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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
92
The Douglas County, Kansas Nationwide Class Action
On August 7, 2008, an action was filed by the Board of County Commissioners of Douglas County, Kansas on
behalf of itself and a purported national class of state, local and territorial governmental entities against the
Company and FDB alleging violations of RICO and federal antitrust laws, and seeking treble damages, as well as
injunctive relief, interest, attorneys’ fees and costs of suit, all in unspecified amounts, Board of County
Commissioners of Douglas County, Kansas v. McKesson Corporation, et al., (No. 1:08-CV-11349-PBS) (“Douglas
County, Kansas Action”).
On December 24, 2008, an amended and consolidated class action complaint was filed abandoning the
previously alleged antitrust claims, and adding as named plaintiffs the City of Panama City, Florida; the State of
Oklahoma; the County of Anoka, Minnesota; Baltimore, Maryland; Columbia, South Carolina; and Goldsboro,
North Carolina. On March 3, 2009, a second amended and consolidated class action complaint was filed, adding the
State of Montana as a plaintiff, adding Montana state law claims, and adding a claim for tortious interference. On
February 10, 2009, plaintiffs filed a notice of dismissal without prejudice of defendant FDB.
On May 20, 2009, an action was filed by Oakland County, Michigan and the City of Sterling Heights, Michigan
against the Company as the sole defendant asserting claims under RICO, Michigan’s Antitrust Reform Act,
Michigan’s Consumer Protection Act, California’s antitrust statute, and for fraud, and seeking damages, treble
damages, interest and attorneys’ fees, all in unspecified amounts, Oakland County, Michigan et al. v. McKesson
Corporation, (No. 1:09-CV-10843-PBS) (“Michigan Counties Action”). On August 4, 2009, the court granted the
Company’s motion to stay the Michigan Counties Action.
On March 4, 2011, the court entered an order granting, in part, and denying, in part, plaintiffs’ motion for class
certification in the Douglas County, Kansas Action. Specifically, the court certified a nationwide class comprised of
all non-federal and non-state governmental entities for liability and equitable relief for the period from August 1,
2001, to June 2, 2005, and for damages for the period August 1, 2001, to December 31, 2003. On March 30, 2011,
the court granted, in part, plaintiffs’ motion for reconsideration by extending the liability-only class period from
June 2, 2005, to October 6, 2006. On May 13, 2011, the United States Court of Appeals for the First Circuit denied
the Company’s petition and the plaintiffs’ cross-petition seeking permission to appeal the district court’s March 4,
2011 class certification order.
On June 28 and June 29, 2011, respectively, the Company executed settlement agreements with the States of
Oklahoma and Montana with respect to the claims those States asserted on behalf of their respective Medicaid
programs in the Douglas County, Kansas Action. On December 6, 2011, the Company executed a settlement
agreement with the State of Oklahoma with respect to the claims it asserted on behalf of the Oklahoma State and
Education Employees Group Insurance Board. Pursuant to these settlements, the court dismissed with prejudice all
claims asserted by the States of Oklahoma and Montana in the Douglas County, Kansas Action.
On October 25, 2011, the Company executed a settlement agreement with the certified class of plaintiffs in the
Douglas County, Kansas Action. The settlement provides that the Company will pay $82 million in settlement of all
claims on behalf of a nationwide class of cities, counties, and other non-federal and non-state governmental entities.
The settlement amount of $82 million is to be paid into a settlement escrow in installments following preliminary
and final approvals of the settlement by the court. The escrow account shall be used for settlement administration
costs, including notice, attorneys’ fees as approved by the court, and the remainder will be distributed to class
members in a manner determined by plaintiffs and subject to court approval. The settlement also provides that the
settlement class will release all claims against the Company relating to FDB’s allegedly inflated AWPs, whenever
such claims were incurred, and includes an express denial of any liability on the part of the Company.
The court granted preliminary approval of the settlement on November 8, 2011, and, on April 19, 2012, the
court granted final approval of the settlement and entered final judgment. To date, approximately $32 million has
been paid by the Company into the settlement escrow, and the balance of the $82 million is expected to be paid into
the settlement escrow during the first quarter of 2013.