Medco 2014 Annual Report Download - page 34

Express Scripts 2014 Annual Report
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prohibitingunfairbusinesspractices.Reliefdemandedincludes,amongotherthings,trebledamages,restitution,
disgorgementofunlawfullyobtainedprofitsandinjunctiverelief.Currently,ESI’smotiontodecertifytheclassinthe
BradyEnterprisescaseispendingsinceoralargumentswereheldinJanuary2012.
• UnitedStatesofAmericaex.rel.LucasW.MathenyandDeborahLovelandvs.MedcoHealthSolutions,Inc.,etal.
(UnitedStatesDistrictCourtfortheSouthernDistrictofFlorida)(unsealedMarch2010).Thisquitammatterrelates
toMedco'sformersubsidiary,PolyMedicaCorporationanditssubsidiaries(“PolyMedica”),andthegovernment
declinedtointervene.ThecomplaintallegesthatPolyMedicaviolatedtheFalseClaimsActthroughaccounting
practicesofapplyinginvoicepaymentstoaccountsreceivable.Thecomplaintseeksmonetarydamages,aswellas
costsandexpenses. Afterthedistrictcourtdismissedtheaction,inFebruary22,2012,theEleventhCircuitCourtof
Appealsreversedthedismissalanddirectedthedistrictcourttoreinstatetwooftheclaims.
InDecember2012,MedcosoldPolyMedica,includingallassetsandliabilities,toFGSTInvestments,Inc.In
February2013,ATLSAcquisitionLLC,aholdingcompany,andPolyMedica(ATLSAcquisitionLLCand
PolyMedicaarecollectivelyreferredtoas“Debtors”),filedforChapter11bankruptcyprotectionintheUnitedStates
BankruptcyCourtfortheDistrictofDelaware,resultinginanautomaticstayofthiscase,whichhasbeenextendedto
Medco.InMay2013,thedistrictcourtenteredanorderacknowledgingthestay,closingthecaseforadministrative
purposespendingthebankruptcyaction,anddenyingallmotionsasmoot.InFebruary2014,thebankruptcycourt
grantedDebtors’motionforsummaryjudgmentonallrelators’claimsinfull,butthecaseremainsstayedwithrespect
toMedco.
• UnitedStatesexrel.DavidMorganv.ExpressScripts,Inc.,FirstDatabank,Inc.,AmerisourceBergenCorp.,Cardinal
Health,Inc.,Caremark,Inc.,McKessonCorp.,MedcoHealthSolutions,Inc.,Medi-Span,andJohnDoeCorporation
1-20,(UnitedStatesDistrictCourtfortheDistrictofNewJersey)(unsealedDecember2012).Thisisaquitam
lawsuitinwhichthegovernmentdeclinedtointerveneagainstdefendants.Morgan,thequitamrelator,serveda
complaintonESIandMedcoinJanuary2013.MorganallegesclaimsunderthefederalFalseClaimsActandthefalse
claimsactsoftwenty-twostates.Theallegationsasserteddealprimarilywithanallegedconspiracyamongother
defendantstoinflatethepublishedaveragewholesaleprice(“AWP”)ofcertaindrugs.Morgangenerallyallegesthat
ESIandMedcowereawareoftheallegedAWPinflationandsubmittedfalseclaimstothegovernment,orcaused
falseclaimstobesubmittedtothegovernment,byfailingtodisclosetheallegedAWPinflation totheirgovernment
healthcareprogramclientsinviolationofanallegedfiduciarydutyand/orinviolationofallegedcontractual
obligations.MorganalsoallegesthatESIandMedcofailedtoproperlyprocessand/oradjudicateclaimsforpayment
forprescriptiondrugsdispensedtofederalhealthcarebeneficiaries,whichallegedlyresultedinthesubmissiontothe
governmentoffalseclaimsforpayment.Thecomplaintseeksmonetarydamages,aswellascostsandexpenses. In
April2013,ESIandMedcofiledamotiontodismissthecomplaintforfailuretostateaclaim,whichwasgrantedin
December2013.FollowingMorgan’sappealtotheUnitedStatesCourtofAppealsfortheThirdCircuit,oral
argumentwasheardonNovember21,2014.OnFebruary20,2015,theThirdCircuitCourtofAppealsdenied
Morgan’sappealandaffirmedthedistrictcourt’sdismissalofthecomplaint.
• UnitedStatesexrel.SteveGreenfield,etal.v.MedcoHealthSolutions,Inc.,AccredoHealthGroup,Inc.,and
HemophiliaHealthServices,Inc.,(UnitedStatesDistrictCourtfortheDistrictofNewJersey)(unsealedFebruary
2013).ThisquitamcasewasfiledundersealinJanuary2012andthegovernmentdeclinedtointervene.The
complaintallegesthatdefendants,includingMedcoandAccredoHealthGroup,Inc.(forpurposesofthisItem3,
“Accredo”)violatedthefederalFalseClaimsAct,theAnti-KickbackStatute,andvariousstateandlocalfalseclaims
statuteswhentheymadecharitablecontributionstonon-profitorganizationssupportinghemophiliapatientsthatwere
allegedlyimproperrewardsorinducementsforreferralsofhemophiliapatientstoAccredo'spharmacyservices.The
complaintfurtherallegesthatAccredogavegiftstopatientsand/ortheirfamiliesthatwereinexcessofthe“nominal”
giftsallegedlyallowedundertheCivilMonetaryPenaltyStatuteandwereallegedlyimproperrewardsorinducements
fortheuseofAccredo'spharmacyservices.Thecomplaintseeksmonetarydamagesandcivilmonetarypenaltieson
behalfofthefederalgovernment,aswellascostsandexpenses.InDecember2013,thecourtgranteddefendants’
motiontodismissrelatingtoGreenfield’sfederalclaimsanddeclinedtoexercisejurisdictionoverhisstatelaw
claims.InJanuary2014,Greenfieldfiledanamendedcomplaintinwhichheassertsclaimssimilartothosepreviously
pled,butallegesthatAccredogavegiftstopatientsand/ortheirfamiliesinviolationofthefederalAnti-Kickback
StatuteasopposedtotheCivilMonetaryPenaltyStatute.InSeptember2014,thecourtgrantedinpart,anddeniedin
part,defendants’motiontodismiss.GreenfieldfiledafurtheramendedcomplaintinOctober2014,andtheCompany
filedananswerandaffirmativedefensesinNovember2014.
• UnitedStatesexrel.DavidM.Kester,etal.v.NovartisPharmaceuticalsCorp.,AccredoHealthGroup,Inc.,BioScrip
Corp.,CuraScript,Inc.,CVSCaremarkCorp.(UnitedStatesDistrictCourtfortheSouthernDistrictofNewYork)
(unsealedJanuary2014).ThisquitamcasewasfiledundersealinApril2013.Thefederalgovernmentintervened
againstdefendantsNovartisPharmaceuticalsCorp.(“Novartis”)andBioScrip,Inc.(“BioScrip”),anddeclinedto
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