WebMD Health (WBMD)

 

WEBMD HEALTH CORP.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

was employed until February 2002; Lee A. Robbins, a former Vice President and Chief Financial Officer of Medical Manager Health Systems, who was employed until September 2000; John P. Sessions, a former President and Chief Operating Officer of Medical Manager Health Systems, who was employed until September 2003; Michael A. Singer, a former Chief Executive Officer of Medical Manager Health Systems and a former director of HLTH, who was most recently employed by HLTH as its Executive Vice President, Physician Software Strategies until February 2005; and David Ward, a former Vice President of Medical Manager Health Systems, who was employed until June 2005. The Indictment charges the persons listed above with conspiracy to commit mail, wire and securities fraud, a violation of Title 18, United States Code, Section 371 and conspiracy to commit money laundering, a violation of Title 18, United States Code, Section 1956(h). The indictment charges Messrs. Sessions and Ward with substantive counts of money laundering, violations of Title 18, United States Code, Section 1957. The allegations set forth in the Indictment describe activities that are substantially similar to those described above with respect to the January 2005 plea agreements.

 

On February 27, 2007, the United States Attorney filed a Second Superseding Indictment with respect to the former officers and employees of Medical Manager Health Systems charged under the prior Indictment, other than Mr. Juzang. The allegations set forth in the Second Superseding Indictment are substantially similar to those described above. The trial of the indicted former officers and directors of Medical Manager Health Systems has been scheduled for May 4, 2009. Mr. Robbins passed away on September 27, 2008 and on October 15, 2008 the court granted a motion to dismiss Mr. Robbins from the Second Superseding Indictment.

 

Based on the information it has obtained to date, including that contained in the court documents filed by the United States Attorney in South Carolina, HLTH does not believe that any member of its senior management whose duties were not primarily related to the operations of Medical Manager Health Systems during the relevant time periods engaged in any of the violations or improprieties described in those court documents. HLTH understands, however, that in light of the nature of the allegations involved, the U.S. Attorney’s office has been investigating all levels of HLTH’s management. Some members of the Company’s senior management are also serving or have served as members of senior management of HLTH. In the event members of the Company’s senior management were to be implicated in any wrongdoing, it could have an adverse impact on the Company.

 

HLTH understands that the SEC is also conducting a formal investigation into this matter.

 

The terms of an indemnity agreement between HLTH and the Company provide that HLTH will indemnify the Company against any and all liabilities arising from or based on this investigation.

 

Other Legal Proceedings

 

In the normal course of business, the Company and its subsidiaries are involved in various other claims and legal proceedings. While the ultimate resolution of these matters has yet to be determined, the Company does not believe that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

 

 

WEBMD HEALTH CORP.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Title 18, United States Code, Section 371 and conspiracy to commit money laundering, a violation of Title 18, United States Code, Section 1956(h). The indictment charges Messrs. Sessions and Ward with substantive counts of money laundering, violations of Title 18, United States Code, Section 1957. The allegations set forth in the Indictment describe activities that are substantially similar to those described above with respect to the January 2005 plea agreements.

 

On February 27, 2007, the United States Attorney filed a Second Superseding Indictment with respect to the former officers and employees of Medical Manager Health Systems charged under the prior Indictment, other than Mr. Juzang. The allegations set forth in the Second Superseding Indictment are substantially similar to those described above. The trial of the indicted former officers and directors of Medical Manager Health Systems has been scheduled for May 4, 2009. Mr. Robbins passed away on September 27, 2008 and on October 15, 2008 the court granted a motion to dismiss Mr. Robbins from the Second Superseding Indictment.

 

Based on the information it has obtained to date, including that contained in the court documents filed by the United States Attorney in South Carolina, HLTH does not believe that any member of its senior management whose duties were not primarily related to the operations of Medical Manager Health Systems during the relevant time periods engaged in any of the violations or improprieties described in those court documents. HLTH understands, however, that in light of the nature of the allegations involved, the U.S. Attorney’s office has been investigating all levels of HLTH’s management. Some members of the Company’s senior management are also serving or have served as members of senior management of HLTH. In the event members of the Company’s senior management were to be implicated in any wrongdoing, it could have an adverse impact on the Company.

 

HLTH understands that the SEC is also conducting a formal investigation into this matter.

 

The terms of an indemnity agreement between HLTH and the Company provide that HLTH will indemnify the Company against any and all liabilities arising from or based on this investigation.

 

Other Legal Proceedings

 

In the normal course of business, the Company and its subsidiaries are involved in various other claims and legal proceedings. While the ultimate resolution of these matters has yet to be determined, the Company does not believe that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

 

 

Department of Justice and SEC Investigations of
HLTH

 

As previously disclosed, the United States Attorney for the
District of South Carolina is conducting an investigation of
HLTH, which HLTH first learned about on September 3, 2003.
Based on the information available to HLTH, it believes that the
investigation relates principally to issues of financial
accounting improprieties for Medical Manager Corporation, a
predecessor of HLTH (by its merger into HLTH in September 2000),
and, more specifically, its Medical Manager Health Systems, Inc.
subsidiary. Medical Manager Health Systems was a predecessor to
Emdeon Practice Services, Inc., a subsidiary that HLTH sold to
Sage Software, Inc. in September 2006.

 

While HLTH is not sure of the investigation’s exact scope,
it does not believe that the investigation relates to the
business of our company or any of our subsidiaries. HLTH
believes that the investigation relates principally to issues of
financial accounting improprieties relating to Medical Manager
Health Systems, including activities that artificially inflated
revenues and earnings of Medical Manager Health Systems. HLTH
has been cooperating and intends to continue to cooperate fully
with the U.S. Attorney’s Office. HLTH’s Board of
Directors has formed a Special Committee consisting solely of
independent directors to oversee this matter, with the sole
authority to direct HLTH’s response to the allegations that
have been raised.

 

In January 2005, certain former employees of Emdeon Practice
Services agreed to plead guilty to mail fraud and tax evasion as
a result of the investigation by the U.S. Attorney.
According to the Informations, Plea Agreements and Factual
Summaries filed by the U.S. Attorney in, and available
from, the District Court of the United States for the District
of South Carolina — Beaufort Division, on
January 7, 2005, the three former employees and other then
unnamed co-schemers were engaged in schemes between 1997 and
2002 that included causing companies acquired by Medical Manager
Health Systems to pay the former vice president in charge of
acquisitions for Medical Manager Health Systems and co-schemers
kickbacks which were funded through increases in the purchase
price paid by Medical Manager Health Systems to the acquired
company and that included fraudulent accounting practices to
inflate artificially the quarterly revenues and earnings of
Medical Manager Health Systems when it was an independent public
company called Medical Manager Corporation from 1997 through
1999, when and after it became acquired by Synetic, Inc. in July
1999 and when and after it became a subsidiary of HLTH in
September 2000. A fourth former officer of Medical Manager
Health Systems pleaded guilty to similar activities later in
2005.

 

On December 15, 2005, the U.S. Attorney announced
indictments of the following former officers and employees of
Medical Manager Health Systems: Ted W. Dorman, a former Regional
Vice President of Medical Manager Health Systems, who was
employed until March 2003; Charles L. Hutchinson, a former
Controller of Medical Manager Health Systems, who was employed
until June 2001; Maxie L. Juzang, a former Vice President of
Medical Manager Health Systems, who was employed until August
2005; John H. Kang, a former President of Medical
Manager Health Systems, who was employed until May 2001;
Frederick B. Karl, Jr., a former General Counsel of Medical
Manager Health Systems, who was employed until April 2000;
Franklyn B. Krieger, a former Associate General Counsel of
Medical Manager Health Systems, who was employed until February
2002; Lee A. Robbins, a former Vice President and
Chief Financial Officer of Medical Manager Health Systems,
who was employed until September 2000; John P. Sessions, a
former President and Chief Operating Officer of Medical Manager
Health Systems, who was employed until September 2003; Michael
A. Singer, a former Chief Executive Officer of Medical Manager
Health Systems and a former director of HLTH, who was most
recently employed by HLTH as its Executive Vice President,
Physician Software Strategies until February 2005; and David
Ward, a former Vice President of Medical Manager Health
Systems, who was employed until June 2005. The Indictment
charges the persons listed above with conspiracy to commit mail,
wire and securities fraud, a violation of

 

WEBMD
HEALTH CORP.

 

NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)

 

Title 18, United States Code, Section 371 and
conspiracy to commit money laundering, a violation of
Title 18, United States Code, Section 1956(h). The
indictment charges Messrs. Sessions and Ward with
substantive counts of money laundering, violations of
Title 18, United States Code, Section 1957. The
allegations set forth in the Indictment describe activities that
are substantially similar to those described above with respect
to the January 2005 plea agreements.

 

On February 27, 2007, the United States Attorney filed a
Second Superseding Indictment with respect to the former
officers and employees of Medical Manager Health Systems charged
under the prior Indictment, other than Mr. Juzang. The
allegations set forth in the Second Superseding Indictment are
substantially similar to those described above. The trial of the
indicted former officers and directors of Medical Manager Health
Systems has been scheduled for May 4, 2009. Mr. Robbins
passed away on September 27, 2008 and on October 15,
2008 the court granted a motion to dismiss Mr. Robbins from
the Second Superseding Indictment.

 

Based on the information it has obtained to date, including that
contained in the court documents filed by the United States
Attorney in South Carolina, HLTH does not believe that any
member of its senior management whose duties were not primarily
related to the operations of Medical Manager Health Systems
during the relevant time periods engaged in any of the
violations or improprieties described in those court documents.
HLTH understands, however, that in light of the nature of the
allegations involved, the U.S. Attorney’s office has
been investigating all levels of HLTH’s management. Some
members of the Company’s senior management are also serving
or have served as members of senior management of HLTH. In the
event members of the Company’s senior management were to be
implicated in any wrongdoing, it could have an adverse impact on
the Company.

 

HLTH understands that the SEC is also conducting a formal
investigation into this matter.

 

The terms of an indemnity agreement between HLTH and the Company
provide that HLTH will indemnify the Company against any and all
liabilities arising from or based on this investigation.

 

Other
Legal Proceedings

 

In the normal course of business, the Company and its
subsidiaries are involved in various other claims and legal
proceedings. While the ultimate resolution of these matters has
yet to be determined, the Company does not believe that their
outcomes will have a material adverse effect on the
Company’s consolidated financial position, results of
operations or liquidity.

 

 

WEBMD HEALTH CORP.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

 

and a former director of HLTH, who was most recently employed by HLTH as its Executive Vice President, Physician Software Strategies until February 2005; and David Ward, a former Vice President of Medical Manager Health Systems, who was employed until June 2005. The Indictment charges the persons listed above with conspiracy to commit mail, wire and securities fraud, a violation of Title 18, United States Code, Section 371 and conspiracy to commit money laundering, a violation of Title 18, United States Code, Section 1956(h). The indictment charges Messrs. Sessions and Ward with substantive counts of money laundering, violations of Title 18, United States Code, Section 1957. The allegations set forth in the Indictment describe activities that are substantially similar to those described above with respect to the January 2005 plea agreements.

 

On February 27, 2007, the United States Attorney filed a Second Superseding Indictment with respect to the former officers and employees of Medical Manager Health Systems charged under the prior Indictment, other than Mr. Juzang. The allegations set forth in the Second Superseding Indictment are substantially similar to those described above.

 

Based on the information it has obtained to date, including that contained in the court documents filed by the United States Attorney in South Carolina, HLTH does not believe that any member of its senior management whose duties were not primarily related to the operations of Medical Manager Health Systems during the relevant time periods engaged in any of the violations or improprieties described in those court documents. HLTH understands, however, that in light of the nature of the allegations involved, the U.S. Attorney’s office has been investigating all levels of HLTH’s management. Some members of the Company’s senior management are also serving or have served as members of senior management of HLTH. In the event members of the Company’s senior management were to be implicated in any wrongdoing, it could have an adverse impact on the Company.

 

HLTH understands that the SEC is also conducting a formal investigation into this matter.

 

The terms of an indemnity agreement between HLTH and the Company provide that HLTH will indemnify the Company against any and all liabilities arising from or based on this investigation.

 

Other Legal Proceedings

 

In the normal course of business, the Company and its subsidiaries are involved in various other claims and legal proceedings. While the ultimate resolution of these matters has yet to be determined, the Company does not believe that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

 

 

WEBMD HEALTH CORP.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

 

above with conspiracy to commit mail, wire and securities fraud, a violation of Title 18, United States Code, Section 371 and conspiracy to commit money laundering, a violation of Title 18, United States Code, Section 1956(h). The indictment charges Messrs. Sessions and Ward with substantive counts of money laundering, violations of Title 18, United States Code, Section 1957. The allegations set forth in the Indictment describe activities that are substantially similar to those described above with respect to the January 2005 plea agreements.

 

On February 27, 2007, the United States Attorney filed a Second Superseding Indictment with respect to the former officers and employees of Medical Manager Health Systems charged under the prior Indictment, other than Mr. Juzang. The allegations set forth in the Second Superseding Indictment are substantially similar to those described above.

 

Based on the information it has obtained to date, including that contained in the court documents filed by the United States Attorney in South Carolina, HLTH does not believe that any member of its senior management whose duties were not primarily related to the operations of Medical Manager Health Systems during the relevant time periods engaged in any of the violations or improprieties described in those court documents. HLTH understands, however, that in light of the nature of the allegations involved, the U.S. Attorney’s office has been investigating all levels of HLTH’s management. Some members of the Company’s senior management are also serving or have served as members of senior management of HLTH. In the event members of the Company’s senior management were to be implicated in any wrongdoing, it could have an adverse impact on the Company.

 

HLTH understands that the SEC is also conducting a formal investigation into this matter.

 

The terms of an indemnity agreement between HLTH and the Company provide that HLTH will indemnify the Company against any and all liabilities arising from or based on this investigation.

 

Other Legal Proceedings

 

In the normal course of business, the Company and its subsidiaries are involved in various other claims and legal proceedings. While the ultimate resolution of these matters has yet to be determined, the Company does not believe that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

 

 

Department
of Justice and SEC Investigations of HLTH

 

As previously disclosed, the United States Attorney for the
District of South Carolina is conducting an investigation of
HLTH, which HLTH first learned about on September 3, 2003.
Based on the information available to HLTH, it believes that the
investigation relates principally to issues of financial
accounting improprieties for Medical Manager Corporation, a
predecessor of HLTH (by its merger into HLTH in September 2000),
and, more specifically, its Medical Manager Health Systems, Inc.
subsidiary. Medical Manager Health Systems was a predecessor to
Emdeon Practice Services, Inc., a subsidiary that HLTH sold to
Sage Software in September 2006.

 

While HLTH is not sure of the investigation’s exact scope,
it does not believe that the investigation relates to the
business of our company or any of our subsidiaries. HLTH
believes that the investigation relates principally to issues of
financial accounting improprieties relating to Medical Manager
Health Systems, including activities that artificially inflated
revenues and earnings of Medical Manager Health Systems. HLTH
has been cooperating and intends to continue to cooperate fully
with the U.S. Attorney’s Office. HLTH’s Board of
Directors has formed a Special Committee consisting solely of
independent directors to oversee this matter, with the sole
authority to direct HLTH’s response to the allegations that
have been raised.

 

In January 2005, certain former employees of Emdeon Practice
Services agreed to plead guilty to mail fraud and tax evasion as
a result of the investigation by the U.S. Attorney.
According to the Informations, Plea Agreements and Factual
Summaries filed by the U.S. Attorney in, and available
from, the District Court of the United States for the District
of South Carolina — Beaufort Division, on
January 7, 2005, the three former employees and other then
unnamed co-schemers were engaged in schemes between 1997 and
2002 that included causing companies acquired by Medical Manager
Health Systems to pay the former vice president in charge of
acquisitions for Medical Manager Health Systems and co-schemers
kickbacks which were funded through increases in the purchase
price paid by Medical Manager Health Systems to the acquired
company and that included fraudulent accounting practices to
inflate artificially the quarterly revenues and earnings of
Medical Manager Health Systems when it was an independent public
company called Medical Manager Corporation from 1997 through
1999, when and after it became acquired by Synetic, Inc. in July
1999 and when and after it became a subsidiary of HLTH in
September 2000. A fourth former officer of Medical Manager
Health Systems pleaded guilty to similar activities later in
2005.

 

On December 15, 2005, the U.S. Attorney announced
indictments of the following former officers and employees of
Medical Manager Health Systems: Ted W. Dorman, a former Regional
Vice President of Medical Manager Health Systems, who was
employed until March 2003; Charles L. Hutchinson, a former
Controller of Medical Manager Health Systems, who was employed
until June 2001; Maxie L. Juzang, a former Vice President of
Medical Manager Health Systems, who was employed until August
2005; John H. Kang, a former President of Medical Manager Health
Systems, who was employed until May 2001; Frederick B.
Karl, Jr., a former General Counsel of Medical Manager
Health Systems, who was employed until April 2000; Franklyn B.
Krieger, a former Associate General Counsel of Medical Manager
Health Systems, who was employed until February 2002; Lee A.
Robbins, a former Vice President and Chief Financial Officer of
Medical Manager Health Systems, who was employed until September
2000; John P. Sessions, a former President and Chief Operating
Officer of Medical Manager Health Systems, who was employed
until September 2003; Michael A. Singer, a former Chief
Executive Officer of Medical Manager Health Systems and a former
director of HLTH, who was most recently employed by HLTH as its
Executive Vice President, Physician Software Strategies until
February 2005; and David Ward, a former Vice President of
Medical Manager Health Systems, who was employed until June
2005. The Indictment charges the persons listed

 

WEBMD
HEALTH CORP.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(Continued)

 

 

above with conspiracy to commit mail, wire and securities fraud,
a violation of Title 18, United States Code,
Section 371 and conspiracy to commit money laundering, a
violation of Title 18, United States Code,
Section 1956(h). The indictment charges
Messrs. Sessions and Ward with substantive counts of money
laundering, violations of Title 18, United States Code,
Section 1957. The allegations set forth in the Indictment
describe activities that are substantially similar to those
described above with respect to the January 2005 plea agreements.

 

On February 27, 2007, the United States Attorney filed a
Second Superseding Indictment with respect to the former
officers and employees of Medical Manager Health Systems charged
under the prior Indictment, other than Mr. Juzang. The
allegations set forth in the Second Superseding Indictment are
substantially similar to those described above.

 

Based on the information it has obtained to date, including that
contained in the court documents filed by the United States
Attorney in South Carolina, HLTH does not believe that any
member of its senior management whose duties were not primarily
related to the operations of Medical Manager Health Systems
during the relevant time periods engaged in any of the
violations or improprieties described in those court documents.
HLTH understands, however, that in light of the nature of the
allegations involved, the U.S. Attorney’s office has
been investigating all levels of HLTH’s management. Some
members of the Company’s senior management are also serving
or have served as members of senior management of HLTH. In the
event members of the Company’s senior management were to be
implicated in any wrongdoing, it could have an adverse impact on
the Company.

 

HLTH understands that the SEC is also conducting a formal
investigation into this matter.

 

The terms of an indemnity agreement between HLTH and the Company
provide that HLTH will indemnify the Company against any and all
liabilities arising from or based on this investigation.

 

Other
Legal Proceedings

 

In the normal course of business, the Company and its
subsidiaries are involved in various other claims and legal
proceedings. While the ultimate resolution of these matters has
yet to be determined, the Company does not believe that their
outcomes will have a material adverse effect on the
Company’s consolidated financial position, results of
operations or liquidity.

 

 

WEBMD HEALTH CORP.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

oversee this matter, with the sole authority to direct Emdeon’s response to the allegations that have been raised.

 

In January 2005, certain former employees of Emdeon Practice Services agreed to plead guilty to mail fraud and tax evasion as a result of the investigation by the U.S. Attorney. According to the Informations, Plea Agreements and Factual Summaries filed by the U.S. Attorney in, and available from, the District Court of the United States for the District of South Carolina — Beaufort Division, on January 7, 2005, the three former employees and other then unnamed co-schemers were engaged in schemes between 1997 and 2002 that included causing companies acquired by Medical Manager Health Systems to pay the former vice president in charge of acquisitions for Medical Manager Health Systems and co-schemers kickbacks which were funded through increases in the purchase price paid by Medical Manager Health Systems to the acquired company and that included fraudulent accounting practices to inflate artificially the quarterly revenues and earnings of Medical Manager Health Systems when it was an independent public company called Medical Manager Corporation from 1997 through 1999, when and after it became acquired by Synetic, Inc. in July 1999 and when and after it became a subsidiary of Emdeon in September 2000. A fourth former officer of Medical Manager Health Systems pleaded guilty to similar activities later in 2005.

 

On December 15, 2005, the U.S. Attorney announced indictments of the following former officers and employees of Medical Manager Health Systems: Ted W. Dorman, a former Regional Vice President of Medical Manager Health Systems, who was employed until March 2003; Charles L. Hutchinson, a former Controller of Medical Manager Health Systems, who was employed until June 2001; Maxie L. Juzang, a former Vice President of Medical Manager Health Systems, who was employed until August 2005; John H. Kang, a former President of Medical Manager Health Systems, who was employed until May 2001; Frederick B. Karl, Jr., a former General Counsel of Medical Manager Health Systems, who was employed until April 2000; Franklyn B. Krieger, a former Associate General Counsel of Medical Manager Health Systems, who was employed until February 2002; Lee A. Robbins, a former Vice President and Chief Financial Officer of Medical Manager Health Systems, who was employed until September 2000; John P. Sessions, a former President and Chief Operating Officer of Medical Manager Health Systems, who was employed until September 2003; Michael A. Singer, a former Chief Executive Officer of Medical Manager Health Systems and a former director of Emdeon, who was most recently employed by Emdeon as its Executive Vice President, Physician Software Strategies until February 2005; and David Ward, a former Vice President of Medical Manager Health Systems, who was employed until June 2005. The Indictment charges the persons listed above with conspiracy to commit mail, wire and securities fraud, a violation of Title 18, United States Code, Section 371 and conspiracy to commit money laundering, a violation of Title 18, United States Code, Section 1956(h). The indictment charges Messrs. Sessions and Ward with substantive counts of money laundering, violations of Title 18, United States Code, Section 1957. The allegations set forth in the Indictment describe activities that are substantially similar to those described above with respect to the January 2005 plea agreements.

 

On February 27, 2007, the United States Attorney filed a Second Superseding Indictment with respect to the former officers and employees of Medical Manager Health Systems charged under the prior Indictment, other than Mr. Juzang. The allegations set forth in the Second Superseding Indictment are substantially similar to those described above.

 

Based on the information it has obtained to date, including that contained in the court documents filed by the United States Attorney in South Carolina, Emdeon does not believe that any member of its senior management whose duties were not primarily related to the operations of Medical Manager Health Systems during the relevant time periods engaged in any of the violations or improprieties described in those court documents. Emdeon understands, however, that in light of the nature of the allegations involved, the U.S. Attorney’s office has been investigating all levels of Emdeon’s management. Some members of the Company’s senior management are also serving or have served as members of senior management of Emdeon.

 

WEBMD HEALTH CORP.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In the event members of the Company’s senior management were to be implicated in any wrongdoing, it could have an adverse impact on the Company.

 

Emdeon understands that the SEC is also conducting a formal investigation into this matter.

 

The terms of an indemnity agreement between Emdeon and the Company provide that Emdeon will indemnify the Company against any and all liabilities arising from or based on this investigation.

 

Ari Weitzner, M.D., P.C. et al. v. National Physicians Datasource LLC

 

As previously disclosed, on May 24, 2005, Dr. Ari Weitzner individually, and as a class action, filed a lawsuit under the Telephone Consumer Protection Act (the “TCPA”), in the U.S. District Court, Eastern District of New York, against National Physicians Datasource LLC (“NPD”), which is currently a subsidiary of the Company. The lawsuit claimed that faxes allegedly sent by NPD, which publishes The Little Blue Book, were sent in violation of the TCPA. The plaintiff voluntarily dismissed the suit, with prejudice, on November 8, 2006.

 

Anthony Vlastaris, et al. v. WebMD Publishing Services

 

On September 25, 2006, Anthony Vlastaris, Brian Kressin, and Richard Cohen filed a lawsuit individually, and as a class action, under the TCPA, in the Ohio Court of Common Pleas, Cuyahoga County. The lawsuit claimed that the defendant sent faxes to the plaintiffs allegedly in violation of the TCPA. The defendant in the suit was named as “WebMD Publishing Services,” an entity that does not exist. Because the suit was served on NPD at its location in Connecticut and because NPD is the publisher of The Little Blue Book, NPD responded — by removing the lawsuit to the United States District Court, Northern District Court of Ohio, on October 24, 2006. After removal to federal court, the plaintiffs voluntarily dismissed the class-action complaint and refiled a new suit in state court that was not a class action. NPD then settled the suit with the plaintiffs on December 28, 2006. The suit has been dismissed.

 

Other Legal Proceedings

 

In the normal course of business, the Company and its subsidiaries are involved in various other claims and legal proceedings. While the ultimate resolution of these matters, and those discussed above, has yet to be determined, the Company does not believe that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

 

 

WEBMD HEALTH CORP.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

oversee this matter, with the sole authority to direct Emdeon’s response to the allegations that have been raised.

 

In January 2005, certain former employees of Emdeon Practice Services agreed to plead guilty to mail fraud and tax evasion as a result of the investigation by the U.S. Attorney. According to the Informations, Plea Agreements and Factual Summaries filed by the U.S. Attorney in, and available from, the District Court of the United States for the District of South Carolina — Beaufort Division, on January 7, 2005, the three former employees and other then unnamed co-schemers were engaged in schemes between 1997 and 2002 that included causing companies acquired by Medical Manager Health Systems to pay the former vice president in charge of acquisitions for Medical Manager Health Systems and co-schemers kickbacks which were funded through increases in the purchase price paid by Medical Manager Health Systems to the acquired company and that included fraudulent accounting practices to inflate artificially the quarterly revenues and earnings of Medical Manager Health Systems when it was an independent public company called Medical Manager Corporation from 1997 through 1999, when and after it became acquired by Synetic, Inc. in July 1999 and when and after it became a subsidiary of Emdeon in September 2000. A fourth former officer of Medical Manager Health Systems pleaded guilty to similar activities later in 2005.

 

On December 15, 2005, the U.S. Attorney announced indictments of the following former officers and employees of Medical Manager Health Systems: Ted W. Dorman, a former Regional Vice President of Medical Manager Health Systems, who was employed until March 2003; Charles L. Hutchinson, a former Controller of Medical Manager Health Systems, who was employed until June 2001; Maxie L. Juzang, a former Vice President of Medical Manager Health Systems, who was employed until August 2005; John H. Kang, a former President of Medical Manager Health Systems, who was employed until May 2001; Frederick B. Karl, Jr., a former General Counsel of Medical Manager Health Systems, who was employed until April 2000; Franklyn B. Krieger, a former Associate General Counsel of Medical Manager Health Systems, who was employed until February 2002; Lee A. Robbins, a former Vice President and Chief Financial Officer of Medical Manager Health Systems, who was employed until September 2000; John P. Sessions, a former President and Chief Operating Officer of Medical Manager Health Systems, who was employed until September 2003; Michael A. Singer, a former Chief Executive Officer of Medical Manager Health Systems and a former director of Emdeon, who was most recently employed by Emdeon as its Executive Vice President, Physician Software Strategies until February 2005; and David Ward, a former Vice President of Medical Manager Health Systems, who was employed until June 2005. The Indictment charges the persons listed above with conspiracy to commit mail, wire and securities fraud, a violation of Title 18, United States Code, Section 371 and conspiracy to commit money laundering, a violation of Title 18, United States Code, Section 1956(h). The indictment charges Messrs. Sessions and Ward with substantive counts of money laundering, violations of Title 18, United States Code, Section 1957. The allegations set forth in the Indictment describe activities that are substantially similar to those described above with respect to the January 2005 plea agreements.

 

On February 27, 2007, the United States Attorney filed a Second Superseding Indictment with respect to the former officers and employees of Medical Manager Health Systems charged under the prior Indictment, other than Mr. Juzang. The allegations set forth in the Second Superseding Indictment are substantially similar to those described above.

 

Based on the information it has obtained to date, including that contained in the court documents filed by the United States Attorney in South Carolina, Emdeon does not believe that any member of its senior management whose duties were not primarily related to the operations of Medical Manager Health Systems during the relevant time periods engaged in any of the violations or improprieties described in those court documents. Emdeon understands, however, that in light of the nature of the allegations involved, the U.S. Attorney’s office has been investigating all levels of Emdeon’s management. Some members of the Company’s senior management are also serving or have served as members of senior management of Emdeon.

 

WEBMD HEALTH CORP.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In the event members of the Company’s senior management were to be implicated in any wrongdoing, it could have an adverse impact on the Company.

 

Emdeon understands that the SEC is also conducting a formal investigation into this matter.

 

The terms of an indemnity agreement between Emdeon and the Company provide that Emdeon will indemnify the Company against any and all liabilities arising from or based on this investigation.

 

Ari Weitzner, M.D., P.C. et al. v. National Physicians Datasource LLC

 

As previously disclosed, on May 24, 2005, Dr. Ari Weitzner individually, and as a class action, filed a lawsuit under the Telephone Consumer Protection Act (the “TCPA”), in the U.S. District Court, Eastern District of New York, against National Physicians Datasource LLC (“NPD”), which is currently a subsidiary of the Company. The lawsuit claimed that faxes allegedly sent by NPD, which publishes The Little Blue Book, were sent in violation of the TCPA. The plaintiff voluntarily dismissed the suit, with prejudice, on November 8, 2006.

 

Anthony Vlastaris, et al. v. WebMD Publishing Services

 

On September 25, 2006, Anthony Vlastaris, Brian Kressin, and Richard Cohen filed a lawsuit individually, and as a class action, under the TCPA, in the Ohio Court of Common Pleas, Cuyahoga County. The lawsuit claimed that the defendant sent faxes to the plaintiffs allegedly in violation of the TCPA. The defendant in the suit was named as “WebMD Publishing Services,” an entity that does not exist. Because the suit was served on NPD at its location in Connecticut and because NPD is the publisher of The Little Blue Book, NPD responded — by removing the lawsuit to the United States District Court, Northern District Court of Ohio, on October 24, 2006. After removal to federal court, the plaintiffs voluntarily dismissed the class-action complaint and refiled a new suit in state court that was not a class action. NPD then settled the suit with the plaintiffs on December 28, 2006. The suit has been dismissed.

 

Other Legal Proceedings

 

In the normal course of business, the Company and its subsidiaries are involved in various other claims and legal proceedings. While the ultimate resolution of these matters, and those discussed above, has yet to be determined, the Company does not believe that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.