This excerpt taken from the MHS 10-Q filed May 2, 2007.
PART II - OTHER INFORMATION
Descriptions of certain legal proceedings to which the Company is a party are contained in Note 9, Commitments and Contingencies, to the unaudited interim condensed consolidated financial statements included in Part I of this Quarterly Report on Form 10-Q. Such descriptions include the following recent developments:
In April 2003, a lawsuit captioned Peabody Energy Corporation (Peabody) v. Medco Health Solutions, Inc., et al. was filed in the U.S. District Court for the Eastern District of Missouri. The complaint, filed by one of the Companys former clients, relies on allegations similar to those in the ERISA cases discussed in Note 9, Commitments and Contingencies, to the unaudited interim condensed consolidated financial statements included in Part I of this Quarterly Report on Form 10-Q, in addition to allegations relating specifically to Peabody, which has elected to opt out of the settlement described in the aforementioned Note 9. In December 2003, Peabody filed a similar action against Merck in the U.S. District Court for the Eastern District of Missouri. Both of these actions were transferred to the U.S. District Court for the Southern District of New York to be consolidated with the ERISA cases pending against Merck and the Company in that court. On March 21, 2007, the Company settled these two matters.
In September 2004, the Companys former client, Horizon Blue Cross Blue Shield of New Jersey (Horizon), filed an action in the Superior Court of New Jersey, Bergen County, alleging, among other things, that the Company breached its contract with Horizon in various respects. The Company denied Horizons allegations and filed counterclaims against Horizon. A bench trial was conducted in late February and early March of 2007, after which the court dismissed all claims and counterclaims.
Reference is made to the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 30, 2006. There have been no material changes with regard to the risk factors disclosed in such Form 10-K.
On February 21, 2007, the Company announced that its Board of Directors had authorized the expansion of the Companys share repurchase plan by an incremental $3 billion to be repurchased over the next two years, bringing the amount authorized under such repurchase plan to a cumulative total of $5.5 billion. The original share repurchase plan, which was approved in August 2005, authorized share repurchases of $500 million. The plan was increased in $1 billion increments in December 2005 and November 2006. The Companys Board of Directors periodically reviews the program and approves trading parameters.
The following is a summary of the Companys share repurchase activity for the three months ended March 31, 2007:
This excerpt taken from the MHS 10-Q filed Nov 3, 2005.
PART II - OTHER INFORMATION
A description of certain legal proceedings to which the Company is a party is contained in Note 13, Commitments and Contingencies, to the unaudited interim condensed consolidated financial statements included in Part I of this Quarterly Report on Form 10-Q.
On August 22, 2005, the Company announced that its Board of Directors had authorized a stock repurchase program to purchase up to $500 million of its common stock in the open market over the next two years. The following is a summary of the Companys stock repurchase activity from August 22, 2005 to September 24, 2005 (share data in thousands):
This excerpt taken from the MHS 10-Q filed Apr 29, 2005.
PART II - OTHER INFORMATION
A description of certain legal proceedings to which the Company is a party is contained in Note 8 to the unaudited interim condensed consolidated financial statements included in Part I of this Quarterly Report on Form 10-Q. Such description includes the following recent developments:
In January 2005, the Company received a letter from the U.S. Attorneys Office for the Eastern District of Pennsylvania requesting information and representations regarding Medcos Medicare coordination of benefits recovery program. The Company and the U.S. Attorneys Office are in discussions regarding the request.
On March 17, 2003, a lawsuit captioned American Federation of State, County and Municipal Employees (AFSCME) v. Advance PCS et al. based on allegations similar to those in the ERISA cases discussed above, was filed against the Company and other major PBMs in the Superior Court of California. The theory of liability in this action is based on a California law prohibiting unfair business practices. The plaintiff, which purports to sue on behalf of itself, California non-ERISA health plans, and all individual participants in such plans, seeks injunctive relief and disgorgement of revenues that were allegedly improperly received by the Company. On March 4, 2005, the court in the AFSCME case dismissed that action with prejudice.
On October 25, 2002, the Company filed a declaratory judgment action, captioned Medco Health Solutions, Inc. v. West Virginia Public Employees Insurance Agency, in the Circuit Court of Kanawha County, West Virginia, asserting the Companys right to retain certain cost savings in accordance with the Companys written agreement with the West Virginia Public Employees Insurance Agency, or PEIA. On November 13, 2002, the State of West Virginia and PEIA filed a separate lawsuit against Merck and the Company, also in the Circuit Court of Kanawha County, West Virginia. This action was premised on several state law theories, including violations of the West Virginia Consumer Credit and Protection Act, conspiracy, tortious interference, unjust enrichment, accounting, fraud and breach of contract. The State of West Virginia and PEIA sought civil penalties; compensatory and punitive damages, and injunctive relief. In March 2003, in the declaratory judgment action, PEIA filed a counterclaim, and the State of West Virginia, which was joined as a party, filed a third-party complaint against the Company and Merck, raising the same allegations asserted by PEIA and the State of West Virginia in their November 2002 action described above. The Company and Merck filed a motion to dismiss the November 2002 action filed by the State of West Virginia and PEIA, and also filed a motion to dismiss the counterclaim and third-party complaint filed by the State of West Virginia and PEIA in the Companys declaratory judgment action. On November 6, 2003, the court granted the motion to dismiss the Consumer Protection Act claims and certain other state law claims, including the claims for conspiracy and tortious interference. The court also dismissed without prejudice the various fraud claims. The court denied the motion to dismiss with respect to the claims for breach of contract, accounting and unjust enrichment. On December 2, 2003, PEIA filed an amended counterclaim and third-party complaint against Merck and the Company, seeking to reassert its fraud claims and restate certain of its other claims. In October of 2004, Medco filed a motion seeking declaratory relief and partial summary judgment on certain of PEIAs counterclaims. Shortly thereafter, Medco filed a second motion for summary judgment on PEIAs fraud counterclaims based on statute of limitations grounds. On April 8, 2005, the court issued preliminary findings granting Medcos declaratory relief and summary judgment relating to any breach of contract claims based on an alleged fiduciary relationship or rights of a third party beneficiary. The court denied Medcos summary judgment motion on PEIAs fraud counterclaims. The litigation is progressing with fact discovery.
On April 13, 2005, the Company received from the Attorney General of the State of Texas a request for information in connection with the Attorney Generals investigation of whether pharmacy benefits management companies are enforcing or relying on certain plan limitations to reject, deny or reduce payment on requests for Medicaid reimbursement made to PBMs by or on behalf of a state Medicaid agency. Medco believes that its business practices comply with all applicable laws and regulations and intends to provide the requested information.
In 2003, the State of Maine enacted a statute entitled the Unfair Prescription Drug Practices Act (the MUPDPA), which imposed fiduciary obligations upon pharmacy benefit managers. In September 2003, the PBM trade association,
Pharmaceutical Care Management Association (PCMA), of which the Company is a member, filed an action seeking to enjoin enforcement of the MUPDPA. On March 9, 2004, the United States District Court for the District of Maine granted PCMAs motion for a preliminary injunction and preliminarily enjoined the law from taking effect. In October 2004, PCMA and the Maine Attorney General filed motions for summary judgment. On February 2, 2005, a magistrate judge recommended that the court grant the Attorney Generals motion and deny PCMAs motion for summary judgment, on the ground, among other reasons, that the federal Employee Retirement Income Security Act did not pre-empt the MUPDPA. On April 13, 2005, the district court adopted the magistrates decision and entered judgment in favor of the Attorney General, allowing the law to take effect. PCMA has appealed the ruling to the United States Court of Appeals for the First Circuit. If the judgment is upheld, it could have a materially adverse effect on the Companys ability to conduct its business on commercially reasonable terms in Maine.