McKesson 2013 Annual Report Download - page 103

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
The Wisconsin Action
On October 2, 2012, an action was filed in Wisconsin state court, Dane County, by the State of Wisconsin against the
Company, FDB, the Hearst Corporation, and Hearst Business Media asserting claims under Wisconsin consumer protection
and false claims statutes, and for civil conspiracy, and seeking damages, treble damages, civil penalties, forfeitures, injunctive
relief, as well as attorneys' fees and costs of suit, all in unspecified amounts, State of Wisconsin v. McKesson Corporation, et
al., (12CV3948). On April 8, 2013, the Company entered into a settlement agreement with the State of Wisconsin. On April
23, 2013, the Court entered an order dismissing with prejudice the claims asserted against the Company in the Wisconsin
Action.
The New Jersey Qui Tam AWP Action
In June 2007, the Company was informed that a relator had previously filed a qui tam action in the United States District
Court for the District of New Jersey, purportedly on behalf of the United States, twelve states (California, Delaware, Florida,
Hawaii, Illinois, Louisiana, Massachusetts, Nevada, New Mexico, Tennessee, Texas and Virginia) and the District of
Columbia against the Company and seven other defendants. In January 2009, the Company was provided with a courtesy
copy of the relator's third amended complaint, which alleges claims against the Company and seven other defendants under
the False Claims Act and various state false claims statutes. The claims arise out of alleged manipulation of AWP by the
defendants. This qui tam action was brought on behalf of the United States and various states, and seeks damages, treble
damages and civil penalties, as well as attorneys' fees and costs of suit.
On June 11, 2012, pursuant to the Company's previously reported settlement agreement with the United States
Department of Justice, the court entered an order which became effective on July 11, 2012, dismissing with prejudice the
claims asserted against Company on behalf of the United States to the extent those claims were encompassed by the
settlement release in the written settlement agreement between the Company and the United States. On September 17, 2012,
the states that participated in the previously reported settlement sponsored by the coalition of Attorneys General and on whose
behalf claims were filed against the Company in the New Jersey qui tam action filed a notice dismissing those claims to the
extent those claims were encompassed by the settlement release in the parties' agreements.
The Company has a reserve relating to AWP public entity claims, which is reviewed at least quarterly and whenever
events or circumstances indicate changes, including consideration of the pace and progress of discussions relating to
potentially resolving other public entity claims. Pre-tax charges relating to changes in the Company's AWP litigation reserve,
including accrued interest, are recorded in the Distribution Solutions segment. The Company's AWP litigation reserve is
included in other current liabilities in the consolidated balance sheets. In view of the number of outstanding cases and
expected future claims, and the uncertainties of the timing and outcome of this type of litigation, it is possible that the ultimate
costs of these matters may exceed or be less than the reserve.
The following is the activity related to the AWP litigation reserve for the years ended March 31, 2013, 2012 and 2011:
Years Ended March 31,
(In millions) 2013 2012 2011
AWP litigation reserve at beginning of period $ 453 $ 330 $ 143
Charges incurred 72 149 213
Payments made (483)(26) (26)
AWP litigation reserve at end of period $ 42 $ 453 $ 330
The charges for 2013 primarily related to state Medicaid claims. The charges for 2012 primarily related to the Douglas
County, Kansas Action settlement and the state and federal Medicaid claims. The charges for 2011 primarily related to the
state and federal Medicaid claims.