LabCorp 2014 Annual Report Download - page 47

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The Company is also a defendant in two additional putative class action lawsuits alleging similar claims to the Bohlander/
Andres consolidated lawsuit. The lawsuit Rachel Rabanes v. California Laboratory Sciences, LLC, et al., was filed in April 2014
in the Superior Court of California for the County of Los Angeles, and the lawsuit Rita Varsam v. Laboratory Corporation of
America DBA LabCorp, was filed in June 2014 in the Superior Court of California for the County of San Diego. In these lawsuits,
the Plaintiffs allege on behalf of similarly situated employees that the Company failed to pay overtime, failed to provide meal and
rest breaks, and committed other violations of the California Labor Code. The complaints seek monetary damages, civil penalties,
costs, injunctive relief, and attorney's fees. The Company will vigorously defend these lawsuits.
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 prenatal genetic test order that allegedly resulted in the parents being given incorrect information. The matter was
tried before 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 million, 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 is vigorously pursuing
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.
On July 3, 2012, the Company was served with a lawsuit, John Wisekal, as Personal Representative of the Estate of Darien
Wisekal v. Laboratory Corporation of America Holdings and Glenda C. Mixon, filed in the Circuit Court of the Fifteenth Judicial
Circuit in and for Palm Beach County, Florida. The lawsuit alleges that the Company misread a Pap test. The case was removed
to the United States District Court for the Southern District of Florida. The matter was tried before a jury beginning on April 1,
2014. On April 17, 2014, the jury returned a verdict in Plaintiff’s favor in the amount of $20.8 million, with non-economic damages
reduced by 25% to account for the Plaintiff's negligence, for a final verdict of $15.8 million. The Company filed post-trial motions.
On July 28, 2014, the Court granted the Company’s motion for remittitur and reduced the jury’s non-economic damages award
to $5.0 million, reduced by 25.0% for the Plaintiff’s negligence. Accordingly, the total judgment is $4.4 million. In December of
2014, the Court granted Plaintiff’s Motion to Certify the remittitur order for interlocutory appeal, and stayed the case pending the
Eleventh Circuit Court of Appeal’s review of the Plaintiff’s challenge to the reduction in the judgment.
On July 9, 2014, the Company was served with a putative class action lawsuit, Christopher W. Legg, et al. v. Laboratory
Corporation of America, filed in the United States District Court for the Southern District of Florida. The complaint alleges that
the Company violated the Fair and Accurate Credit Transactions Act (“FACTA”) by allegedly providing credit card expiration
date information on an electronically printed credit card receipt. The lawsuit seeks statutory and punitive damages, injunctive
relief, and attorney’s fees. The Company will vigorously defend the lawsuit.
In October 2014, the Company became aware of, but was not served with, a False Claims Act lawsuit, United States of America
and State of California ex rel. Elisa Martinez v. Quest Diagnostics Incorporated, et al., filed in the United States District Court
for the Eastern District of California. The lawsuit alleged that Quest and the Company submitted false claims to the United States
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 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 $6.2 billion in cash and Company common stock. The transaction closed on February 19, 2015. Prior to the closing