GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The changes in the carrying amount of goodwill, by reporting segment, for the years ended December 31, 2012 and 2011 were as follows (in thousands):



	Commercial Products			Government Programs			Workers’ Compensation		Total
Balance, December 31, 2010	$	1,516,745		$	227,183		$	806,642	$	2,550,570
Acquisition of PHS	4,164			—			—		4,164
Acquisition of MHP	4,033			838			—		4,871
Deferred tax adjustments	(6,684		)	(4,087		)	—		(10,771		)
Balance, December 31, 2011	$	1,518,258		$	223,934		$	806,642	$	2,548,834
Acquisition of FHP	—			42,654			—		42,654
Balance, December 31, 2012	$	1,518,258		$	266,588		$	806,642	$	2,591,488

The Company completed its 2012 annual impairment test of goodwill in accordance with ASC Topic 350 and determined that there were no impairments. The Company believes that the fair value of its reporting units are substantially in excess of their carrying values and not at risk of failing step one of the quantitative impairment test in the near term. In performing its impairment analysis the Company identified its reporting units in accordance with the provisions of ASC Topic 350 and ASC Topic 280, “Segment Reporting.”

In accordance with ASC Topic 350, for the purpose of testing goodwill for impairment, acquired assets and assumed liabilities were assigned to a reporting unit as of the acquisition date if both of the following criteria were met: (1) the asset will be employed in or the liability relates to the operations of a reporting unit and (2) the asset or liability will be considered in determining the fair value of the reporting unit. Corporate assets or liabilities were also assigned to a reporting unit if both of these criteria were met.

Other Intangible Assets

The other intangible asset balances are as follows (in thousands):



	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Amortization Period
As of December 31, 2012
Amortized other intangible assets
Customer Lists	$	596,162	$	406,272	$	189,890	7-15 Years
HMO Licenses	12,600		8,907		3,693		20 Years
Provider Networks	63,300		24,191		39,109		15-20 Years
Trade Name	3,449		3,449		—		3-4 Years
Total amortized other intangible assets	$	675,511	$	442,819	$	232,692
Unamortized other intangible assets
Trade Name	$	85,900	$	—	$	85,900	—
Total unamortized other intangible assets	$	85,900	$	—	$	85,900
Total other intangible assets	$	761,411	$	442,819	$	318,592

As of December 31, 2011
Amortized other intangible assets
Customer Lists	$	579,062	$	344,111	$	234,951	7-15 Years
HMO Licenses	12,600		8,312		4,288		20 Years
Provider Networks	63,200		20,895		42,305		15-20 Years
Trade Names	3,449		3,360		89		3-4 Years
Total amortized other intangible assets	$	658,311	$	376,678	$	281,633
Unamortized other intangible assets
Trade Name	$	85,900	$	—	$	85,900	—
Total unamortized other intangible assets	$	85,900	$	—	$	85,900
Total other intangible assets	$	744,211	$	376,678	$	367,533

The Company performed an impairment test of its unamortized other intangible asset (trade name) as of October 1, 2012, and determined that the asset was not impaired.

Other intangible asset amortization expense for the years ended December 31, 2012, 2011 and 2010 was $74.1 million, $64.4 million, and $64.1 million, respectively. For the years ending December 31, 2013, 2014, 2015, 2016, and 2017, the Company’s estimated intangible amortization expense is $66.1 million, $65.6 million, $32.2 million, $16.6 million and $13.3 million, respectively. For the years ended December 31, 2012 and 2011, the weighted-average amortization period is approximately 10 years for other intangible assets.

Intangible Impairment

During the second quarter of 2012, the Company was notified of the non-renewal of the State of Kansas Medicaid contract, which the Company acquired in connection with the acquisition of FHP. As a result of the non-renewal of the Kansas Medicaid contract, there are no future cash flows expected related to the associated intangibles; therefore, the fair value of those intangibles was written down to zero. Accordingly, depreciation and amortization expense for the twelve months ended December 31, 2012 includes a $7.7 million impairment charge of the intangibles associated with the non-renewal of this contract. The impairment charge related only to the intangibles assigned to the Kansas business acquired in the FHP acquisition and did not affect the intangibles assigned to the ongoing Missouri business, also acquired in the FHP acquisition.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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