NJ firm settles Calif. pension fund kickback case

SACRAMENTO, Calif. (AP) — A New Jersey company that manages prescription benefits has agreed to pay $2.7 million to settle an investigation over influence-peddling at California’s largest public pension fund, officials announced Friday.

The California attorney general’s office said Medco Health Solutions Inc. also has agreed to change its internal procedures.

The California Public Employees’ Retirement System did not renew a contract with Medco last year after an investigation revealed the company paid more than $4 million to Alfred Villalobos to help secure a prescription drug contract.

Villalobos is a former CalPERS board member who acted as a middleman to help companies gain contracts with the pension fund. The state attorney general has charged him with setting up a system of kickbacks to gain influence with pension fund executives.

California officials sued Villalobos in 2010, and the case is expected to head to trial later this year in Los Angeles. At the same time, federal authorities continue criminal and civil investigations.

Medco spokeswoman Ann Smith said the company is pleased the state investigation affirmed “no wrongdoing of any kind.” She said the review determined no employees violated any rules or Medco’s code of conduct.

“Our retainer agreement bound Mr. Villalobos to follow all applicable laws and regulations to the work on our behalf,” Smith said.

CalPERS CEO Anne Stausboll said in a statement she was pleased with the settlement, a portion of which will be shared with CalPERS.

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