Caremark Probe Goes Postal

However, government prosecutors insist that Caremark knew exactly what it was doing when it allegedly set out to defraud Medicaid. Indeed, they allege that the company even designed special "dummy" computer codes that would reject Medicaid claims automatically.

Thus, those involved in the case scoff at the notion that Caremark had no idea it was doing anything wrong. Lawyers representing the Caremark "relator" who first blew the whistle on the company feel that they can prove otherwise.

"We believe the relator's evidence (which was not presented to the Tennessee court) demonstrates that her concerns about Caremark's conduct were voiced early and often and that such concerns were flagrantly disregarded by Caremark during her tenure with the company," says Marlene Martin, a San Antonio attorney helping the government with its case. "The relator looks forward to showing the Texas judge and jury her evidence that Caremark knowingly made false statements to the Medicaid programs and thereby avoided its obligation to pay the government."

In the meantime, Caremark brass continues to sell a load of company stock. This month alone, 10 Caremark insiders -- including senior finance and legal executives -- have carried out big sales. CEO Edwin "Mac" Crawford raked in the most of all through an options transaction, executed just last week, that netted him more than $16.5 million.