Cardinal Health directors’ insurers will pay the company $124 million to settle a stockholder derivative action related to the opioid crisis.
The company (NYSE: CAH) on July 22 issued a court-authorized notice to alert investors to a settlement hearing to be held on Oct. 4 in U.S. District Court in Southern Ohio.
If the settlement is entered, it would end nearly three years of hard-fought litigation that sought to prove that present and former board members of Cardinal Health failed in their oversight of the company, according to a plaintiffs motion filed May 25 for preliminary approval of the proposed settlement.
Through their lawyers, the investors claimed that the board members acted with reckless disregard for the best interests of Cardinal by allowing Cardinal to distribute prescription opioids without fully adhering to the laws governing the distribution of controlled substances, including the Controlled Substances Act (the “CSA”). The plaintiffs alleged that the individual board members ignored red flags of non-compliance with the CSA and other laws, ultimately causing the company significant financial exposure and harm.
According to the motion filed May 25, the $124 million settlement “represents one of the largest cash recoveries in a derivative settlement
ever on behalf of an Ohio corporation.” It was reached “only after an in-person mediation session lasting late into the night with the assistance of two highly experienced mediators in complex litigation, including similar shareholder actions.”
In February, Cardinal Health, AmerisourceBergen and McKesson agreed to pay up to $19.5 billion over 18 years to settle most state and local government lawsuits across the country related to the opioid abuse epidemic.