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About POGO's Federal Contractor Misconduct Database (FCMD)
The government awards contracts to companies with histories of misconduct such as contract fraud and environmental, ethics, and labor violations. In the absence of a centralized federal database listing instances of misconduct, the Project On Government Oversight (POGO) is providing such data. We believe that it will lead to improved contracting decisions and public access to information about how the government spends hundreds of billions of taxpayer money each year on goods and services. Report an instance of misconduct »
Ranking: 11
McKesson
McKesson Corporation is a healthcare services and information technology company. McKesson provides pharmaceutical and medical-surgical supply management; healthcare information technology for hospitals, physicians, homecare and payors; and hospital and retail pharmacy automation.
Federal Contract $: $4970.6m
Total Number of Instances: 11
Total Misconduct dollar amount: $1360.6m
- Annual Report
- Ethics Page
- Hoovers Profile
- Lobbying Information
- Political Activity
- Press Page
- SEC 10K
- Subsidiary List
- Contracting Information
- Website
Instances of Misconduct
1. McKesson/HBOC Inc. ERISA Litigation
The case “involves [Employee Retirement Security Income Act] claims brought on behalf of the HBOC Profit Sharing and Savings Plan (the “HBOC Plan”) and the McKesson Profit Sharing and Investment Plan (the “McKesson Plan”), as well as participants in those plans. On May 6, 2005, a Stipulation and Agreement of Settlement was executed for that portion of the ERISA Action that involves HBOC Plan claims. The proposed settlement resolves all claims by the HBOC Plan and its participants in consideration of an $18.2 million cash payment by the Company. The settlement is subject to various conditions, including, but not limited to, notice to the class and final approval by the Court. Judge Whyte has scheduled a hearing on final approval of the HBOC Plan settlement for September 9, 2005. The separate ERISA claims of the McKesson Plan and its participants are not resolved by this settlement. The Company’s motion to dismiss those claims remains pending before this Court.”... more»
2. McKesson/HBOC, Inc. Securities Litigation
In January 2005, McKesson reached an agreement to settle a consolidated securities class action arising out of the discovery in April 1999 of accounting improprieties at HBO & Co., Inc. (HBOC), which McKesson acquired in January 1999. The improprieties turned out to be part of a long-running scheme at HBOC to fraudulently inflate revenue and net income, a scheme for which several former HBOC executives pled guilty. Under the agreement, McKesson agreed to pay the class members a total of $960 million in cash.... more»
3. Overcharging the Government
McKesson Corporation, a wholesale pharmaceutical distributor, agreed to pay the United States $3 million to settle claims that it defrauded the Department of Defense from October 1997 to December 2001. The settlement resolved “allegations that the San Francisco-based corporation defrauded the United States by knowingly charging the Defense Department’s medical treatment facilities more for pharmaceutical products than was allowable under its prime vendor contracts with the government.”... more»
4. Caccavale v. McKesson Medical Surgical (Abuse of Process)
A federal jury awarded $11 million in damages to Carmen Caccavale, a Phoenix, Arizona medical and pharmaceutical supplies salesman, and his company in a countersuit they filed against McKesson Medical Surgical Inc., a division of McKesson Corp. McKesson originally sued Caccavale in 2004, claiming Caccavale, a former employee, had violated trade practices when he left the company to take a job with another medical supply company. McKesson’s suit was dismissed in 2008. Caccavale and his company, Henry Schein Inc., countersued McKesson for abuse of the legal process. The jury in the countersuit awarded $5 million to Caccavale and $6 million to Henry Schein.... more»
5. U.S. v. McCall et al. (Securities Fraud)
Former McKesson HBOC Chairman Charles McCall was convicted on four counts of securities fraud and one count of circumventing internal accounting controls. (McKesson and HBOC merged in January 1999.) The government accused McCall and other top company executives of defrauding shareholders from December 1997 to April 1999 by inflating publicly reported revenue. Co-defendant Jay Lapine, former general counsel at McKesson HBOC, was acquitted of securities fraud and other charges.... more»
6. Roby v. McKesson (Wrongful Termination)
A California state court jury found that McKesson Corp. harassed, discriminated against, and wrongfully fired employee Charlene Roby based on her medical condition and related disability and awarded $3,511,000 in compensatory damages and $15 million in punitive damages (both awards were each reduced to $1,905,000 on appeal). Roby claimed McKesson subjected her to harassment and wrongly fired her because medication she took to help her panic attacks caused body odor and other side effects, and her medical condition necessitated frequent absences from work.... more»
7. Slavin v. McKesson (Negligence)
A Miami-Dade County jury awarded Amanda Slavin over $38 million in a negligence lawsuit against McKesson Medication Management LLC (a unit of McKesson Corporation until April 2008) and a neurosurgeon. Amanda Slavin underwent spinal surgery in October 2003. During the surgery, the neurosurgeon injected Slavin with Methylene Blue which operating room personnel acquired from a medicine cabinet maintained by McKesson. McKesson had contracted with the hospital to run its pharmacies and train its staff. Slavin alleged McKesson did not provide the doctor or any of the hospital’s medical personnel with training or with the information the FDA required indicating that Methylene Blue was contraindicated for Slavin’s procedure. Following the surgery, Slavin developed a debilitating condition characterized by severe burning pain and neurologic disability, which has required multiple surgeries and forced to give up her profession as a nurse. The Jury found both McKesson and the neurosurgeon were negligent and at fault for Slavin’s damages.... more»
8. Racial Discrimination
On March 6, 2002, a federal court "approved a $1,245,000 settlement of a class action race discrimination lawsuit brought by EEOC and private counsel against McKesson Water Products Company and Groupe Danone...The EEOC initiated an investigation of McKesson in 1998 when Steven Crutchfield and several other African-American employees filed charges of discrimination with the Commission alleging that they had suffered racial discrimination at the drinking water processing and delivery company. Specifically, they charged that McKesson had paid African-American drivers less and increased their compensation at a slower rate than white drivers. They claimed that McKesson assigned African-American drivers to routes in low-income neighborhoods, which were often less profitable than routes in affluent communities. Because pay and promotion were tied to the profitability of the routes, the African-American drivers received lower compensation and fewer promotions than those assigned to the affluent areas."... more»
9. SEC v. Smeraski (HBOC Securities Fraud)
The United States District Court for the Northern District of California entered a consent and final judgment against Michael G. Smeraski, former senior sales vice president at HBO & Company, Inc. (HBOC), an Atlanta, Ga.-based health care software vendor that merged with McKesson in 1999. Smeraski was charged with securities fraud in connection with a long-running scheme at HBOC to fraudulently inflate revenue and net income. Smeraski and others routinely approved software sales contracts with associated side letters containing unsatisfied contingencies precluding revenue recognition and backdated contracts and other documents for the purpose of recognizing revenue in an earlier reporting period. These practices failed to comply with Generally Accepted Accounting Principles. In addition to being permanently enjoined from violating the antifraud provisions of the federal securities laws, Smeraski was ordered to pay a civil penalty of $50,000. See related McKesson misconduct instances “McKesson/HBOC, Inc. Securities Litigation” and “McKesson/HBOC Inc. ERISA Litigation.”... more»
10. Average Wholesale Price (AWP) Lawsuit
A class-action lawsuit filed in federal court in Massachusetts against McKesson Corporation alleges McKesson and pharmaceutical data publishing company First DataBank entered into a secret agreement to artificially inflate the average wholesale price (AWP) of hundreds of brand-name drugs. The government uses average wholesale prices as reported by drug companies to set reimbursements from federal health programs. The lawsuit was filed on behalf of healthcare consumers and third-party payors who allegedly overpaid for drugs by billions of dollars. In November 2008, McKesson agreed to settle all private party claims for $350 million. The settlement terms, which are subject to final court approval, include an express denial of liability. Claims made by public entities, including federal, state and local governments, remain pending. See related McKesson pending instances, "Connecticut Drug Prices Lawsuit" and “San Francisco Drug Prices Lawsuit.”... more»
11. Federal Drug Reporting Violations
McKesson Corp. agreed to pay over $13 million to U.S. Attorney's Offices in California, Colorado, Florida, Maryland, Texas and Utah to settle allegations that it violated federal drug reporting provisions. According to the Department of Justice, McKesson violated the Controlled Substances Act by failing to report to the Drug Enforcement Administration suspicious sales of prescription medications to various pharmacies, including those that fill orders from Internet sites that sell drugs online to customers who do not have a legal prescription. McKesson made no admission of liability under the settlement.... more»
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