Caremark Suit Takes a Surprising Turn

A whisteblower lawsuit against Caremark (CMX) is starting to sound off-key.

In an unusual twist, the giant pharmacy benefit manager -- accused of selling returned drugs to unsuspecting customers -- is actually inviting prosecution by Florida. The company said on Thursday that it supports the state attorney general's intervention in a case that it has "strenuously refuted" as baseless in the past.

To be sure, the state's motion itself is far from typical. It makes absolutely no mention of the allegations against Caremark but instead suggests that the state should intervene because of some potential conflict with the whistleblowers. Specifically, it says that there is a "strong possibility" that at least one of the whistleblowers could soon face an administrative hearing before the state and, thus, should not be allowed to direct the litigation. It also makes clear that Caremark voiced no opposition to the state's intervention.

Caremark followed up on Thursday by saying that it even welcomed the move. The developments had no impact on Caremark's stock, which rose 8 cents to $32.86 late Thursday.

"Caremark has strenuously refuted the allegations brought against the company by the relators and sought the Florida attorney general's intervention," the company stated. And "immediately following the filing of the [state's] motion, Caremark today filed a separate motion to stay all discovery in this case on the basis that it would be inappropriate for the relators to continue participating in discovery until the court has ruled on the department's motion to intervene."

But Mike Leonard, the Chicago attorney representing the whistleblowers, told TheStreet.com on Thursday that Caremark has already lost that motion. He said he will, therefore, proceed with the depositions this week of two Caremark workers who are familiar with the company's business practices. Leonard has already collected damaging testimony from other Caremark employees that bolsters the whistleblowers' allegations that the company has defrauded customers by, among other things, destroying prescriptions and selling returned drugs.