Sac Bee, On CalPERS — And Merck’s Stint Controlling Medco — The Scandal Allegations Roll On. . . And On.


The Sacramento Bee has done an excellent job of covering this public corruption story for years now. Lately, one facet of the [alleged bribes to] Villalobos [to curry favor, for certain investments by CalPERS] matter to sudenly sparkle dazzlingly — in the Bee’s bright sunlight — is the connection between Villalobos and Merck-Medco. Apparently, while receiving around $4 million to consult on the audit of a prior Cal contract for prescription benefits management, Alfred JR Villalobos was being paid an additional $20,000 per month continuously through 2009 (or about a quarter-million dollars a year) from Medco, for “largely non-CalPERS related” contract advice. Really? As they say, where there’s smoke — often there is fire, too.

Do go read the whole Bee article, here — but this is a bit of it:

. . . .Medco also said it has just received a subpoena from the SEC. . . .

CalPERS said Wednesday it won’t renew its contract with Medco, which administers drug benefits to 300,000 state workers and retirees. Medco was lead finalist for the new pact.

The move followed disclosures by CalPERS that Villalobos was hired after he met with Medco Chief Executive David Snow and Fred Buenrosto, the pension fund’s CEO at the time. He also met later with Kurato Shimada, Charles Valdes and the late Robert Carlson, who were CalPERS board members, according to a report written for the fund by attorney Philip Khinda.

Medco paid Villalobos to help win the contract, Khinda said, and made the final $1 million payment the day it won the deal. . . .

[Medco was] then a subsidiary of Merck & Co. and known as Merck-Medco – was also dealing with several class-action suits. Sources familiar with the litigation said the suits involved some of the same issues brought up in CalPERS’ audit.

The litigation was settled with Merck-Medco paying over $42 million. CalPERS wasn’t part of the litigation.

Meanwhile, a retired state worker has sued Medco, Buenrostro, Shimada and Valdes, saying the dealings with Villalobos led to CalPERS members being overcharged for drugs.

State workers and retirees “have paid excessive amounts of money for their medications purchased through Medco,” says the suit filed in Sacramento Superior Court. It was filed by Michael Desrys, a retired Caltrans worker, and seeks class-action status. . . .

We will keep you informed from time to time.

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