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4-Traders Homepage  >  Equities  >  Nasdaq  >  Express Scripts Holding Co    ESRX

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Express Scripts Holding Co : Express Scripts Sues Ernst & Young Alleging Document Theft

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02/16/2013 | 12:36am CEST
   By Jon Kamp and Michael Rapoport 
 

Pharmacy-benefit giant Express Scripts Holding Co. (ESRX) has filed a lawsuit against accounting firm Ernst & Young LLP and a former employee for allegedly stealing at least 20,000 pages of data containing confidential information and trade secrets.

St. Louis-based Express Scripts hired E&Y to provide consulting services while combining its business with Medco Health Solutions. Express Scripts bought Medco last year to form the largest pharmacy-benefit manager by prescriptions handled.

These firms, known as PBMs, managed drug benefits for health plans and corporate clients, using their buying clout to secure rebates from drug manufacturers. Express Scripts said in the lawsuit that its investigation did not show E&Y's actions affecting any patient or protected health information.

But Express Scripts did accuse the big-four accounting giant of taking "competitively sensitive cost and pricing information" and "highly proprietary" documents involving business and integration strategies, projections and performance metrics.

Express Scripts didn't have a comment on the matter beyond the content of the court filing, which seeks "substantial punitive damages," and to stop E&Y from using or disclosing the information at issue. The lawsuit was filed Thursday in the Circuit Court in St. Louis County, Mo., and reviewed by Dow Jones Newswires.

E&Y in a statement Friday confirmed there was a violation of company policies, and that the individual "at the center of these allegations"--who the Express Scripts lawsuit said was a Health Care IT Partner named Donald Gravlin--"is no longer with the firm."

But E&Y also said it will "vigorously contest the claims" in the lawsuit. The accounting firm noted it "immediately took all necessary steps" to secure the data at issue once it became aware of the matter, and that it's not aware of any instance where the data was used inappropriately or transmitted to a third party.

According to Express Scripts' allegations, an investigation launched last August determined Mr. Gravlin was sending confidential information from another E&Y employee's Express Scripts email account to an outside email account. The company accused him of "sneaking into Express Scripts' headquarters and stealing confidential and proprietary information" for months.

The PBM also alleged that E&Y was motivated to facilitate this activity because it stood to gain from the confidential information, which could be used to grow and develop additional business both with Express Scripts and competitors.

Attempts to reach Mr. Gravlin late Friday were unsuccessful.

E&Y said it believes its prompt action to secure the data prevented any harm to Express Scripts. "Ernst & Young takes client confidentiality seriously," the company said. "We are fully committed to following our clients' security protocols."

Express Scripts uses PricewaterhouseCoopers for auditing work and Deloitte for tax accounting.

Write to Jon Kamp at [email protected]

Corrections & Amplifications

This was corrected at 7:47 p.m. EST because the original incorrectly identified the accounting firm in the last paragraph as PricewaterhouseCoopers. That firm does auditing work for Express Scripts, and the tax accountant is Deloitte.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

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