of America ex rel. Shanna Woyak v. Vanguard Health Systems, Inc.; Abrazo Health Care</font></div><div style="line-height:120%;padding-bottom:16px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On April 8, 2013, the Company was made aware of a civil action against it that was originally filed under seal on June 25, 2012 in the U.S. District Court for the District of Arizona.  This action was brought by Shanna Woyak as a private party “</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">qui tam relator</font><font style="font-family:inherit;font-size:10pt;">” on behalf of the federal government.</font></div><div style="line-height:120%;padding-bottom:16px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The action brought by Ms. Woyak alleges civil violations of the federal FCA.  Ms. Woyak's claims are primarily premised on allegations that the Company's Arizona Heart Hospital (“AHH”) failed to properly qualify for provider-based status under Medicare rules as a campus of the Company's Phoenix Baptist Hospital (“PBH”), though Ms. Woyak also alleges various means by which the Company allegedly fraudulently increased its billings.  The action further alleges retaliation in violation of the FCA and common-law wrongful discharge.  The action seeks damages provided for in the FCA and under common law.</font></div><div style="line-height:120%;padding-bottom:16px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Office of the Inspector General of the Department of Health and Human Services has previously informed the Company that its investigation into provider-based matters relating to AHH and PBH has been closed. </font></div><div style="line-height:120%;padding-bottom:16px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company believes that all of the allegations described above are without merit and intends to vigorously defend itself in these actions, if pursued.</font><font style="font-family:inherit;font-size:10pt;color:#1f497d;"> </font><font style="font-family:inherit;font-size:10pt;">Management does not believe that the final outcome of this matter will materially impact the Company's financial position, operating results or cash flows.</font></div><div style="line-height:120%;padding-top:18px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Litigation Related to the Merger </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company is aware of two lawsuits relating to the Merger Agreement filed by purported stockholders of the Company against the Company, Orange Merger Sub, Inc. ("Merger Sub"), a Delaware corporation and wholly owned subsidiary of Tenet, and Tenet. On June 25, 2013, a purported stockholder filed a putative class action lawsuit in the Chancery Court for Davidson County, Tennessee, captioned </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">James A. Kaurich v. Vanguard Health Systems, Inc., et al.</font><font style="font-family:inherit;font-size:10pt;">, Case No. 13-905-IV. On June 27, 2013, a second purported stockholder filed a substantively identical putative class action lawsuit in the Chancery Court for Davidson County, Tennessee, captioned </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Marion Edinburgh TTEE FBO</font><font style="font-family:inherit;font-size:10pt;"> </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Marion Edinburgh Trust U/T/D/ 7/8/1991 v. Vanguard Health Systems, Inc., et al.</font><font style="font-family:inherit;font-size:10pt;">, Case No. 13-921-IV. Both complaints name as defendants the Company, Tenet, Merger Sub, and the members of the Company's Board of Directors (the "Director Defendants") and allege that the Director Defendants breached their fiduciary duties by approving the Merger through an unfair process and at an unfair price, and allege that the Company, Merger Sub, and Tenet aided and abetted the Director Defendants' breach of their fiduciary duties. On July 26, 2013, the complaints were consolidated and an amended complaint was filed. This amended complaint replaced the two putative class actions and seeks to enjoin the Merger and to create a constructive trust for the purportedly improper benefits received by the Director Defendants. The Company and its directors believe the allegations contained in the complaint are without merit and intend to contest the allegations vigorously. </font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Antitrust Lawsuits</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On June 20, 2006, a federal antitrust class action suit was filed in San Antonio, Texas against the Company's Baptist Health System subsidiary in San Antonio, Texas and </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">two</font><font style="font-family:inherit;font-size:10pt;"> other large hospital systems in San Antonio. In the complaint, plaintiffs allege that the </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">three</font><font style="font-family:inherit;font-size:10pt;"> hospital system defendants conspired with each other and with other unidentified San Antonio area hospitals to depress the compensation levels of registered nurses employed at the conspiring hospitals within the San Antonio area by engaging in certain activities that violated the federal antitrust laws. The complaint alleges </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">two</font><font style="font-family:inherit;font-size:10pt;"> separate claims. The first count asserts that the defendant hospitals violated Section 1 of the federal Sherman Act, which prohibits agreements that unreasonably restrain competition, by conspiring to depress nurses' compensation. The second count alleges that the defendant hospital systems also violated Section 1 of the Sherman Act by participating in wage, salary and benefits surveys for the purpose, and having the effect, of depressing registered nurses' compensation or limiting competition for nurses based on their compensation. The class on whose behalf the plaintiffs filed the complaint is alleged to comprise all registered nurses employed by the defendant hospitals since June 20, 2002. The suit seeks unspecified damages, trebling of this damage amount pursuant to federal law, interest, costs and attorneys' fees. From 2006 through April 2008, the Company and the plaintiffs worked on producing documents to each other relating to, and supplying legal briefs to the court in respect of, solely the issue of whether the court will certify a class in this suit, the court having bifurcated the class and merit issues. In April 2008, the case was stayed by the judge pending his ruling on plaintiffs' motion for class certification. On July 8, 2013, the plaintiffs filed a motion to lift the stay and reopen discovery. The Company continues to believe that the allegations contained within this putative class action suit are without merit, and the Company has vigorously worked to defeat class certification. If a class is certified, the Company will continue to defend vigorously against the litigation.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On the same date in 2006 that this suit was filed against the Company in federal district court in San Antonio, the same attorneys filed </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">three</font><font style="font-family:inherit;font-size:10pt;"> other substantially similar putative class action lawsuits in federal district courts in Chicago, Illinois, Albany, New York and Memphis, Tennessee against some of the hospitals or hospital systems in those cities (none of such hospitals or hospital systems being owned by the Company). The attorneys representing the plaintiffs in all </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">four</font><font style="font-family:inherit;font-size:10pt;"> of these cases said in June 2006 that they may file similar complaints in other jurisdictions and in December 2006 they brought a substantially similar class action lawsuit against </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">eight</font><font style="font-family:inherit;font-size:10pt;"> hospitals or hospital systems in the Detroit, Michigan metropolitan area, including DMC. Since representatives of the Service Employees International Union (“SEIU”) joined plaintiffs' attorneys in announcing the filing of all four complaints on June 20, 2006, and as has been reported in the media, the Company believes that SEIU's involvement in these actions appears to be part of a corporate campaign to attempt to organize nurses in these cities, including San Antonio and Detroit. The registered nurses in the Company's hospitals in San Antonio and Detroit are currently not members of any union. In the suit in Detroit against DMC, the court did not bifurcate class and merits issues. On March 22,</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2012, the judge issued an opinion and order granting in part and denying in part the defendants' motions for summary judgment. The defendants' motions were granted as to the count of the complaint alleging wage fixing by defendants, but were denied as to the count alleging that the defendants' sharing of wage information allegedly resulted in the suppression of nurse wages. The opinion, however, did not address plaintiffs' motion for class certification and did not address defendants' challenge to the opinion of plaintiffs' expert, but specifically reserved ruling on those matters for a later date. At a mandatory mediation in January 2013 before the presiding U.S. District Court judge, counsel for DMC was advised that it appears likely that the DMC will be the only non-settling defendant, and the Company understands that the other defendants have settled the case or are in the process of having their settlements approved by the court. Subsequently, on April 22, 2013, the judge issued an opinion and order denying defendants' motion to exclude the testimony of plaintiffs' expert. Plaintiffs' motion for class certification is still pending before the court.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">If the plaintiffs in the San Antonio and/or Detroit suits (1) are successful in obtaining class certification and (2) are able to prove both liability and substantial damages, which are then trebled under Section 1 of the Sherman Act, such a result could materially affect the Company's business, financial condition or results of operations. However, in the opinion of management, the ultimate resolution of these matters is not expected to have a material adverse effect on the Company's financial position or results of operations.</font></div><div style="line-height:120%;padding-top:13px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Employment-Related Agreements</font></div><div style="line-height:120%;padding-top:13px;text-align:left;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Effective June 1, 1998, the Company executed employment agreements with </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">three</font><font style="font-family:inherit;font-size:10pt;"> of its current executive officers. The Company executed an employment agreement with a fourth current executive officer on September 1, 1999. The employment agreements were amended on September 23, 2004 to extend the term of each employment agreement another five years and to provide that the Blackstone merger did not constitute a change of control, as defined in the agreements. From November 15, 2007 to December 31, 2008, the Company entered into written employment agreements with </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">four</font><font style="font-family:inherit;font-size:10pt;"> other executive officers for terms expiring five years from the agreement date. The employment agreements will renew automatically for additional one-year periods, unless terminated by the Company or the executive officer. The employment agreements provide, among other things, for minimum salary levels, for participation in bonus plans, and for amounts to be paid as liquidated damages in the event of a change in control or termination by the Company without cause.</font></div><div style="line-height:120%;padding-top:13px;text-align:left;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company has executed severance protection agreements (“severance agreements”) between the Company and each of its other officers who do not have employment agreements. The severance agreements are automatically extended for successive one year terms at the discretion of the Company unless a change in control occurs, as defined in the severance agreement, at which time the severance agreement continues in effect for a period of not less than three years beyond the date of such event. The Company may be obligated to pay severance payments as set forth in the severance agreements in the event of a change in control and the termination of the executive’s employment of the Company.</font></div><div style="line-height:120%;padding-top:13px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Guarantees</font></div><div style="line-height:120%;padding-top:13px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Physician Guarantees</font></div><div style="line-height:120%;padding-top:13px;text-align:left;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In the normal course of its business, the Company enters into physician relocation agreements under which it guarantees minimum monthly income, revenues or collections or guarantees reimbursement of expenses up to maximum limits to physicians during a specified period of time (typically, 12 months to 24 months). In return for the guarantee payments, the physicians are required to practice in the community for a stated period of time (typically, three to four years) or else return the guarantee payments to the Company. The Company records a liability and offsetting intangible asset at estimated fair value for all guarantees by calculating an estimate of expected payments to be made over the guarantee period. The Company reduces the liability as it makes guarantee payments and amortizes the intangible asset over the term of the physicians’ relocation agreements. The Company also estimates the fair value of liabilities and offsetting intangible assets related to payment guarantees for physician service agreements for which no repayment provisions exist. As of June 30, </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">2013</font><font style="font-family:inherit;font-size:10pt;">, the Company had a net intangible asset of $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">6.4 million</font><font style="font-family:inherit;font-size:10pt;"> and a remaining liability of $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">3.6 million</font><font style="font-family:inherit;font-size:10pt;"> related to these physician income and service guarantees. The maximum amount of the Company’s unpaid physician income and service guarantees as of June 30, </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">2013</font><font style="font-family:inherit;font-size:10pt;"> was approximately $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">4.4 million</font><font style="font-family:inherit;font-size:10pt;">.</font></div><div style="line-height:120%;padding-top:13px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Other Guarantees</font></div><div style="line-height:120%;padding-top:13px;text-align:left;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">As part of its contract with the AHCCCS, one of the Company’s health plans, PHP, is required to maintain a performance guarantee, the amount of which is based upon PHP’s membership and capitation premiums received. As of June 30, </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">2013</font><font style="font-family:inherit;font-size:10pt;">, the Company maintained this performance guarantee in the form of $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">40.0 million</font><font style="font-family:inherit;font-size:10pt;"> of surety bonds with independent third party insurers. The Company also has a surety bond for its Michigan Pioneer ACO in the amount of $</font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">4.0 million</font><font style="font-family:inherit;font-size:10pt;"> as part of the requirements set forth by CMS has other miscellaneous surety bonds for various corporate needs.</font></div></div>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for commitments and contingencies.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.
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