We are subject to litigation in the ordinary course of our business, including litigation based on new or evolving legal theories, that could significantly affect our results of operations.  

Due to the nature of our business, we are subject to a variety of legal actions relating to our business operations including claims relating to:  

• our denial of health care benefits;  
• vicarious liability for our actions or medical malpractice claims;  
• disputes with our providers over compensation and termination of provider contracts;  
• disputes related to our non-risk business, including actions alleging breach of fiduciary duties, claim administration errors and failure to disclose network rate discounts and other fee and rebate arrangements;  
• disputes over our copayment calculations; and  
• customer audits of our compliance with our plan obligations.  

In addition, plaintiffs continue to bring new types of purported legal claims against managed care companies. Recent court decisions and legislative activity increase our exposure to these types of claims. In some cases, plaintiffs may seek class action status and substantial economic, non-economic or punitive damages. The loss of even one of these claims, if it resulted in a significant damage award, could have a significant adverse effect on our financial condition or results of operations. This risk of potential liability may make reasonable settlements of claims more difficult to obtain. We cannot determine with any certainty what new theories of recovery may evolve or what their impact may be on the managed care industry in general or on us in particular. 

We currently have, and expect to maintain, liability insurance coverage for some of the potential legal liabilities we may incur. Potential liabilities that we incur may not, however, be covered by insurance, our insurers may dispute coverage, our insurers may be unable to meet their obligations or the amount of our insurance coverage may be inadequate. We cannot assure you that we will be able to obtain insurance coverage in the future, or that insurance will continue to be available on a cost effective basis, if at all.  

Our stock price and trading volume may be volatile.  

From time to time, the price and trading volume of our common stock, as well as the stock of other companies in the health care industry may experience periods of significant volatility. Company-specific issues and developments generally in the health care industry (including the regulatory environment) and the capital markets may cause this volatility. Our stock price and trading volume may fluctuate in response to a number of events and factors, including:  

• quarterly variations in our operating results;  
• changes in the market’s expectations about our future operating results;  
• changes in financial estimates and recommendations by securities analysts concerning our company or the health care industry generally;  
• operating and stock price performance of other companies that investors may deem comparable;  
• news reports relating to trends in our markets;  
• changes in the laws and regulations affecting our business;  
• acquisitions and financings by us or others in our industry; and  
• sales of substantial amounts of our common stock by our directors and executive officers or principal stockholders, or the perception that such sales could occur.  

Our indebtedness will impose restrictions on our business and operations.  

The indenture for our senior notes, which were issued on February 1, 2002, imposes restrictions on our business and operations. These restrictions limit our ability to, among other things:  

• incur additional debt;  
• pay dividends or make other restricted payments;  
• create or permit certain liens on our assets;  
• sell assets;  
• create or permit restrictions on the ability of certain of our restricted subsidiaries to pay dividends or make other distributions to us;

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