McKesson 2012 Annual Report Download - page 102

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
98
On February 23, 2011, the case was transferred to the District of Massachusetts. On May 27, 2011, the
Company filed a motion to dismiss the relator’s complaint. On June 10, 2011, the relator filed a notice of intent to
voluntarily dismiss the Company from the action, subject to approval by the United States and the various states on
whose behalf the relator filed suit. On March 2, 2012, the court granted, in part, and denied, in part, the Johnson &
Johnson defendants’ motion to dismiss. Specifically, the court ruled that it lacked jurisdiction over the relator’s
claims under the False Claims Act, and it declined to exercise supplemental jurisdiction over the relator’s claims
under various state false claims statutes. On April 19, 2012, the Court granted the relator’s unopposed motion to
dismiss the Company from the action.
III. Government Investigations and Subpoenas
From time-to-time, the Company receives subpoenas or requests for information from various government
agencies. The Company generally responds to such subpoenas and requests in a cooperative, thorough and timely
manner. These responses sometimes require considerable time and effort and can result in considerable costs being
incurred by the Company. Such subpoenas and requests also can lead to the assertion of claims or the
commencement of civil or criminal legal proceedings against the Company and other members of the health care
industry, as well as to settlements. Examples of such requests and subpoenas include the following two items.
First, prior to its recent acquisition by the Company, US Oncology was informed that the United States Federal
Trade Commission (“FTC”) and the Attorney General for the State of Texas (“Texas AG”) had opened
investigations to determine whether a transaction in which certain Austin, Texas based oncology physicians became
employees of an existing Texas US Oncology affiliated oncology practice group violated relevant state or federal
antitrust laws. US Oncology has responded to requests for information from the government agencies and the
Company has continued to cooperate with the FTC and the Texas Attorney General regarding these investigations.
US Oncology has reached an agreement with the Texas AG fully resolving its inquiry, and the FTC has informed
US Oncology that it has closed its file regarding the matter.
Second, the Company has been informed of an investigation by the Regie de l’assurance maladie Du Quebec
(“RAMQ”) to which the Company’s subsidiary, McKesson Canada Corporation (“MCC”), has responded. RAMQ
is a provincial government agency with administrative authority over the conduct of pharmaceutical businesses in
Quebec Province. MCC has cooperated fully with the investigation which has been conducted, with substantial
interruptions, from 2009 through the present. The Company believes that the investigation is focused on certain
discounts and payments offered to pharmacies in the Quebec Province.
IV. Environmental Matters
Primarily as a result of the operation of the Company’s former chemical businesses, which were fully divested
by 1987, the Company is involved in various matters pursuant to environmental laws and regulations. The Company
has received claims and demands from governmental agencies relating to investigative and remedial actions
purportedly required to address environmental conditions alleged to exist at eight sites where it, or entities acquired
by it, formerly conducted operations and the Company, by administrative order or otherwise, has agreed to take
certain actions at those sites, including soil and groundwater remediation. In addition, the Company is one of
multiple recipients of a New Jersey Department of Environmental Protection Agency directive and a separate United
States Environmental Protection Agency directive relating to potential natural resources damages (“NRD”)
associated with one of these eight sites. Although the Company’s potential allocation under either directive cannot
be determined at this time, it has agreed to participate with a potentially responsible party (“PRP”) group in the
funding of an NRD assessment, the costs of which are reflected in the aggregate estimates set forth below.
Based on a determination by the Company’s environmental staff, in consultation with outside environmental
specialists and counsel, the current estimate of the Company’s probable loss associated with the remediation costs
for these eight sites is $7 million, net of approximately $1.7 million that third parties have agreed to pay in
settlement or is expected, based either on agreements or nonrefundable contributions which are ongoing, to be
contributed by third parties. The $7 million is expected to be paid out between April 2012 and March 2032. The
Company’s estimated probable loss for these environmental matters has been entirely accrued for in the
accompanying consolidated balance sheets.