Lawsuit Filed over Wrongdoing in CalPERS Pharmacy Contract

March 18, 2011 ( - A new lawsuit claims California state workers and others were forced to pay higher charges for prescription medicines as a result of alleged bribes and clandestine meetings held between Medco Health Solutions (Medco) and officials of the California Public Employees’ Retirement System (CalPERS).

A news release from the Hackard Law Firm said in addition to Medco Health Solutions, the lawsuit names former CalPERS CEO Federico Buenrostro and former CalPERS Directors Charles “Chuck” Valdes and Kurato Shimada. 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 (see “Special Review” Outlines Private Placement Problems at 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 announcement said.   

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 (see Former CalPERS Officials Sued over Investment Scheme).   

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.