Rite Aid 2016 Annual Report Download - page 145

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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended February 27, 2016, February 28, 2015 and March 1, 2014
(In thousands, except per share amounts)
21. Commitments, Contingencies and Guarantees (Continued)
the tolling agreement until April 7, 2016. At this stage of the proceedings, Rite Aid is unable to predict
the outcome of any review by the government of such information.
On April 26, 2012, the Company received an administrative subpoena from the U.S. Drug
Enforcement Administration (‘‘DEA’’), Albany, New York District Office, requesting information
regarding the Company’s sale of products containing pseudoephedrine (‘‘PSE’’). In April 2012, it also
received a communication from the U.S. Attorney’s Office (‘‘USAO’’) for the Northern District of
New York concerning an investigation of possible civil violations of the Combat Methamphetamine
Epidemic Act of 2005 (‘‘CMEA’’). Additional subpoenas were issued in 2013, 2014, and 2015 seeking
broader documentation regarding PSE sales and recordkeeping requirements. Assistant U.S. Attorneys
from the Northern and Eastern Districts of New York and the Southern District of West Virginia are
currently investigating, but no charges have been filed. On September 2, 2015 and March 11, 2016, the
Company received grand jury subpoenas from the U.S. District Court for the Southern District of West
Virginia seeking additional information in connection with the investigation of violations of the CMEA
and/or the Controlled Substances Act (‘‘CSA’’). Violations of the CMEA or the CSA could result in the
imposition of administrative, civil and/or criminal penalties against the Company. The Company is
cooperating with the government and continues to provide information responsive to the subpoenas.
The Company has entered into a tolling agreement with the USAOs in the Northern and Eastern
Districts of New York and entered into a separate tolling agreement with the USAO in the Southern
District of West Virginia. Discussions are underway to resolve these matters with those USAOs, but
whether an agreement can be reached and on what terms is uncertain. While the Company’s
management cannot predict the outcome of these matters, it is possible that the Company’s results of
operations or cash flows could be materially affected by an unfavorable resolution. At this stage of the
investigation, Rite Aid is unable to predict the outcome of the investigation.
In January 2013, the DEA, Los Angeles District Office, served an administrative subpoena on the
Company seeking documents related to prescriptions by a certain prescriber. The USAO, Central
District of California, also contacted the Company about a related investigation into allegations that
Rite Aid pharmacies filled certain controlled substance prescriptions for a number of practitioners after
their DEA registrations had expired or otherwise become invalid in violation of the federal Controlled
Substances Act and DEA regulations. The Company responded to the administrative subpoena and
subsequent informal requests for information from the USAO. The Company met with the USAO and
DEA in January 2014 and is involved in ongoing discussions with the government regarding this matter.
The Company has entered into a tolling agreement with the USAO. The Company recorded a legal
accrual during the period ended March 1, 2014, which was revised during the period ending August 29,
2015. However, Rite Aid cannot predict at this time whether an agreement can be reached and the
terms of any agreement.
The Company was served with a Civil Investigative Demand (‘‘CID’’) dated June 21, 2013 by the
USAO for the Eastern District of California and the Attorney General’s Office of the State of
California (the ‘‘AG’’). The CID requested records and responses to interrogatories regarding Rite
Aid’s Drug Utilization Review and prescription dispensing protocol and the dispensing of drugs
designated ‘‘Code 1’’ by the State of California. The Company produced responsive documents and
interrogatory responses to the USAO and AG. The Company and the government are in the process of
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