CVS Proposes Settlement in Retirement Plan Lawsuit

July 5, 2005 ( - CVS Corp. has agreed to a $3 million settlement in a case involving its 401(k) and Employee Stock Ownership plans, according to a Boston Globe report.

The suit, filed last year by former employee James Fescina, claims that executives ”should have known that CVS stock was an imprudent investment alternative for the [retirement] plan due to the substantial and material accounting and business improprieties occurring at the company.” It was filed on Friday in a federal court in Boston.

The Globe reports that the company admitted to no wrongdoing in the settlement proposal, which must still be approved by a federal judge. The agreement also requires CVS to form a committee that will assess investments made by the plans and advise the company’s board of directors about the chain’s financial and operational health.

The claims cover the period from December 1, 2000 to October 31, 2001 and it is not known how many will be eligible for payment from the settlement, according to the Globe report.

The company was previously sued by a shareholder who claimed the company made misleading statements and violated accounting practices. CVS settled that suit for $110 million.

-Rebecca Moore