LabCorp 2013 Annual Report Download - page 50

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On August 24, 2012, the Company was served with a putative
class action lawsuit, Sandusky Wellness Center, LLC, et al. v. MEDTOX
Scientific, Inc., et al., filed in the United States District Court for the
District of Minnesota. The lawsuit alleges that on or about February 21,
2012, the defendants violated the federal Telephone Consumer
Protection Act by sending unsolicited facsimiles to Plaintiff and
more than 39 other recipients without the recipients’ prior express
invitation or permission. The lawsuit seeks actual damages or the sum
of $0.0005 for each violation, subject to trebling under TCPA, and
injunctive relief. The Company will vigorously defend the lawsuit.
The Company was a defendant in two separate putative class
action lawsuits, Christine Bohlander v. Laboratory Corporation of
America, et al., and Jemuel Andres, et al. v. Laboratory Corporation of
America Holdings, et. al., related to overtime pay. After the filing of
the two lawsuits on July 8, 2013, the Bohlander lawsuit was consoli-
dated into the Andres lawsuit, and the consolidated lawsuit is now
pending in the Superior Court of California for the County of Los
Angeles. In the consolidated lawsuit, the Plaintiffs allege on behalf
of similarly situated phlebotomists and couriers that the Company
failed to pay overtime, failed to provide meal and rest breaks, and
committed other violations of the California Labor Code. The
complaint seeks monetary damages, civil penalties, costs, injunctive
relief, and attorney’s fees. The Company intends to vigorously
defend the lawsuit.
On December 17, 2010, the Company was served with a lawsuit,
Oliver Wuth, et al. v. Laboratory Corporation of America, et al., filed in
the State Superior Court of King County, Washington. The lawsuit
alleges that the Company was negligent in the handling of a pre-
natal genetic test order that allegedly resulted in the parents being
given incorrect information. The matter was tried to a jury beginning
on October 21, 2013. On December 10, 2013, the jury returned a
verdict in in plaintiffs’ favor in the amount of $50.0, with 50% of liability
apportioned to the Company and 50% of liability apportioned to
co-defendant Valley Medical Center. The Company filed post-
judgment motions for a new trial, which were denied, and intends
to vigorously pursue an appeal of the judgment on multiple grounds.
The Company carries self-insurance reserves and excess liability
insurance sufficient to cover the potential liability in this case.
Under the Company’s present insurance programs, coverage is
obtained for catastrophic exposure as well as those risks required to
be insured by law or contract. The Company is responsible for the
uninsured portion of losses related primarily to general, professional
and vehicle liability, certain medical costs and workers’ compensation.
The self-insured retentions are on a per occurrence basis without
any aggregate annual limit. Provisions for losses expected under
these programs are recorded based upon the Company’s estimates
of the aggregated liability of claims incurred. At December 31, 2013,
the Company had provided letters of credit aggregating approxi-
mately $42.5, primarily in connection with certain insurance programs.
The Company’s availability under its Revolving Credit Facility is
reduced by the amount of these letters of credit.
The Company leases various facilities and equipment under
non-cancelable lease arrangements. Future minimum rental com-
mitments for leases with non-cancelable terms of one year or more
at December 31, 2013 are as follows:
Operating
2014 $ 132.3
2015 81.8
2016 58.1
2017 39.7
2018 20.5
Thereafter 41.0
Total minimum lease payments 373.4
Less:
Amounts included in restructuring and acquisition related accruals (12.4)
Non-cancelable sub-lease income –
Total minimum operating lease payments $ 361.0
Rental expense, which includes rent for real estate, equipment
and automobiles under operating leases, amounted to $235.7,
$226.0 and $220.2 for the years ended December 31, 2013, 2012
and 2011, respectively.
16. Pension and Postretirement Plans
Pension Plans
The Company has a defined benefit retirement plan (the “Company
Plan”) and a nonqualified supplemental retirement plan (the “PEP”).
Both plans have been closed to new participants since December 31,
2009. Employees participating in the Company Plan and the PEP no
longer earn service-based credits, but continue to earn interest
credits. In addition, effective January 1, 2010, all employees eligible
for the defined contribution retirement plan (the “401K Plan”)
receive a minimum 3% non-elective contribution (“NEC”) concur-
rent with each payroll period. Employees are not required to make
a contribution to the 401K Plan to receive the NEC. The NEC is
non-forfeitable and vests immediately. The 401K Plan also permits
discretionary contributions by the Company of 1% to 3% of pay
for eligible employees based on service.
The Company’s 401K Plan covers substantially all employees.
Prior to 2010, Company contributions to the plan were based on a
percentage of employee contributions. In 2013, 2012 and 2011,
the Company made non-elective and discretionary contributions
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements