CVS 2014 Annual Report Download - page 85

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83
2014 Annual Report
Attorney General of the State of Texas has issued civil investigative demands and other requests in February 2012
and May 2014, and has continued its investigation concerning the Health Savings Pass program and claims for
reimbursement from the Texas Medicaid program.
• On October 12, 2012, the Drug Enforcement Agency (“DEA”) Administrator published its Final Decision and Order
revoking the DEA license registrations for dispensing controlled substances at two of our retail pharmacy stores in
Sanford, Florida. The license revocations for the two stores formally became effective on November 13, 2012. The
Company has entered into discussions with the U.S. Attorney’s Office for the Middle District of Florida concerning
civil penalties for violations of the Controlled Substances Act arising from the circumstances underlying the action
taken against the two Sanford, Florida stores. The Company is also undergoing several audits by the DEA and is
in discussions with the DEA and the U.S. Attorney’s Office in several locations. Whether agreements can be
reached and on what terms is uncertain.
• 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.
• In January 2014, the U.S. District Court in the Southern District of New York unsealed a qui tam action in which
the Company is a defendant. The suit originally was filed under seal in 2011 by relator David Kester, a former
employee of Novartis Pharmaceuticals Corp. (“Novartis”). The suit alleges that Novartis, the Company, and other
specialty pharmacies violated the federal False Claims Act, as well as the false claims acts of several states, by
using pharmacists, nurses and other staff to recommend and increase the sales and market share for certain
Novartis specialty drugs in exchange for patient referrals, rebates and discounts provided by Novartis. The federal
government has intervened in the case as to some allegations against Novartis but has declined to intervene as to
any of the allegations against the Company. The relator has continued to litigate the declined action against the
Company and other specialty pharmacies.
• In March 2014, the Company received a subpoena from the United States Attorney’s Office for the District of
Rhode Island, requesting documents and information concerning bona fide service fees and rebates received
from certain pharmaceutical manufacturers in connection with certain drugs utilized under Part D of the Medicare
Program. The Company has been cooperating with the government and collecting documents in response to
the subpoena.
The Company is also a party to other legal proceedings, government investigations, 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) pending or future government enforcement actions against the Company; (v) adverse devel-
opments 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 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.