CMX Caremark RX

Suit Claims CareMark Owes Millions in Past Commissions SCOTTSDALE, Ariz., July 19 /PRNewswire/ -- Hagens Berman Sobol Shapiro filed a proposed class-action suit today in the U.S. District Court of Arizona alleging that CareMark Rx, Inc. (NYSE:CMX) intentionally concealed revenue in order to avoid paying certain commissions owed to consultants who marketed and sold its services. CareMark and its predecessor companies -- Advance Paradigm Inc., HMNHealth Services Inc., and AdvancePCS -- provide pharmaceutical and formulary services to health plan sponsors and plan participants throughout the United States. Clients include corporate health plans, discount card programs, managed care organizations, insurance companies, labor unions, governmental agencies, etc. CareMark's revenues primarily come through rebates, fees, and other revenue streams provided by drug manufacturers in exchange for selling and marketing the manufacturers' drugs to CareMark's clients. According to the complaint, CareMark engages consultants to market and sell its services to health plan sponsors and plan participants. If an entity contracts with CareMark to use its pharmaceutical services, the consultant is entitled to either a percentage of the total revenue -- including administrative fees -- or a set rate for each drug purchased. The complaint states that CareMark failed to honor the plain language of the consulting contracts by not paying commission based on total revenues and instead paying commission based on only partial revenues. According to named plaintiff Jan Peck, CareMark intentionally failed to report total revenues earned from four companies she brought to two of CareMark's predecessors. "I brought a great deal of business to companies Caremark purchased, and Caremark did its best to under-report that revenue, knowing it would affect my commissions," said Peck. "CareMark negotiated new contracts with the customers and then hid the revenue as separate administrative fees." Peck estimates she is owed between $25 and $50 million in under-reported revenue commission. "We believe that CareMark's dealings with Peck was much more than an accounting oversight, and something that could extend to other Caremark consultants," said Rob Carey, attorney for the plaintiffs. "We will thoroughly review all of CareMark's accounting records to ensure Mrs. Peck, and others who may have been harmed by CareMark's actions, receive the full compensation they are entitled to." Allegations against Caremark include, among other things, breach of contract, breach of good faith and fair dealings, and misrepresentation. The proposed class-action suit includes all persons who contracted with CareMark -- or any entity acquired by CareMark -- to sell or market formulary services whose compensation was based on a percentage of revenue generated by clients they brought to CareMark or its predecessors, received a set rate for each qualifying drug purchased by these companies, or a combination of both methods. The suit seeks compensatory and punitive damages, interest on all owed money to members of the class, and a release of all revenue information earned under the consulting agreement. For additional information regarding this suit, contact Hagens Berman Sobol Shapiro at 206-623-7292 or visit http://www.hbsslaw.com/. About Hagens Berman Sobol Shapiro Hagens Berman Sobol Shapiro is a law firm with offices in Seattle, Cambridge, Los Angeles, and Phoenix. The firm has developed a nationally recognized practice in class-action litigation. The firm is co-lead counsel in litigation to recover losses from Enron employees' retirement funds and represented Washington and 12 other states in lawsuits against the tobacco industry that resulted in the largest settlement in the history of litigation. The firm also served as counsel in several other high-profile cases including the Washington Public Power Supply litigation, which resulted in a settlement of more than $850 million, and the $92.5 million settlement of The Boeing Company litigation. Other notable cases include litigation involving the Exxon Valdez oil spill; Louisiana Pacific Siding; Morrison Knudsen; Piper Jaffray; Nordstrom; Boston Chicken; Noah's Bagels; TAP Pharmaceutical's Lupron litigation; and SmithKline Beecham's Paxil Litigation. DATASOURCE: Hagens Berman Sobol Shapiro CONTACT: Mark Firmani of Firmani + Associates, Inc., +1-206-443-9357, or

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