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Restructuring and Separation Costs | 12 Months Ended
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Dec. 31, 2017
Restructuring and Related Activities [Abstract] |
Restructuring and Separation Costs | Restructuring and Separation Costs Following a management-initiated, broad operational assessment in early 2017, designed to improve our profitability and expand our core Medicaid business, in June 2017, we accelerated the implementation of a comprehensive restructuring and profitability improvement plan (the 2017 Restructuring Plan). Under the 2017 Restructuring Plan, we have taken the following actions:
1. | We have streamlined our organizational structure, including the elimination of redundant layers of management, the consolidation of regional support services, and other reductions to our workforce, to improve efficiency as well as the speed and quality of our decision-making.
2. | We re-designed core operating processes such as provider payment, utilization management, quality monitoring and improvement, and information technology to achieve more effective and cost efficient outcomes.
3. | We are remediating high cost provider contracts and building around high quality, cost-effective networks.
4. | We restructured our existing direct delivery operations.
5. | We reviewed our vendor base to ensure that we are partnering with the lowest-cost, most-effective vendors.
In addition to costs incurred under the 2017 Restructuring Plan, we have recorded costs associated with the separation of our former CEO and former CFO, described in further detail below. Costs Incurred 2017 Restructuring Plan Restructuring costs in 2017 consisted primarily of one-time termination benefits, write-offs of long-lived assets (primarily capitalized software, and leasehold improvements and other assets relating to restructured direct delivery operations), consulting fees, and contract termination costs (including office leases and other contracts). We previously anticipated that we would incur costs under the 2017 Restructuring Plan in 2018. However, we incurred substantially all costs relating to this plan in 2017, or approximately $234 million. Such costs are presented, by type and reportable segment, below. Since the initiation of our 2017 Restructuring Plan in the second quarter of 2017, the range of total estimated costs increased by approximately $50 million due primarily to non-cash write-offs of certain capitalized software in connection with the re-design of core processes. Such write-offs were not included in our initial total cost estimates, but as our evaluation of core operating processes proceeded in the third quarter, we determined that certain projects were inconsistent with our future operating goals and were therefore written off. In addition, in the second quarter of 2017, we reported that we expected restructuring costs to relate only to the Health Plans and Other segments. In the third quarter of 2017, however, we wrote off certain costs capitalized at our Molina Medicaid Solutions segment that supported our Health Plans segment provider information management processes. These processes are now subject to re-design under the 2017 Restructuring Plan. Separation Costs On May 2, 2017, we terminated the employment of our former CEO and CFO without cause. Under their amended and restated employment agreements, they were each entitled to receive 400% of their base salary, a prorated termination bonus (150% of base salary for the former CEO and 125% of base salary for the former CFO), full vesting of equity compensation, and a cash payment for health and welfare benefits. We recorded separation costs of $36 million primarily related to these former executives under FASB ASC Topic 712, Nonretirement and Postemployment Benefits. Of this total, $23 million related to the acceleration of their share-based compensation, as further discussed in Note 14, “Stockholders' Equity.” Employee separation costs were insignificant in 2016 and 2015. Restructuring and separation costs are reported in “Restructuring and separation costs” in the accompanying consolidated statements of operations. The following tables present the major types of such costs by segment. Long-lived assets include capitalized software, intangible assets and furniture, fixtures and equipment.
| Year Ended December 31, 2017
| Separation Costs - Former Executives |  | One-Time Termination Benefits |  | Other Restructuring Costs |  | Total
|  |  | Write-offs of Long-lived Assets |  | Consulting Fees |  | Contract Termination Costs |
| (In millions)
Health Plans | $ | — |  |  | $ | 33 |  |  | $ | 16 |  |  | $ | — |  |  | $ | 24 |  |  | $ | 73 |
Molina Medicaid Solutions | — |  |  | — |  |  | 8 |  |  | — |  |  | — |  |  | 8 |
Other | 36 |  |  | 34 |  |  | 37 |  |  | 44 |  |  | 2 |  |  | 153 |
| $ | 36 |  |  | $ | 67 |  |  | $ | 61 |  |  | $ | 44 |  |  | $ | 26 |  |  | $ | 234 |
Reconciliation of Liability For those restructuring and separation costs that require cash settlement (primarily separation costs not including equity incentives, termination benefits, consulting fees and contract termination costs), the following table presents a roll-forward of the accrued liability, which is reported primarily in “Accounts payable and accrued liabilities” in the accompanying consolidated balance sheets. Certain contract termination cost accruals are non-current, recorded in “Other long-term liabilities.”
| Separation Costs - Former Executives |  | One-Time Termination Benefits |  | Other Restructuring Costs |  | Total
| (In millions)
Accrued as of December 31, 2016 | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Charges | 13 |  |  | 66 |  |  | 71 |  |  | 150 |
Cash payments | (11 | ) |  | (55 | ) |  | (36 | ) |  | (102 | )
Accrued as of December 31, 2017 | $ | 2 |  |  | $ | 11 |  |  | $ | 35 |  |  | $ | 48 |

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- References No definition available. + Details
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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 + Details
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