Cardinal Health to Settle Securities Lawsuit for $600 Million

Cardinal Health Inc. agreed to pay $600 million to settle a lawsuit filed by shareholders accusing the medical products and services company of accounting irregularities and inflated earnings, according to the company.

In a regulatory filing on Wednesday, the company denied any wrongdoing and said it settled to eliminate the uncertainties and expense of further litigation. The settlement is subject to approval in U.S. District Court.

The Medical products and services company had established a $600 million reserve for the settlement in its third quarter ended March 31.

The lawsuit was filed on behalf of those who bought stock between 2000 and 2004.

Shareholders who filed the lawsuit are pleased with the settlement, said Henry Rosen, an attorney with the San Diego firm that represented several of the largest investors.

The case was filed after the Securities and Exchange Commission began investigating the company in October 2003 over its accounting of money it got from vitamin manufacturers. The investigation was expanded to include its core pharmaceutical distribution business.

Cardinal then began an internal investigation that resulted in the company restating its annual and quarterly financial statements for three years. Some employees were disciplined or fired, and the company’s chief financial officer quit in 2004.

The company said in the filing that it has set aside an additional $40 million to cover a possible settlement of a lawsuit filed by workers who bought Cardinal stock for their retirement plans.

The company, based in the Columbus suburb of Dublin, also has established a separate $35 million reserve to settle a SEC investigation over some of the same issues.

SOURCE: AP