CVS Caremark is in the news arising out of contract entered into more than twenty-five (25) years ago. In 1990, MedPartners Inc. (now Caremark) reached a $56 million settlement on a pending securities and derivative litigation after a failed merger with Nashville, Tennessee-based PhyCor Inc. Plaintiffs in the new litigation matter alleged that during the negotiations leading to a settlement in 1990, MedPartners and its insurance company, American Insurance Group (AIG), represented there was only $50 million in available insurance to settle the case. In fact, MedPartners had an insurance policy from AIG that provided for unlimited insurance coverage and that “AIG would pay any judgment or settlement, no matter how large.” In the new litigation matter, Plaintiffs allege that “Defendants wrongfully withheld information relating” to the excess policy. As part of the settlement, “Defendants deny that they engaged in any wrongdoing of any kind.” Under the latest settlement, AIG has agreed to pay $230 million, while Caremark has agreed to pay $80 million.
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