Hi-Tech Pharmacal Co., Inc. has agreed to settle a business litigation matter with the State of Texas for $25 million. An investigation involving the Texas Attorney General’s office had been ongoing concerning alleged pricing practices of Hi-Tech involving products that were purchased with Texas Medicaid dollars.

Hi-Tech has recently been involved in a merger with Akorn, Inc. and Akorn Enterprises, Inc. The merger plan was dated August 26, 2013, and the plan was approved by stockholders on December 19, 2013.

This matter demonstrates how significant business litigation claims can be.  Obviously these settlements can be extremely large as a $25 million settlement indicates.  However, lawsuits like this or investigations from governmental authorities can also be costly to fight and ultimately harm the reputation of the business.

Though we often see language in press statements about such settlements not constituting an admission of wrongdoing, it is certainly true that the presence of allegations does not automatically mean that any improper business practice was occurring.  It is ultimately up to those bringing claims to prove that the allegations are actually accurate.  However, businesses also have to factor in the expense of bringing such matters all the way to trial to clear the company’s name.  This is especially true when other ongoing business is taking place like an anticipated merger.

When we are speaking of these kinds of financial concerns, businesses will want to consult with experienced business and commercial law attorneys when allegations of wrongdoing are made.  These attorneys can negotiate a settlement with other parties in certain cases and represent the business at trial if necessary.

Source: The Wall Street Journal, “Hi-Tech Pharmacal Announces Settlement Regarding Texas Pricing Investigation,” Dec. 26, 2013