CVS Caremark to pay $20 million to three states over fraud allegations

Pharmacy and prescription drug management company CVS Caremark Corp. has agreed to pay nearly $20 million to settle three lawsuits involving allegations that the company defrauded pension systems in three states, including California’s giant pension fund, attorneys said.

The whistleblower lawsuits, filed by two former CVS Caremark pharmacists, accused the company of reselling returned drugs, changing prescription orders to make them more expensive and submitting false reports about how long it took to fill prescriptions.

Under terms of the settlements, CVS Caremark will pay nearly $7 million to the California Public Employees’ Retirement System, $4 million to the state of Illinois and $3 million to the state of Florida. Other money from the settlement went to plaintiff attorneys’ fees and costs, the attorneys said in a news release.

The former employees filed the lawsuits under state laws that encourage employees to expose fraud that victimized government agencies. Typically, whistleblowers receive a portion of any settlements as a reward for exposing the fraud.

“It is a great feeling to finally see this matter brought to a successful resolution,” said Chicago attorney Michael Leonard, one of the plaintiffs’ attorneys. “Even though CVS Caremark of course continues to deny any liability, in my opinion justice has truly been served.”

CVS Caremark did not immediately respond to a request for comment. The company is the product of a 2007 merger between CVS Corp. and Caremark Rx Inc. In addition to operating 7,000 retail stores, the company manages pharmacy benefit services for employers, including prescriptions by mail.

Despite the allegations, CalPERS agreed in June to pay CVS Caremark $575 million per year to provide prescription drug benefits to 346,000 members.

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-- Stuart Pfeifer

Photo: A CVS store in Florida. Credit: Wilfredo Lee / Associated Press

Consumer Confidential: Ticketmaster refund, Lipitor probe

Here's your fool-to-cry Friday roundup of consumer news from around the Web:

--If you bought a ticket through Ticketmaster between October 1999 and October of this year, you're due for some cash -- $1.50, to be precise. Because of a proposed class action settlement, Ticketmaster is being forced to credit that much per ticket order (up to 17 orders) to customers because the company profited from "processing fees" without declaring that it was doing so. According to court documents, the original claim, filed Oct. 21, 2003, also implicates UPS' delivery price for expedited delivery of tickets as deceptive. This could end up costing Ticketmaster a hefty amount of money. If, in any given year over the four-year redemption period, less than $11.25 million is redeemed by customers, Ticketmaster is going to donate the remainder to charity. (Business Insider)

--For a while, it looked like the wireless market could get more competitive as cable companies tried to launch their own service. But that's not going to happen. Comcast, Time Warner Cable and Bright House Networks are giving up on their dreams of creating their own wireless network, opting instead to resell Verizon Wireless service. The companies say they have agreed to sell their wireless licenses -- which they haven't been using -- to Verizon for $3.6 billion. The cable companies paid $2.2 billion for the spectrum in 2006, so they're getting a 64% gain on a five-year investment. For Verizon, the deal offers millions of potential new customers and maintains the status quo in the wireless space. (Associated Press)

--First drug maker Pfizer had to contend with its blockbuster drug Lipitor going generic this week. Now some lawmakers are asking the company and other health businesses to detail agreements to block prescriptions of generic versions of the cholesterol drug Lipitor and sell only the Pfizer brand-name version. Pfizer is offering discounts to companies that will reject generic prescriptions and favor Lipitor. The senators say they're concerned about longer term impacts on employers, Medicare and healthcare costs. They include Sen. Max Baucus, a Montana Democrat; Charles E. Grassley, an Iowa Republican; and Herb Kohl, the Wisconsin Democrat who is chairman of the Special Committee on Aging. (New York Times)

-- David Lazarus

Photo: Questionable fees will result in refunds for Ticketmaster customers. Credit: Paul Sakuma/AP

 

Botox maker Allergan sued by Las Vegas surgeon

A Las Vegas plastic surgeon has sued Allergan Inc., accusing the Irvine pharmaceutical company of selling its popular wrinkle treatment Botox in large vials and encouraging physicians to unsafely reuse them.

Dr. Julio L. Garcia contends that Allergan sold Botox exclusively in 100-unit vials for several years, even though a typical treatment required just 20 units. The lawsuit, filed Monday in federal court in Los Angeles, said Allergan sales reps encouraged physicians to use the vials on multiple patients, a practice now condemned by health officials.

The lawsuit accuses Botox of false advertising and violating California’s unfair competition law. It seeks unspecified monetary damages and certification as a class action. The lawsuit does not contend that any Botox patients became ill because of the alleged safety violations.

Allergan spokeswoman Caroline Van Hove declined to discuss specific allegations in the lawsuit. She said the company advocates the single use of Botox vials, as its labels indicate.

Botox is the brand name for Botulinum Toxin Type A, a toxin that temporarily weakens facial muscles that contribute to wrinkles. Botox Cosmetic was available only in 100-unit vials from 2002 until 2008, when Nevada health officials blamed a hepatitis outbreak on the reuse of vials of the drug propofol, the lawsuit said.

To defer patient costs, Allergan reps had told doctors to promote a “buddy system,” in which two or more patients came into the office together to share a single vial, Garcia said in the lawsuit.

The Centers for Disease Control and state public health agencies have warned against using medication from a single vial to treat multiple patients.

In 2008, Allergan started selling Botox in 50-unit vials, “only after the hepatitis exposure in Nevada,” the lawsuit said. Still, the majority of the medication must be discarded after use, keeping costs high and making it difficult for physicians to profit, the lawsuit said.

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-- Stuart Pfeifer

Photo: A patient receives Botox treatment in Dallas. Credit: Ron Heflin/Associated Press

CalPERS, other investors, settle suit against Countrywide, BofA

California's giant public pension fund and 15 other large investors settled lawsuits accusing former mortgage goliath Countrywide Financial Corp. of costing them billions of dollars in stock losses by failing to disclose the severity of the risks posed by the easy-money loans the Calabasas lender handed out during the housing boom.

A filing Monday in U.S. District Court in Los Angeles disclosed the confidential settlement. The filing did not reveal how much Bank of America Corp., which acquired Countrywide in 2008 and was also a defendant in the case, would pay to the California Public Employees' Retirement System and the other plaintiffs.

Bank of America's spokeswoman for legal affairs, Shirley Norton, declined to comment. An attorney for CalPERS and the other 15 investors didn't return a call Tuesday, and CalPERS officials declined to describe the settlement.

The 16 big investors, mostly pension and mutual funds, were among 33 plaintiffs who opted not to participate in a $624-million settlement of class-action litigation that U.S. District Judge Mariana R. Pfaelzer approved in February.

The opt-outs believed the proposed settlement was "shockingly cheap," Columbia University securities law expert John C. Coffee said at the time, citing a discussion with one of the lawyers representing those institutions.

Seventeen additional institutional investors who decided against participating in the February settlement still have claims pending in the case.

This week's settlement, if approved by Pfaelzer, would end the 16 plaintiffs' claims against Countrywide, Bank of America, and former Countrywide executives Angelo R. Mozilo, David Sambol and Eric P. Sieracki.

Accounting firm KPMG, which had audited Countrywide's books, is also a defendant in the case but did not settle with CalPERS and the other funds. It was a participant in the $624-million settlement finalized in February.

Bank of America, based in Charlotte, N.C., has struggled to put Countrywide's woes behind it since it shelled out $2.5 billion in stock for what was then the country's largest mortgage lender.

After running up more than $30 billion in losses on its investment, Bank of America still has undetermined liabilities outstanding for claims against soured Countrywide loans and the mortgage securities that were backed by them.

The Countrywide troubles have caused regulators to pressure Bank of America to increase its capital cushion against losses, and investors have punished the bank's stock, which has declined by 59% this year. Bank of America closed Tuesday down 12 cents, or 2.2%, at $5.37.

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Photo: Dark glasses can't conceal Countrywide Financial co-founder Angelo Mozilo. Credit: Los Angeles Times / Irfan Khan

 

Naked Juice not so natural, lawsuit says

There’s more to Naked Juice than the Monrovia-based juice company promotes in its advertising, according to a lawsuit filed in Los Angeles County Superior Court.

The lawsuit accuses Naked Juice and parent PepsiCo Inc. of marketing juice products as “all natural” when they actually contain “unnaturally processed and synthetic ingredients.”

Those ingredients include zinc oxide, ascorbic acid, cyanocobalamin and others.

“Consumers were deceived into believing that the unnatural products were in fact natural substances,” but were actually created through "artificial and mechanical means," the lawsuit said.

Andrea Foote, a spokeswoman for Naked Juice, said the company by policy does not comment on pending litigation.

“We stand behind the juices that we craft and we’re committed to full compliance with labeling laws and regulations,” she said.

The lawsuit, filed Monday by Los Angeles consumer Gina Park, seeks certification as a class action. It accuses Naked Juice of violating California’s Unfair Business Practices Act and seeks unspecified monetary damages and an injunction ordering the company to discontinue its marketing practices.

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-- Stuart Pfeifer

Photo: Naked Protein Zone Mango is one product identified in lawsuit against Naked Juice and parent PepsiCo Inc. Credit: nakedjuice.com 

 

Workers win record number of bias cases in 2011, EEOC reports

More workers than ever sought help against office discrimination from the Equal Employment Opportunity Commission this year, the agency said this week.

More than 99,947 charges were filed in 2011 alleging unfair workplace practices based on race, sex, age, religion, disability and even family medical history, according to the EEOC’s annual performance report. 

That’s the highest number since the commission was launched through the Civil Rights Act of 1964. The agency also won a record amount of monetary relief –- nearly $365 million -– for employees.

Over a year in which national unemployment remained stuck at around 9%, many workers are working longer hours for less pay, with older employees expecting to delay retirement.

The EEOC resolved 112,499 cases through a mix of investigations, conciliations, mediations and litigation, more than last year.

The agency won $3 million for 290 former 3M employees who had accused the company of denying leadership training to and laying off hundreds of workers over age 45. About 800 Verizon employees won a $20-million fund after challenging the company over claims that it disciplined or fired employees with disabilities.

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Photo: Paul Taggart / Bloomberg

Boston Beer sues San Francisco's Anchor Brewing [Updated]

Boston Beer Corp., brewer of Sam Adams beer, has sued a former sales employee and his new employer, San Francisco rival Anchor Brewing Co., in a battle over alleged trade secrets.

Judd Hausner, who resigned Sept. 8 as Boston Beer’s Northern California district manager, began working for Anchor Brewing as a managing distributor in Marin, Sonoma and Napa counties.

Within weeks, Boston Beer filed a lawsuit in Massachusetts claiming that Hausner broke his employment contract, which prohibited him from sharing company secrets or working for a competitor for a year after leaving Boston Beer.

In its complaint, Boston Beer claims it taught Hausner everything he knows about the beer business: “His expertise in the beer business is Boston Beer, exclusively.”

The Boston company also alleges that Anchor Brewing interfered with its contract by hiring Hausner in order to obtain trade secrets.

Anchor Steam said Boston Beer is getting all hopped up over nothing.

[updated at 3:55 p.m. with comment.]

“We don’t believe Judd Hausner had any trade secrets of Boston Beer company and we would not want any and we couldn’t use them," said Wesley Kinnear, Anchor Brewing’s attorney. “We’re a tiny company. Boston Beer sells well over 2 million barrels of beer a year, we sell about 100,000.”

 Kinnear added that Hausner is not the suds mastermind that Boston Beer is making him out to be.

“We’re talking about a young guy," Kinnear said. "He doesn’t supervise anybody. He’s just a young guy selling beer.”

An official hearing date has not been set.

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Photo: A selection of holiday ales, including Anchor Steam. Credit: Glenn Koenig / Los Angeles Times

Wells Fargo settles bid-rigging case

Wells Fargo & Co. has agreed to pay at least $37 million to settle accusations that it and Wachovia Corp., which Wells acquired in 2008, paid kickbacks to win business from municipal governments.

In its regular quarterly filing with the Securities and Exchange Commission, made Tuesday, the San Francisco bank said it would pay the greater of the $37 million or "65% of the restitution amount of a future settlement, if any, with the various state attorneys general of their investigation of Wachovia."

The agreement, which Wells said was reached Oct. 21, stems from litigation with various municipal governments around the country and consolidated in a federal lawsuit in Manhattan.

The suit accused many investment banks of conspiring to rig the bidding process, “sharing their illegal gains through kickbacks to one another, and making other secret, undisclosed arrangements.”

A Wells spokeswoman said the case mainly involved events at Wachovia that occurred before Wells took over the Charlotte, N.C., bank.

Bank of America, JPMorgan Chase and UBS previously agreed to much larger settlements in the case.

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Photo: A Wells Fargo stagecoach in the bank's history museum in L.A. Source: Wells Fargo & Co.

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Buzz Aldrin's lawsuit against trading-card company tossed

Buzz Aldrin may have stepped foot on the moon, but he wasn’t able to walk over trading-card company Topps Inc. in court.

Aldrin accused Topps in a lawsuit filed last year of improperly using his image in a series of historic trading cards.

U.S. District Judge Dean D. Pregerson ruled that Topps’ use of photographs from the Apollo 11 mission was protected as “free speech of an issue of public interest.” He dismissed the lawsuit Sept. 27.

Aldrin has appealed to the U.S. 9th Circuit Court of Appeals.

At the center of the disagreement is a series of trading cards Topps issued in 2009 called, Topps American Heritage. The set of cards includes hundreds of images of well-known American politicians, actors, athletes and events, including a photograph of Aldrin during the historic mission.

Aldrin argued that Topps’ use of his image was “unprotected commercial speech,” for which he was entitled toc compensation.

"We believe that the federal trial court's ruling could effectively end California's well-established and statutory right of publicity law as it affects the use of celebrity images on trinkets such as plates, pencils, trading cards and the like," Aldrin's attorney, Robert C. O'Brien, said. "Accordingly, Dr. Aldrin has appealed the ruling to the 9th Circuit. He is hopeful for a positive result from the appeals court."

Topps was represented by the law firm Davis Wright Tremaine, which also represents The Times.

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Photo: The cover of Buzz Aldrin's book, "Reaching for the Moon." Credit: HarperCollins Children's Books

Female Wal-Mart employees file new suit in California

A few months after the Supreme Court tossed out a massive class-action lawsuit against Wal-Mart Stores Inc., women who say they faced discrimination from the world's biggest retailer filed an amended suit in California.

The lawsuit, announced Thursday, narrows the scope of the lawsuit from all female employees who are working or have worked for Wal-Mart and its Sam's Club warehouse stores (about 1.5 million people) to just those in California (about 90,000), Reuters reported.

The suit alleges that the company systematically discriminated against its women workers, denying them promotions, pay bumps and other work advances because of their gender, the report said.

Attorneys for the plaintiff said at a news briefing that the California action would be the first suit of several to come in the next half-year.

"We are beginning with the locales where the evidence of discrimination is strongest," lawyer Joseph Sellers said, according to Reuters.

When the Supreme Court ruled in June to throw out the huge class-action lawsuit, it did not make a decision on whether women had been discriminated against. Instead, it determined that the plaintiffs in the case, spanning a multitude of jobs in thousands of stores nationwide, were not similar enough to be combined into one suit. But that left the door open for smaller, more targeted complaints against the company.

Theodore Boutrous Jr., attorney for Wal-Mart, said in a statement that the suit depends on arguments that the Supreme Court had already dismissed.

"The Supreme Court rejected these very same class-action theories when it reversed the plaintiffs' lawyers' last effort in June," he said.

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Photo: A shopper outside a Wal-Mart store in Rosemead. Credit: Don Bartletti / Los Angeles Times

Oreck ads falsely claim vacuums killed flu, lawsuit says [Updated]

Oreck Corp. claims to build a better vacuum. But the company went too far when it said its Halo vacuum and some of its air purifiers killed virtually all germs, bacteria and viruses, including the flu virus, according to a consumer lawsuit filed in federal court in Los Angeles.

The lawsuit lists two plaintiffs, Roxy Edge of Los Angeles and Linda Gonzalez of Broome County, N.Y., and seeks certification as a class action. The lawsuit accuses Oreck of falsely claiming in television and print advertisements that the Halo vacuum killed “up to 99.9%” of germs and making similar false claims about its ProShield air purifier.

“Defendants’ claims are not adequately supported by credible, scientific testing or other substantiation and are not true,” the lawsuit alleged.

Oreck did not immediately respond to a request for comment.

[Updated at 6:43 p.m.: Oreck Corp. spokesman John Van Mol issued a statement that said the company "does not believe there is any merit to the plaintiffs' attorneys’ case and it intends to vigorously defend the lawsuit."]

In May, the company agreed to pay $750,000 to settle a Federal Trade Commission lawsuit that made similar allegations.

The lawsuit, filed Friday in U.S. District Court in Los Angeles, seeks damages in excess of $5 million.

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Photo: Oreck Corp. ad for its Halo vacuum. Credit: ConsumerReports.org