McKesson 2008 Annual Report Download - page 97

Download and view the complete annual report

Please find page 97 of the 2008 McKesson annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 119

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
90
State Actions
Twenty-four actions were filed in various state courts in California, Colorado, Delaware, Georgia, Louisiana
and Pennsylvania (the “State Actions”). All of these actions have been settled or otherwise resolved, except for the
following two individual actions, originally filed in Georgia Superior Court: Holcombe T. Green and HTG Corp. v.
McKesson, Inc. et al., (Georgia Superior Court, Fulton County, Case No. 2002-CV-48407); and Hall Family
Investments, L.P. v. McKesson, Inc. et al. (Georgia Superior Court, Fulton County, Case No. 2002-CV-48612). The
Green and Hall Family Investments, L.P. actions were voluntarily dismissed by plaintiffs on April 26, 2006 in the
Georgia Superior Court and were re-filed in Georgia State Court, Holcombe T. Green and HTG Corp. v. McKesson
Corporation, et al. (Georgia State Court, Fulton County, Case No. 06-VS-096767-D) and Hall Family Investments,
L.P. v. McKesson Corporation, et al. (Georgia State Court, Fulton County, Case No. 06-VS-096763-F). The
allegations in these actions are substantially similar to those in the Consolidated Securities Litigation Action.
Plaintiffs allege claims of fraud and deceit; additionally, plaintiff Green seeks indemnification in connection with a
lawsuit, now settled, which had been filed by the McKesson Corporation Profit Sharing Investment Plan against
McKesson Corporation and for other unspecified losses. Plaintiffs seek actual and punitive damages, attorneys’ fees
and costs of suit in amounts unspecified in the complaint. The Company and HBOC have answered the complaints
in each of these actions, generally denying the allegations and any liability to plaintiffs. In April 2007, we filed
motions to disqualify the Green and Hall Family Investments, L.P. damages experts, who had opined that plaintiffs
incurred approximately $150 million in actual damages, and for summary judgment. On December 13, 2007, the
trial judge denied those motions. On January 3, 2008, following certification by the trial court of an appeal from her
rulings on the disqualification and summary judgment motions, we applied to the Georgia Court of Appeals, seeking
acceptance of an interlocutory appeal from the trial court rulings, and on January 29, 2008, the Court of Appeals
granted that application. No briefing schedule for that appeal has been set.
As previously reported, in December of 2005, Bear Stearns filed a complaint captioned, Bear Stearns & Co.,
Inc v. McKesson Corporation, (Case No. 604304/5), against the Company in the trial court for the State and County
of New York. Bear Stearns alleged that the Company’ s entry into the settlement of the Consolidated Securities
Litigation Action, without providing a full release for Bear Stearns in that settlement, was a breach of the
engagement letter under which Bear Stearns advised the Company in connection with its acquisition of HBOC. As
described above, the Bear Stearns federal class settlement required that Bear Stearns dismiss its New York state
court action against the Company upon final approval of the Bear Stearns settlement. Accordingly, Bear Stearns
dismissed this action following Judge Whyte’ s January 18, 2008 order granting final approval to the Bear Stearns
settlement.
II. Average Wholesale Price Litigation
On June 2, 2005, a civil class action complaint was filed against the Company in the United States District
Court, District of Massachusetts captioned: New England Carpenters Health Benefits Fund et al., v. First DataBank,
Inc. and McKesson Corporation, (Civil Action No. 05-11148) (“New England Carpenters I”). Named plaintiffs are
health benefit plans. The Complaint alleges that in late 2001 and early 2002 the Company and co-defendant First
DataBank (“FDB”) conspired to improperly raise the published Average Wholesale Price (“AWP”) of certain
prescription drugs, and that this alleged conduct resulted in higher drug reimbursement payments by plaintiffs and
others similarly situated. Plaintiffs purported to represent a class of third party payors who paid any portion of the
price of certain prescription drugs based upon the AWPs published by FDB during the period January 1, 2002 to
March 15, 2005.
The complaint alleges claims against the Company based on the federal Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C. § 1962(c); California’ s Business and Professions Code sections 17200 and
17500, and common law civil conspiracy and seeks injunctive relief, as well as actual, punitive and treble damages,
attorneys’ fees and costs, in an unspecified amount. On December 29, 2005, the Company filed a response to the
plaintiffs’ complaint, denying the allegations and asserting numerous affirmative defenses.