Restructuring and Separation Costs

Following a management-initiated, broad operational assessment in early 2017, our board of directors approved, and we committed to, a comprehensive restructuring and profitability improvement plan in June 2017 (the 2017 Restructuring Plan). Key activities under this plan to date have included:


•	Streamlining of our organizational structure to eliminate redundant layers of management, consolidate regional support services, and other staff reductions to improve efficiency and the speed and quality of decision making;


•	Re-design of core operating processes such as provider payment, utilization management, quality monitoring and improvement, and information technology, to achieve more effective and cost-efficient outcomes;


•	Remediation of high-cost provider contracts and enhancement of high quality, cost-effective networks;


•	Restructuring, including selective exits, of direct delivery operations; and


•	Partnering with the lowest-cost, most effective vendors.

Costs Incurred

In our 2017 Annual Report on Form 10-K, we reported that we had incurred substantially all of the costs associated with the 2017 Restructuring Plan in 2017, amounting to $234 million. In the first half of 2018, we incurred an additional $33 million in such costs, primarily as a result of our further evaluation and write-off of a utilization and care management project terminated because of its inconsistency with the goals of the 2017 Restructuring Plan. We also recorded nominal amounts for one-time termination benefits, true-ups of certain lease contract termination costs, and consulting fees recorded in 2017. As of June 30, 2018, we had incurred $267 million in total costs under the 2017 Restructuring Plan; we expect to complete all activities under the 2017 Restructuring Plan in 2018, with the exception of the cash settlement of lease termination liabilities. We expect to continue to settle those liabilities through 2025, unless the leases are terminated sooner.

Restructuring and separation costs are reported by the same name in the accompanying consolidated statements of operations. The following tables present the major types of such costs by segment. Current and long-lived assets include current and non-current capitalized project costs, and capitalized software determined to be unrecoverable.



	Three Months Ended June 30, 2018
	One-Time Termination Benefits			Other Restructuring Costs						Total
	One-Time Termination Benefits			Write-offs of Current and Long-lived Assets		Consulting Fees		Contract Termination Costs		Total
	(In millions)
Health Plans	$	(1	)	$	—	$	—	$	9	$	8
	$	(1	)	$	—	$	—	$	9	$	8



	Six Months Ended June 30, 2018
	One-Time Termination Benefits		Other Restructuring Costs							Total
	One-Time Termination Benefits		Write-offs of Current and Long-lived Assets			Consulting Fees		Contract Termination Costs		Total
	(In millions)
Health Plans	$	—	$	(1	)	$	—	$	8	$	7
Other	5		20			1		—		26
	$	5	$	19		$	1	$	8	$	33



	Three Months and Six Months Ended June 30, 2017
	Separation Costs - Former Executives		One-Time Termination Benefits		Other Restructuring Costs						Total
	Separation Costs - Former Executives		One-Time Termination Benefits		Write-offs of Current and Long-lived Assets		Consulting Fees		Contract Termination Costs		Total
	(In millions)
Other	$	35	$	—	$	—	$	8	$	—	$	43
	$	35	$	—	$	—	$	8	$	—	$	43

As of June 30, 2018, we had incurred cumulative restructuring costs under the 2017 Restructuring Plan as follows:



	Separation Costs - Former Executives		One-Time Termination Benefits		Other Restructuring Costs						Total
	Separation Costs - Former Executives		One-Time Termination Benefits		Write-offs of Current and Long-lived Assets		Consulting Fees		Contract Termination Costs		Total
	(In millions)
Health Plans	$	—	$	33	$	15	$	—	$	32	$	80
Molina Medicaid Solutions	—		—		8		—		—		8
Other	36		39		57		45		2		179
	$	36	$	72	$	80	$	45	$	34	$	267

Reconciliation of Liability

For those restructuring and separation costs that require cash settlement (primarily separation costs, one-time termination benefits, consulting fees and contract termination costs), the following table presents a roll-forward of the accrued liability, which is reported in “Accounts payable and accrued liabilities” in the accompanying consolidated balance sheets. The adjustments are due to true-ups of costs recorded in 2017.



	Separation Costs - Former Executives			One-Time Termination Benefits			Other Restructuring Costs			Total
	(In millions)
Accrued as of December 31, 2017	$	2		$	11		$	35		$	48
Adjustments	—			(1		)	8			7
Charges	—			6			2			8
Cash payments	(2		)	(15		)	(13		)	(30		)
Accrued as of June 30, 2018	$	—		$	1		$	32		$	33