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These excerpts taken from the BIOS 10-K filed Mar 7, 2008. Legal
Proceedings
On February 14, 2005, a complaint was filed in the Alabama
Circuit Court for Barbour County, captioned Eufaula Drugs,
Inc. v. ScriptSolutions [sic], one of approximately
fourteen substantially identical complaints commenced in Alabama
courts against various unrelated pharmacy benefit management
companies. On April 8, 2005, the plaintiff filed an amended
complaint substituting the Company’s, BioScrip PBM Services
f/k/a ScripSolutions (“PBM Services”) subsidiary as
the defendant, alleging breach of contract and related tort and
equitable claims on behalf of a putative nationwide class of
pharmacies alleging insufficient reimbursement for prescriptions
dispensed, principally on the theory that PBM Services was
obligated to update its prescription pricing files on a daily
rather than weekly basis. The complaint seeks unspecified money
damages and injunctive relief. PBM Services sought
unsuccessfully to remove the action to Federal court. On
February 5, 2007, the court denied PBM Services’
motion to dismiss the action for lack of jurisdiction and
failure to state a claim, and on February 16, 2007, PBM
Services answered the complaint denying the material
allegations. The parties are now engaged in discovery into the
question of class certification only. BioScrip intends to deny
the allegations and intends to defend vigorously against the
action. While the Company is confident in its position, it does
not believe that an adverse ruling in this matter would have a
material adverse effect on its business, operations, financial
position or results of operations.
The U.S. Attorney’s Office in Boston and the
Department of Justice informed the Company that its Chronimed
Holdings, Inc. d/b/a StatScript Pharmacy
(“StatScript”) subsidiary, was named as a defendant in
a qui tam law suit filed by a whistleblower against
Serono, Inc., and several other defendants in the Federal
district court for the District of Massachusetts alleging claims
under the Federal False Claims Act. In May 2007, the complaint
was
BIOSCRIP,
INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
served on the Company and other defendants by the relators
because the Federal government and various state governments on
behalf of which the relators alleged claims declined to
intervene to prosecute the claims and the Federal government
decided not to pursue earlier conversations it had initiated
into possible settlement of the claims alleged in the
relators’ complaint. The action is captioned United
States ex rel. Driscoll, et al. v. Serono, Inc., et al.,
Civil Action
No. 00-11680GAO
(D. Mass.). The complaint alleges that the Company and other
defendant pharmacy companies violated the Federal False Claims
Act and various states’ false claims-like acts by receiving
from Serono but not reporting in unspecified Medicare and
Medicaid reimbursement claims alleged discounts on certain
purchases of Serono’s product, Serostim. The Company and
numerous other defendants moved to dismiss the complaint with
prejudice for failure to state a claim, failure to plead with
particularity, expiration of the statute of limitations, and
other grounds. The court heard oral argument on the dismissal
motions in January 2008 and a decision is expected soon. There
have been no other proceedings in the action. The Company denies
the allegations and intends to defend vigorously against them.
Given the preliminary stage of these matters, the Company is
unable to assess the probable outcomes of these proceedings or
their financial impact.
In July 2007, a complaint was filed in Federal court in the
Southern District of Ohio naming the Company’s subsidiary,
Chronimed Holdings, Inc. as a defendant. The plaintiffs are
several members of the DiCello family who sold all the stock of
an Ohio pharmacy company known as Northland to BioScrip in 2005.
The action is captioned JDP, Inc., et al. v. Chronimed
Holdings, Inc., Civil Action No. 2:07:646 (Frost). The
complaint alleges that the plaintiffs were entitled to receive
an additional purchase price payment in 2007 under the stock
purchase agreement based on Northland’s 2006 EBITDA, a
position the Company disputes, and the complaint seeks damages
of at least $5.64 million and other relief under several
legal theories. The Company moved to stay the lawsuit and compel
arbitration of the disagreement under the terms of the stock
purchase agreement. The district court denied the motion to
compel arbitration but granted a stay pending the Company’s
appeal of the denial to the Sixth Circuit Court of Appeals,
where briefing on the motion to compel arbitration has been
completed. It is expected that the appellate court will schedule
oral argument on the appeal shortly. There have been no other
proceedings in the action. The Company denies the allegations
and intends to defend vigorously against the matters. While the
Company is confident in its position, an adverse ruling in this
matter would not have a material adverse effect on its business,
operations or financial position.
Legal Proceedings On February 14, 2005, a complaint was filed in the Alabama Circuit Court for Barbour County, captioned Eufaula Drugs, Inc. v. ScriptSolutions [sic], one of approximately fourteen substantially identical complaints commenced in Alabama courts against various unrelated pharmacy benefit management companies. On April 8, 2005, the plaintiff filed an amended complaint substituting the Company’s, BioScrip PBM Services f/k/a ScripSolutions (“PBM Services”) subsidiary as the defendant, alleging breach of contract and related tort and equitable claims on behalf of a putative nationwide class of pharmacies alleging insufficient reimbursement for prescriptions dispensed, principally on the theory that PBM Services was obligated to update its prescription pricing files on a daily rather than weekly basis. The complaint seeks unspecified money damages and injunctive relief. PBM Services sought unsuccessfully to remove the action to Federal court. On February 5, 2007, the court denied PBM Services’ motion to dismiss the action for lack of jurisdiction and failure to state a claim, and on February 16, 2007, PBM Services answered the complaint denying the material allegations. The parties are now engaged in discovery into the question of class certification only. BioScrip intends to deny the allegations and intends to defend vigorously against the action. While the Company is confident in its position, it does not believe that an adverse ruling in this matter would have a material adverse effect on its business, operations, financial position or results of operations. The U.S. Attorney’s Office in Boston and the Department of Justice informed the Company that its Chronimed Holdings, Inc. d/b/a StatScript Pharmacy (“StatScript”) subsidiary, was named as a defendant in a qui tam law suit filed by a whistleblower against Serono, Inc., and several other defendants in the Federal district court for the District of Massachusetts alleging claims under the Federal False Claims Act. In May 2007, the complaint was
BIOSCRIP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) served on the Company and other defendants by the relators because the Federal government and various state governments on behalf of which the relators alleged claims declined to intervene to prosecute the claims and the Federal government decided not to pursue earlier conversations it had initiated into possible settlement of the claims alleged in the relators’ complaint. The action is captioned United States ex rel. Driscoll, et al. v. Serono, Inc., et al., Civil Action No. 00-11680GAO (D. Mass.). The complaint alleges that the Company and other defendant pharmacy companies violated the Federal False Claims Act and various states’ false claims-like acts by receiving from Serono but not reporting in unspecified Medicare and Medicaid reimbursement claims alleged discounts on certain purchases of Serono’s product, Serostim. The Company and numerous other defendants moved to dismiss the complaint with prejudice for failure to state a claim, failure to plead with particularity, expiration of the statute of limitations, and other grounds. The court heard oral argument on the dismissal motions in January 2008 and a decision is expected soon. There have been no other proceedings in the action. The Company denies the allegations and intends to defend vigorously against them. Given the preliminary stage of these matters, the Company is unable to assess the probable outcomes of these proceedings or their financial impact. In July 2007, a complaint was filed in Federal court in the Southern District of Ohio naming the Company’s subsidiary, Chronimed Holdings, Inc. as a defendant. The plaintiffs are several members of the DiCello family who sold all the stock of an Ohio pharmacy company known as Northland to BioScrip in 2005. The action is captioned JDP, Inc., et al. v. Chronimed Holdings, Inc., Civil Action No. 2:07:646 (Frost). The complaint alleges that the plaintiffs were entitled to receive an additional purchase price payment in 2007 under the stock purchase agreement based on Northland’s 2006 EBITDA, a position the Company disputes, and the complaint seeks damages of at least $5.64 million and other relief under several legal theories. The Company moved to stay the lawsuit and compel arbitration of the disagreement under the terms of the stock purchase agreement. The district court denied the motion to compel arbitration but granted a stay pending the Company’s appeal of the denial to the Sixth Circuit Court of Appeals, where briefing on the motion to compel arbitration has been completed. It is expected that the appellate court will schedule oral argument on the appeal shortly. There have been no other proceedings in the action. The Company denies the allegations and intends to defend vigorously against the matters. While the Company is confident in its position, an adverse ruling in this matter would not have a material adverse effect on its business, operations or financial position. | EXCERPTS ON THIS PAGE:
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