Caremark ( CMX) has suffered a relapse. The company's preferred treatment of a whistleblower lawsuit was rejected by a Florida court this week. The Tallahassee Democrat reported on Tuesday that Leon Circuit Judge P. Kevin Davey denied a motion by the Florida attorney general to obtain control of a whistleblower complaint that accuses Caremark of defrauding state customers. In an unusual move, the company last month actually invited prosecution by the state. But the whistleblowers provided evidence that well-connected Florida officials may be more interested in protecting Caremark than in pursuing the company. And the Florida attorney general's office failed to convince the judge on Monday that it is best suited to handle the case. "If they show good cause, they can come in later," Davey said, according to the Tallahassee newspaper. "However, I don't think they've shown good cause here." Former Caremark pharmacists Michael and Peppi Fowler have accused Caremark of harming Florida customers by, among other things, changing their prescriptions and selling them drugs that were returned through the mail but never tested for possible damage. The plaintiffs claim that Caremark then improperly pocketed bonuses for "saving" the state money and even profited twice by reselling the same drugs. Their attorney, Michael Leonard, has previously estimated the resulting damages at more than $100 million in Florida alone. Leonard declined to comment on the case Tuesday. For its part, Caremark has denied any wrongdoing and taken aim at the whistleblowers instead. Caremark also managed to convince a state prosecutor -- who until last year worked for the law firm now representing the company -- to intervene in the case. In its unusual motion last month, the Florida attorney general argued that it should take over the lawsuit due to a possible conflict with the whistleblowers. Caremark has since elaborated by saying that the Fowlers may soon face an administrative hearing before the state pharmacy board for improperly obtaining non-narcotic painkillers. But the whistleblowers have highlighted some potential conflicts as well. They claim that the Florida attorney general originally declined to get involved in the case last summer after Richard Barnum, a well-placed state official, expressed satisfaction with Caremark's services. Moreover, the plaintiffs recently obtained emails indicating that Barnum -- a state division head who has served in the past as a Caremark adviser -- learned about the company's drug restocking strategy but sounded no alarm to state prosecutors. The same emails show that Barnum recommended that assistant Dee Fort, who didn't necessarily agree with Caremark's practices, follow his lead. "I wish to avoid making any additional comment to the
Florida attorney general's office at this time," Barnum wrote to Fort after reviewing restocking information from Caremark itself. "If you do feel differently, please withhold taking any action. Regardless of which option you choose, I trust your judgment." In a court filing last week, the whistleblowers stated that both Barnum and Fort claimed "they did not know and had never been told by Caremark" about the company's restocking practices in sworn depositions. They sought to depose Barnum again but saw that particular motion denied by the judge on Monday. John Kuczwanski, a spokesman for the Florida agency where Barnum and Fort both work, said the state "needs to look into the full context of the emails before we can comment" on the matter. The state is already examining whether Barnum may have violated Florida's strict ethics code by accepting expensive trips to special Caremark advisory board meetings. The whistleblowers claim in court filings that Fort accepted "gratuities" from the company as well. The plaintiffs are now seeking to unseal the depositions of Barnum and others. Meanwhile, they have already shared some of their discovery findings in sworn statements filed with the court. One former Caremark staffer, Yesenia Garcia, indicated that the company not only restocked drugs but also attempted to cover its tracks. Garcia, an hourly worker once employed in Caremark's "returned goods" room, said that she was ordered to falsify computer records to conceal the restocked drugs by saying they were destroyed instead. "You get used to putting 'restocked' for over a year," she said. "And then all of a sudden, boom, you have to put 'destroyed' ... even though we were restocking it and shipping it out." According to Garcia's testimony, not until last year -- after the whistleblowers filed their suit -- did Caremark finally stop restocking drugs altogether. Caremark has said in the past that it restocked only a tiny fraction of its drugs and no longer engages in the activity. It has also consistently defended its business practices and portrayed the entire whistleblower lawsuit as baseless in nature. It followed up on Tuesday by downplaying the new court ruling that bars Florida from intervening in the case. "Yesterday's ruling is unrelated to the underlying case," said Caremark spokesman Gerard Carney. "And we will continue to vigorously defend our case in the courtroom and, as previously stated, will not try it in the press." Caremark's stock fell 15 cents Tuesday afternoon to $30.20. The shares recovered after briefly dipping below $30 -- a level they last breached when Caremark announced a multistate probe of its business practices in early July.