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96
McKESSON CORPORATION
FINANCIAL NOTES (Continued)
The Arizona Administrative Proceeding
On November 5, 2010, the Company received a Notice of Proposed Civil Monetary Penalty from the Office of Inspector
General for the Arizona Health Care Cost Containment System (“AHCCCS”) purporting to initiate an administrative claim
process against the Company, and seeking civil penalties in the amount of $101 million and an assessment in the amount of
$112 million for false claims allegedly submitted to the Arizona Medicaid program (No. 2010-1218). On February 28, 2011,
the Company filed a complaint in Arizona Superior Court, County of Maricopa, against AHCCCS and its Director, alleging
that the administrative proceeding commenced by AHCCCS violates the Arizona Administrative Procedure Act and the Due
Process Clauses of the Arizona Constitution and the United States Constitution, and seeking to enjoin AHCCCS's
administrative proceeding, a declaratory judgment that AHCCCS lacks jurisdiction and legal authority to impose penalties or
assessments against the Company, as well as costs of suit, McKesson Corporation v. AHCCCS, (No. CV-2011-004446). On
April 28, 2011, the court ruled that AHCCCS has no jurisdiction to impose penalties or assessments against the Company and
enjoined AHCCCS from prosecuting the penalty proceeding against the Company. On May 31, 2011, the court entered final
judgment in favor of the Company.
On June 16, 2011, AHCCCS filed a notice of appeal. On September 6, 2012, the Arizona court of appeals issued an order
affirming the trial court's order enjoining AHCCCS from prosecuting the penalty proceeding against the Company. The time
for the filing of a petition for review has expired and no such petition was filed.
On November 9, 2012, the Company received a Revised Notice of Proposed Civil Monetary Penalty from the Office of
Inspector General for AHCCCS purporting to reinitiate the administrative proceeding against the Company, and seeking civil
penalties in the amount of $112 million and an assessment in the amount of $102 million for false claims allegedly submitted
to the Arizona Medicaid program. The Company intends to challenge the reinitiated proceeding and proposed penalty and
assessment by AHCCCS.
The Virginia Action
On June 8, 2011, an action was filed in the United States District Court for the Northern District of California by the
Commonwealth of Virginia against the Company and two of its employees asserting claims under RICO, Virginia's false
claims statute, Virginia's fraud statute, and for conspiracy to defraud, and seeking damages, treble damages, civil penalties,
interest, and costs of suit, all in unspecified amounts, Commonwealth of Virginia v. McKesson Corporation, et al., (C11-
02782-SI). On October 13, 2011, the court denied the Company's motion to dismiss the Commonwealth's complaint. On
March 28, 2013, the court granted the two individual defendants' motion for summary judgment on all claims asserted against
them. Discovery is ongoing, and trial is set for November 18, 2013.
Shareholder Derivative Action
On September 10, 2012, a derivative action was filed in California Superior Court, San Francisco County, by a
shareholder purportedly on behalf of the Company against certain past and present officers and directors of the Company,
alleging that they breached their fiduciary duties and wasted Company assets by failing to prevent the underlying conduct that
resulted in the Company's AWP litigation, and seeking damages, corporate governance and procedural reforms, equitable and
injunctive relief, restitution, disgorgement of profits, as well as attorneys' fees and costs of suit, all in unspecified amounts,
Daniel Himmel v. John Hammergren et al., (12-524074). On April 12, 2013, the Company filed a motion to dismiss the
complaint. The hearing on the Company's motion is set for June 28, 2013.
The Arizona Action
On September 14, 2012, an action was filed in Arizona state court, Maricopa County, by the State of Arizona against the
Company asserting claims under the Arizona Consumer Fraud Act, and seeking injunctive relief, restitution, civil penalties, as
well as attorneys' fees and costs of suit, all in unspecified amounts, State of Arizona ex rel. Thomas Horne v. McKesson
Corporation, (2012-013707). On November 7, 2012, the Company filed a motion to dismiss the complaint. The hearing on
the Company's motion is set for May 10, 2013.