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CVS CAREMARK 2012 ANNUAL REPORT
80
Notes to Consolidated Financial Statements
public disclosures made by the Company concerning the PBM business and allegations of insider trading. In addition, a
shareholder derivative lawsuit was filed in December 2009 in the same court against the directors and certain officers of
the Company. A derivative lawsuit is a lawsuit filed by a shareholder purporting to assert claims on behalf of a corporation
against directors and officers of the corporation. This lawsuit, which was stayed pending developments in the related
securities class action, includes allegations of, among other things, securities fraud, insider trading and breach of fiduciary
duties and further alleges that the Company was damaged by the purchase of stock at allegedly inflated prices under
its share repurchase program. In January 2011, both lawsuits were transferred to the United States District Court for the
District of New Hampshire. In June 2012, the court granted the Company’s motion to dismiss the securities class action.
The plaintiffs subsequently filed a notice of appeal of the Court’s ruling on the motion to dismiss, and the appeal is pend-
ing. The derivative lawsuit will remain stayed pending the outcome of the appeal of the securities class action.
In March 2010, the Company learned that various State Attorneys General offices and certain other government agencies
were conducting a multi-state investigation of certain of the Company’s business practices similar to those being investi-
gated at that time by the U.S. Federal Trade Commission (“FTC”). Twenty-eight states, the District of Columbia and the
County of Los Angeles are known to be participating in this investigation. The prior FTC investigation, which commenced
in August 2009, was officially concluded in May 2012 when the consent order entered into between the FTC and the
Company became final. The Company continues to cooperate in the multi-state investigation.
In March 2010, the Company received a subpoena from the OIG requesting information about programs under which the
Company has offered customers remuneration conditioned upon the transfer of prescriptions for drugs or medications to
our pharmacies in the form of gift cards, cash, non-prescription merchandise or discounts or coupons for non-prescription
merchandise. The subpoena relates to an investigation of possible false or otherwise improper claims for payment under
the Medicare and Medicaid programs. The Company has been providing documents and other information in response to
this request for information.
The Company received a subpoena from the U.S. Securities and Exchange Commission (“SEC”) in February 2011 and has
subsequently received additional subpoenas and other requests for information. The SEC’s requests relate to, among other
things, public disclosures made by the Company during 2009, transactions in the Company’s securities by certain officers
and employees of the Company during 2009 and the purchase accounting for the Longs Drug Stores acquisition. The
Company has been providing documents and other information as requested by the SEC.
In January 2012, the United States District Court for the Eastern District of Pennsylvania unsealed a first amended
qui tam
complaint filed in August 2011 by an individual relator, who is described in the complaint as having once been employed
by a firm providing pharmacy prescription benefit audit and recovery services. The complaint seeks monetary damages
and alleges that Caremark’s processing of Medicare claims on behalf of one of its clients violated the federal false claims
act. The United States, acting through the U.S. Attorney’s Office in Philadelphia, Pennsylvania, declined to intervene in
the lawsuit. Caremark filed a motion to dismiss the amended complaint and the DOJ filed a Statement of Interest with
regard to Caremark’s motion to dismiss. In December 2012, the court denied Caremark’s motion to dismiss the
amended complaint.
In January 2012, the Company received a subpoena from OIG requesting information about its Health Savings Pass
program, a prescription drug discount program for uninsured or under insured individuals, in connection with an investiga-
tion of possible false or otherwise improper claims for payment involving HHS programs. In February 2012, the Company
also received a civil investigative demand from the Office of the Attorney General of the State of Texas requesting a copy of
information produced under this OIG subpoena and other information related to prescription drug claims submitted by our