9. Commitments and Contingencies

Insurance

The Company maintains a program of insurance coverage for a broad range of risks in its business. The Company has renewed its general, professional and managed care liability insurance policies with unaffiliated insurers for a one-year period from June 17, 2014 to June 17, 2015. The general liability policy is written on an "occurrence" basis, subject to a $0.05 million per claim un-aggregated self-insured retention. The professional liability and managed care errors and omissions liability policies are written on a "claims-made" basis, subject to a $1.0 million per claim ($10.0 million per class action claim) un-aggregated self-insured retention for managed care errors and omissions liability, and a $0.05 million per claim un-aggregated self-insured retention for professional liability.

The Company maintains a separate general and professional liability insurance policy with an unaffiliated insurer for its specialty pharmaceutical dispensing operations. The specialty pharmaceutical dispensing operations insurance policy has a one-year term for the period June 17, 2014 to June 17, 2015. The general liability policy is written on an "occurrence" basis and the professional liability policy is written on a "claims-made" basis, subject to a $0.05 million per claim and $0.25 million aggregated self-insured retention.

The Company maintains separate professional liability insurance policies with unaffiliated insurers for its Maricopa Contract business for the behavioral health direct care facilities, all of which were divested at various times prior to September 1, 2009. The Maricopa Contract professional liability insurance policies effective dates were from September 1, 2008 to September 1, 2009. The Company purchased a five-year extended reporting period for the professional liability policies effective September 1, 2009 for the period September 1, 2009 to September 1, 2014, subject to a $0.5 million per claim un-aggregated self-insured retention. The Company extended the reporting period for the professional liability policies for an additional two-year period to September 1, 2016, subject to a $0.5 million per claim un-aggregated self-insured retention. The professional liability policies are written on a "claims-made" basis.

The Company is responsible for claims within its self-insured retentions, and for portions of claims reported after the expiration date of the policies if they are not renewed, or if policy limits are exceeded. The Company also purchases excess liability coverage in an amount that management believes to be reasonable for the size and profile of the organization.

Regulatory Issues

The managed healthcare industry is subject to numerous laws and regulations. The subjects of such laws and regulations cover, but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirements, information privacy and security, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Over the past several years, government activity has increased with respect to investigations and/or allegations concerning possible violations of fraud and abuse and false claims statutes and/or regulations by healthcare organizations and insurers. Entities that are found to have violated these laws and regulations may be excluded from participating in government healthcare programs, subjected to fines or penalties or required to repay amounts received from the government for previously billed patient services. Compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time.

In addition, regulators of certain of the Company's subsidiaries may exercise certain discretionary rights under regulations including increasing their supervision of such entities, requiring additional restricted cash or other security or seizing or otherwise taking control of the assets and operations of such subsidiaries.

Legal

The Company's operating activities entail significant risks of liability. From time to time, the Company is subject to various actions and claims arising from the acts or omissions of its employees, network providers or other parties. In the normal course of business, the Company receives reports relating to deaths and other serious incidents involving patients whose care is being managed by the Company. Such incidents occasionally give rise to malpractice, professional negligence and other related actions and claims against the Company or its network providers. Many of these actions and claims received by the Company seek substantial damages and therefore require the Company to incur significant fees and costs related to their defense.

The Company is also subject to or party to certain class actions and other litigation and claims relating to its operations or business practices. In the opinion of management, the Company has recorded reserves that are adequate to cover litigation, claims or assessments that have been or may be asserted against the Company, and for which the outcome is probable and reasonably estimable. Management believes that the resolution of such litigation and claims will not have a material adverse effect on the Company's financial condition or results of operations; however, there can be no assurance in this regard.

Operating Leases

The Company leases certain of its operating facilities and equipment. The leases, which expire at various dates through January 2025, generally require the Company to pay all maintenance, property tax and insurance costs.

At December 31, 2014, aggregate amounts of future minimum payments under operating leases were as follows: 2015—$16.5 million; 2016—$16.6 million; 2017—$14.4 million; 2018—$12.4 million; 2019—$11.2 million; 2020 and beyond—$25.7 million. Operating lease obligations include estimated future lease payments for both open and closed offices.

At December 31, 2014, aggregate amounts of future minimum rentals to be received under operating subleases were as follows: 2015—$0.1 million; 2016—$0.1 million; 2017—$0.1 million; 2018—$0.2 million; and 2019—$0.1 million. Operating sublease rentals to be received relate to a portion of the Company's former headquarters.

Rent expense is recognized on a straight-line basis over the terms of the leases. Rent expense was $19.5 million, $15.2 million and $17.4 million for the years ended December 31, 2012, 2013 and 2014, respectively.

Capital Leases

At December 31, 2014, aggregate future amounts of minimum payments under capital leases, net of leasehold improvement allowances, were as follows: 2015—$0.6 million; 2016—$2.3 million; 2017—$3.5 million; 2018—$3.4 million; 2019—$2.9 million; 2020 and beyond—$18.4 million. Included in the future amounts payable under capital lease commitments is imputed interest of $6.5 million.

Restructuring Activities

As a result of restructuring activities initiated in 2013, the Company recorded liabilities for employee termination costs. The restructuring activities initiated in 2013 were related to contract terminations and organizational changes made in an effort to improve the Company's ability to execute its strategy. For the year ended December 31, 2014, the Company incurred $(1.7) million of employee termination costs, due to net reversals of prior year liabilities, and $1.3 million of lease termination and exit costs. The restructuring costs incurred by segment were Commercial $0.4 million, Public Sector $0.2 million and Corporate $(1.0) million. As of December 31, 2014, the Company incurred cumulative restructuring costs of $14.9 million related to 2013 initiatives. As of December 31, 2014, the cumulative restructuring costs incurred by segment were Public Sector $7.0 million, Commercial $5.1 million, and Corporate $2.8 million. Restructuring costs are included in direct service costs and other operating expenses in the consolidated statements of income.

The following table summarizes the activity related to the employee termination cost aspect of the 2013 restructuring liabilities for the year ended December 31, 2014, by reportable segment (in thousands):

	Commercial			Public Sector			Corporate			Consolidated
Liability for employee termination costs at December 31, 2013	$	4,744		$	4,296		$	3,429		$	12,469
Additions		850			797			341			1,988
Payments		(3,756	)		(3,596	)		(2,458	)		(9,810	)
Liability released		(1,188	)		(1,196	)		(1,312	)		(3,696	)

Liability for employee termination costs at December 31, 2014	$	650		$	301		$	—		$	951