This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Medco's Talking Cure

Medco (MHS) could be on the verge of chasing away a nagging legal headache.

The giant pharmacy benefit manager has signaled a new willingness to settle a six-year-old government probe of its business practices. A court order issued last week says the parties have temporarily abandoned their original schedules -- which had them headed for a 2006 trial -- "to permit settlement discussions" instead.

The federal government has accused Medco of defrauding customers by shorting, changing and canceling their prescriptions. The government has already forced Medco to adopt different business practices -- a move that has hurt the company's margins -- but continues to seek monetary damages that, some believe, could top $1 billion.

For its part, Medco always has denied any wrongdoing while leaving the door open for a fair settlement that would put the litigation behind the company. Medco told on Tuesday that it would not comment on "speculation or rumor" about a possible deal.

Still, at least one Medco critic believes that the company could finally make a move.

"Settlement is in Medco's best interest -- and always has been," says Patrick Burns, a spokesman for Taxpayers Against Fraud. "If the Department of Justice joins a False Claims Act case, the facts are generally very bad. ... All in all, there are over 20 frauds listed (against the company), and the laundry list itself is something Medco does not want a jury to see."

In the meantime, Medco already has lost its highly lucrative contract with the federal government. Medco has essentially portrayed the government's case as a fishing expedition carried out by an overzealous prosecutor. Associate U.S. Attorney James Sheehan, who is leading the government's probe, has developed a reputation for pursuing companies suspected of engaging in health care fraud. The case against Medco is among the biggest of his career.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs