McKesson 2010 Annual Report Download - page 103

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
97
III. Other Litigation and Claims
On April 7, 2010, an action was filed in the Superior Court of the State of California for the County of Los
Angeles against, among others, the Company, its indirect subsidiary, NDCHealth Corporation (“NDC”) and “Relay
Health,” a trade name under which NDC conducts business, Rodriguez et al. vs. Etreby Computer Company et al.,
(Civ. No. BC435303) (“Rodriguez”). The plaintiffs in Rodriguez purport to represent a class of California residents
whose individual confidential medical information was allegedly illegally released and used by defendants, and
plaintiffs also purport to bring their claims as a private Attorney General action. The claims asserted in the
complaint against the Company defendants include negligence, statutory violations and violation of California
Business and Professions Code, Sections 17200 et seq. covering unfair, unlawful and fraudulent business acts and
practices. The statutory violations alleged by plaintiffs purport to arise out of California Civil Code, Sections 56
through 56.37, also known as the Confidentiality of Medical Information Act (“CMIA”). The complaint seeks
compensatory and statutory damages under the CMIA, equitable and injunctive relief, as well as interest and
attorneys’ fees and costs, all in unspecified amounts. The complaint was served on April 14, 2010, and no other
activity has occurred in the action.
On October 3, 2008, the United States filed a complaint in intervention in a pending qui tam action in the
United States District Court for the Northern District of Mississippi, naming as defendants, among others, the
Company and its former indirect subsidiary, McKesson Medical-Surgical MediNet Inc. (“MediNet”), now merged
into and doing business as McKesson Medical-Surgical MediMart Inc., United States v. McKesson Corporation, et
al., (Civil Action No. 2:08-CV-00214-SA). The United States asserts in its complaint claims based on violations of
the federal False Claims Act, 31 U.S.C Sections 3729-33, in connection with billing and supply services rendered by
MediNet to the long-term care facility operator co-defendants. The action seeks monetary damages in an unstated
amount. On December 3, 2008, the Company and co-defendants filed motions to dismiss the complaint on grounds
that the allegations lacked the particularity required by the Federal Rules of Procedure and on grounds that the
complaint failed to state a claim under the False Claims Act. On September 29, 2009, the trial court denied those
motions. On July 7, 2009, all defendants filed motions to dismiss the action filed by the original Relator based on
the contention that the Relator was not the original source of the claims, which he attempts to pursue in his qui tam
action. On March 25, 2010, the trial court granted defendants’ motions to dismiss the Relator and his complaint.
Discovery in the United States’ intervention action is expected to commence in the first quarter of 2011 and trial has
been set for February 6, 2012.
On July 14, 2006, an action was filed in the United States District Court for the Eastern District of New York
against McKesson, two McKesson employees, several other drug wholesalers and numerous drug manufacturers,
RxUSA v. Alcon Laboratories et al., (Case No. 06-CV-3447 -DRH). Plaintiff alleges that we, along with various
other defendants, unlawfully engaged in monopolization and attempted monopolization of the sale and distribution
of pharmaceutical products in violation of the federal antitrust laws, as well as in violation of New York State’s
Donnelly Act. We are also alleged to have violated the Sarbanes-Oxley Act of 2002; and our employees are alleged
to have violated the Donnelly Act, the Sarbanes-Oxley Act and Sections 1962 (c) and (d) of the civil RICO statute.
Plaintiff alleges generally that defendants have individually, and in concert with one another, taken actions to create
and maintain a monopoly and to exclude secondary wholesalers, such as the plaintiff, from the wholesale
pharmaceutical industry. The complaint seeks monetary damages of approximately $1.6 billion and also seeks
treble damages, attorneys’ fees and injunctive relief. All defendants filed motions to dismiss all claims. The
motions were briefed and submitted to the trial court on March 13, 2007. On September 24, 2009, the trial court
issued its order granting “with prejudice” defendants’ motions to dismiss and on September 28, 2009, the trial court
entered judgment dismissing all of plaintiff’s claims. On October 23, 2009, plaintiff filed a Notice of Appeal in the
United States Court of Appeals for the Second Circuit seeking reversal of the trial court’s orders of dismissal and
judgment. The briefing on the appeal was completed on April 21, 2010, and it is not yet known whether the court
will set the matter for oral argument or will issue its decision on the submitted papers.