Rite Aid 2012 Annual Report Download - page 111

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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended March 3, 2012, February 26, 2011 and February 27, 2010
(In thousands, except per share amounts)
16. Commitments, Contingencies and Guarantees (Continued)
The Company was served with a Civil Investigative Demand Subpoena Duces Tecum dated
August 26, 2011 by the United States Attorney’s Office for the Eastern District of Michigan. The
subpoena requests records regarding the relationship of Rite Aid’s Rx Savings Program to the reporting
of usual and customary charges to publicly funded health programs. The Company is in the process of
communicating with the U.S. Attorney’s Office regarding the scope of the subpoena and is unable to
predict with certainty the timing or outcome of any review by the government of such information.
The Company is subject from time to time to various claims and lawsuits and governmental
investigations arising in the ordinary course of our business. While the Company’s management cannot
predict the outcome of these claims with certainty, the Company’s management does not believe that
the outcome of any of these legal matters will have a material effect on its financial statements.
Contingencies:
The California Department of Health Care Services (‘‘DHCS’’), the agency responsible for
administering the State of California Medicaid program, recently implemented retroactive
reimbursement rate reductions impacting the medical provider community in California, including
pharmacies. Numerous medical providers, including representatives of both chain and independent
pharmacies, filed suits against DHCS in federal district court in California and have obtained
preliminary injunctions against the rate cuts, subject to a trial on the merits. DHCS is appealing the
preliminary injunctions to the Ninth Circuit Court of Appeals. Based upon the actions of DHCS, the
Company has recorded the appropriate accrual, which is not material. As pertinent facts and
circumstances develop, these accruals may be adjusted.
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