CVS 2015 Annual Report Download - page 92

90 CVS Health
Notes to Consolidated Financial Statements
In August 2006, the Judicial Panel on Multidistrict Litigation issued an order transferring all related PBM antitrust
cases, including the North Jackson Pharmacy cases, to the United States District Court for the Eastern District of
Pennsylvania for coordinated and consolidated proceedings with the cases originally filed in that court, including
the Bellevue matter. The consolidated action is now known as In re Pharmacy Benefit Managers Antitrust Litigation .
A motion for class certification filed by the North Jackson Pharmacy plaintiffs against the Caremark defendants in
August 2015 is currently pending. In the Bellevue matter, the parties are in the early stages of discovery.
• In February 2006, two substantially similar putative class action lawsuits were filed in the U.S. District Court for
the Eastern District of Kentucky, and were consolidated and entitled Indiana State Dist. Council of Laborers &
HOD Carriers Pension & Welfare Fund v. Omnicare, Inc., et al. , No. 2:06cv26. The consolidated complaint was
filed against Omnicare, three of its officers and two of its directors and purported to be brought on behalf of all
open-market purchasers of Omnicare common stock from August 3, 2005 through July 27, 2006, as well as all
purchasers who bought shares of Omnicare common stock in Omnicare’s public offering in December 2005. The
complaint alleged violations of the Securities Exchange Act of 1934 and Section 11 of the Securities Act of 1933
and sought, among other things, compensatory damages and injunctive relief. After dismissals and appeals to the
United States Court of Appeals for the Sixth Circuit, the United States Supreme Court remanded the case to the
district court. In October 2015, the court granted plaintiffs’ motion to file a third amended complaint. In December
2015, Omnicare filed a motion to dismiss plaintiffs’ third amended complaint.
• In December 2007, the Company received a document subpoena from the Office of Inspector General (“OIG”)
within the U.S. Department of Health and Human Services, requesting information relating to the processing of
Medicaid and certain other government agency claims on behalf of its clients (which allegedly resulted in under-
payments from our pharmacy benefit management clients to the applicable government agencies) on one of the
Company’s adjudication platforms. In September 2014, the Company settled the OIG’s claims, as well as related
claims by the Department of Justice and private plaintiffs, without any admission of liability. The Company is in
discussions with the OIG concerning other claim processing issues.
• 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. An amended complaint extended that time period back to October 30, 2008.
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 August 2015, the Parties
reached an agreement in principle to settle the Medoff action for $48 million. In September 2015, the Parties filed
a joint stipulation seeking preliminary approval for this settlement. Preliminary approval was granted in November
2015 and the final approval hearing occurred in January 2016. The Company denies any wrongdoing, and agreed
to a settlement to avoid the burden, uncertainty and distraction of litigation. The settlement will be funded by
insurance proceeds. The Wuotila derivative matter remains pending.
• As part of a previously disclosed civil settlement agreement entered into by Omnicare with the U.S. Attorney’s
Office, for the District of Massachusetts in November 2009, Omnicare also entered into an amended and restated
corporate integrity agreement (“CIA”) with the OIG with a term of five years from November 2, 2009 with certain
provisions continuing for a period after the term. In October 2015, Omnicare received a closure letter from the
OIG. The Company is continuing discussions with the OIG around the CIA and its compliance program.
• 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