SACRAMENTO, Calif.–(BUSINESS WIRE)–A lawsuit was filed in Sacramento Superior Court today by attorneys acting for state workers and others forced to pay higher charges for prescription medicines as a result of alleged bribes and clandestine meetings held between Medco Health Solutions (Medco) and senior executives and directors of the California Public Employees’ Retirement System (CalPERS).
The lawsuit asks the Court to suspend Medco’s pharmacy benefits agreement with CalPERS, force Medco to pay restitution for all amounts paid to Medco and its agents, and certify the lawsuit as a class action to allow any CalPERS member harmed by Medco to seek the compensation due them under the law.
“Bribery is not a victimless crime,” said Michael A. Hackard, lead attorney for the plaintiffs. “And in this case, every CalPERS member who was forced to pay higher charges for prescriptions so that Medco could secretly wine and dine CalPERS officials or pay millions of dollars in kickbacks to so-called ‘placement agents’ is a victim.”
“Medco needs to make restitution for every person their actions have harmed,” said Hackard. “And they should also be forced to disgorge any and all profits they might have made under this tainted agreement.”
In addition to Medco Health Solutions, the lawsuit names former CalPERS CEO Federico Buenrostro and former CalPERS Directors Charles “Chuck” Valdes and Kurato Shimada. Additional defendants may be named later.
The roles of all three men, along with so-called “placement agent” Al Villalobos, were revealed as a result of an independent investigation conducted on behalf of CalPERS. Among other things, the report alleges that Medco Chairman and CEO David Snow paid more than $4 million in “placement fees” to Villalobos, who in turn offered trips, jobs, condominiums and other inducements to Buenrostro, Valdes, Shimada and others in order to win a lucrative pharmacy benefit contract from CalPERS.
The Medco case is being probed by the California Attorney General’s Office and the federal Securities and Exchange Commission according to both CalPERS and Medco. Buenrostro and Villalobos are also the object of a civil enforcement action by the state Attorney General alleging bribery and corruption in connection with their overall dealings with CalPERS.
New Jersey-based Medco is the nation’s largest pharmaceutical benefits administrator, with sales of more than $60 billion annually. In 2009, Medco provided $500 million worth of prescription drugs to CalPERS members.
After the federal government, CalPERS is the nation’s largest purchaser of health care, providing more than 1.7 million state and local government workers, retirees and family members with medical and prescription drug coverage.
Michael A. Hackard will serve as lead counsel. Plaintiffs will also be represented by Archie C. Lamb of Birmingham, AL. Lamb has represented California clients in the past, most recently as lead counsel for the California Medical Association in their class action lawsuit against WellPoint, Inc. (Blue Cross in California) concerning pricing and reimbursement issues.