Tuesday, May 31, 2005

Medco Fights Subpoena

While companies are usually quick to tout their willingness to cooperate with government investigations, every once in a while a corporation resists producing records.  Medco Health Solutions, Inc., the pharmacy benefits management company that was spun out of Merck, has refused to provide documents subpoenaed by the Department of Health and Human Services' Office of the Inspector General as part of an investigation into possible kickbacks and false claims until the OIG agrees not to share the records with the U.S. Attorney's Office for the Eastern District of Pennsylvania.  That office filed a civil lawsuit against Medco in 2003 alleging fraud in the recommendation of drugs, and Medco is demanding that any records produced not be given to the government attorneys prosecuting the civil action.  A Wall Street Journal story (here) quotes a response from a Medco spokeswoman that the company is only seeking confidential treatment of the documents.  The OIG has moved to enforce the subpoena, and a hearing is scheduled for Wednesday, June 1, in U.S. District Court in Philadelphia.

While Medco claims that all it is seeking is confidential treatment of its records, it is unusual that the request is directed at another office of the federal government.  In most cases involving confidential treatment, a private plaintiff is seeking the records produced to the government, and that brings up issues related to FOIA and the need to maintain confidentiality during a pending investigation.  Unlike a grand jury subpoena, under which the documents may be protected by the strict confidentiality requirements of Rule 6(e), a civil investigative subpoena does not restrict the sharing of information with other offices of the federal government that may be interested in the documents.  While Medco may fear an end-run by the OIG, if the HHS investigation is legitimate and not a sham for the benefit of the earlier lawsuit -- and it appears to be part of a broad investigation of other companies, such as Caremark -- then I think the subpoena is likely to be enforced because the OIG has broad investigatory authority. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/05/medco_fights_su.html

Civil Enforcement, Fraud, Investigations | Permalink

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