CVS 2013 Annual Report Download - page 87

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85
2013 Annual Report
• 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 the OIG requesting information about its Health Savings
Pass program, a prescription drug discount program for uninsured or underinsured individuals, in connection with
an investigation 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 the Company’s pharmacies to Texas Medicaid for reimbursement. The
Company is providing documents and other information in response to these requests for information.
• A purported shareholder derivative action was filed on behalf of nominal defendant CVS Caremark Corporation
against certain of the Company’s officers and members of its Board of Directors. The action, which alleged a single
claim for breach of fiduciary duty relating to the Company’s alleged failure to properly implement internal regulatory
controls to comply with the Controlled Substances Act and the Combat Methamphetamine Epidemic Act, was
originally filed in June 2012. In addition, an amended complaint was filed in November 2012 and a Supplemental
Complaint was filed in April 2013. In October 2013, the court granted the Company’s motion to dismiss and entered
judgment dismissing the action, without prejudice. Following dismissal of the action, the same purported share-
holder sent a letter to the Company’s Board of Directors demanding that the Board investigate her allegations and
pursue legal action against certain directors and officers of the Company. A committee of the Board of Directors is
conducting a review and intends to respond to the letter as appropriate.
• In November 2012, the Company received a subpoena from the OIG requesting information concerning automatic
refill programs used by pharmacies to refill prescriptions for customers. The Company has been cooperating and
providing documents and other information in response to this request for information.
The Company is also a party to other legal proceedings, inquiries and audits arising in the normal course of its
business, none of which is expected to be material to the Company. The Company can give no assurance, however,
that its business, financial condition and results of operations will not be materially adversely affected, or that the
Company will not be required to materially change its business practices, based on: (i) future enactment of new health
care or other laws or regulations; (ii) the interpretation or application of existing laws or regulations as they may relate
to the Company’s business, the pharmacy services, retail pharmacy or retail clinic industries or to the health care
industry generally; (iii) pending or future federal or state governmental investigations of the Company’s business or
the pharmacy services, retail pharmacy or retail clinic industry or of the health care industry generally; (iv) institution
of government enforcement actions against the Company; (v) adverse developments in any pending
qui tam
lawsuit
against the Company, whether sealed or unsealed, or in any future
qui tam
lawsuit that may be filed against the
Company; or (vi) adverse developments in other pending or future legal proceedings against the Company or
affecting the pharmacy services, retail pharmacy or retail clinic industry or the health care industry generally.