LabCorp 2014 Annual Report Download - page 113

F-34
and the State of California for duplicative lab tests. The lawsuit sought actual and treble damages and civil penalties for each
alleged claim, as well as recovery of costs, attorney’s fees, and legal expenses. Neither the United States government nor the State
of California has intervened in the lawsuit. In January of 2015, Plaintiffs filed a First Amended Complaint, and the Company is
no longer a defendant in the lawsuit.
Prior to the consummation of the Company’s acquisition of LipoScience, purported stockholders of LipoScience filed four
putative class action lawsuits against LipoScience, members of the LipoScience board of directors, the Company and Bear
Acquisition Corp., a wholly owned subsidiary of the Company, in the Delaware Court of Chancery and, with respect to one of
the lawsuits, in the Superior Court of Wake County, North Carolina. The lawsuits alleged breach of fiduciary duty and/or other
violations of state law arising out of the proposed acquisition. Each suit sought, among other things, injunctive relief enjoining
the merger. On October 23, 2014, the case in North Carolina was voluntarily dismissed without prejudice by the Plaintiff. On
October 29, 2014, the Delaware Court of Chancery consolidated the four actions under the caption In re LipoScience, Inc.
Stockholder Litigation, Consolidated C.A. No. 10252-VCP (the “Consolidated Action”). On November 7, 2014, the Consolidated
Action plaintiffs entered into a memorandum of understanding with the defendants regarding a settlement of the Consolidated
Action. In connection with the settlement, the parties agreed that LipoScience would make certain additional disclosures to its
stockholders. Subject to the completion of certain confirmatory discovery by counsel, entry by the parties into a stipulation of
settlement and customary conditions, including court approval, the settlement will resolve all of the claims that were or could
have been brought, including all claims relating to the merger.
On November 19, 2014, the Company entered into a definitive merger agreement to acquire Covance, Inc. (“Covance”) for
approximately $6,200.0 in cash and Company common stock. The transaction closed on February 19, 2015. Prior to the closing
of the transaction, purported stockholders of Covance filed two putative class action lawsuits, one in the Delaware Court of
Chancery, and the other in Mercer County, New Jersey, against Covance, members of the Covance board of directors, the Company
and Neon Merger Sub, Inc., a wholly owned subsidiary of the Company. The lawsuits alleged breach of fiduciary duty and/or
other violations of state law arising out of the proposed acquisition. Each suit sought, among other things, injunctive relief enjoining
the merger. On January 21, 2015, the case in New Jersey was voluntarily dismissed without prejudice by the Plaintiff. On February
9, 2015, the Plaintiffs in the Delaware case entered into a memorandum of understanding with the Defendants regarding a settlement.
In connection with the settlement, the parties agreed that Covance would make additional disclosures to its stockholders. Subject
to the entry by the parties into a stipulation of settlement and customary conditions, including court approval, the settlement will
resolve all the claims that were or could have been brought, including all claims relating to the merger.
In December 2014, the Company received a Civil Investigative Demand issued pursuant to the federal False Claims Act from
the U.S. Attorney’s Office for South Carolina, which requests information regarding remuneration and services provided by the
Company to physicians who also received draw and processing/handling fees from competitor laboratories Health Diagnostic
Laboratory, Inc. and Singulex, Inc. The Company is cooperating with the request.
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, 2014, the Company had provided letters
of credit aggregating approximately $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
commitments for leases with non-cancelable terms of one year or more at December 31, 2014 are as follows:
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in millions, except per share data)