CVS 2014 Annual Report Download - page 84

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CVS Health
82
Notes to Consolidated Financial Statements
In August 2006, the Bellevue case and the North Jackson Pharmacy case were both transferred to Pennsylvania
federal court by the Judicial Panel on Multidistrict Litigation for coordinated and consolidated proceedings with
other cases before the panel, including cases against other PBMs. Motions for class certification in the coordi-
nated cases within the multidistrict litigation, including the North Jackson Pharmacy case, remain pending, and
the court has permitted certain additional class discovery and briefing. The consolidated action is now known as
the In Re Pharmacy Benefit Managers Antitrust Litigation.
• In November 2009, a securities class action lawsuit was filed in the United States District Court for the District of
Rhode Island by Richard Medoff, purportedly on behalf of purchasers of CVS Health Corporation stock between
May 5, 2009 and November 4, 2009. The lawsuit names the Company and certain officers as defendants and
includes allegations of securities fraud relating to public disclosures made by the Company concerning the PBM
business and allegations of insider trading. In addition, a shareholder derivative lawsuit was filed by Mark Wuotila
in December 2009 in the same court against the directors and certain officers of the Company. This lawsuit, which
has remained 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 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 investigated 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 has cooperated with 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 the Company’s 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
provided documents and other information in response to this request for information.
• 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, Anthony Spay, 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 declined to intervene in the lawsuit. The case
is proceeding.
• In November 2014, the U.S. District Court in the District of Massachusetts unsealed a qui tam lawsuit brought
against the Company by a pharmacy auditor and a CVS pharmacist. The lawsuit, which was initially filed under
seal in 2011, alleges that the Company violated the federal False Claims Act, as well as the false claims acts of
several states, by overcharging state and federal governments in connection with prescription drugs available
through the Company’s Health Savings Pass program, a membership-based program that allows enrolled
customers special pricing for typical 90-day supplies of various generic prescription drugs. The federal govern-
ment, which issued a January 2012 OIG subpoena concerning the Health Savings Pass program, has declined
to intervene in the case. The Company is now responding to the declined qui tam complaint. Separately, the