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Express Scripts Holding Co. must turn over internal documents to an investor seeking to probe whether the company misled investors about its relationship with Anthem Inc., the Delaware Chancery Court ruled May 31 ( Elow v. Express Scripts Holding Co. , 2017 BL 181856, Del. Ch., No. 12734-VCMR, 5/31/17 ). Health insurer Anthem is Express Scripts’ largest commercial client as a result of a 10-year deal entered into by the companies in 2009. However, Anthem last year sued Express Scripts in federal court claiming that the St. Louis-based pharmacy benefit manager breached its contractual duties.Shareholder Clifford Elow, in seeking access to Express Scripts records, alleged there was a credible basis to infer that directors breached their fiduciary duties by allowing the company to violate its agreement with Anthem. He also claimed that Express Scripts represented to the market that its relationship with Anthem was strong, when in fact it was deteriorating.
Delaware law allows shareholders to inspect a company’s internal records to investigate possible wrongdoing, the results of which may be used to support a follow-on derivative lawsuit filed on the company’s behalf. Vice Chancellor Tamika Montgomery-Reeves found that court filings from the Anthem lawsuit and statements made by Express Scripts’ management were enough to show there was a credible basis for the shareholder’s inspection.
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