K-V Pharmaceutical obtains OK of settlement with Florida, Ven-a-Care

By Caroline Salls

Pittsburgh, Sept. 11 - K-V Pharmaceutical Co. received court approval of a settlement with the State of Florida and Ven-a-Care of the Florida Keys, Inc., according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

K-V said Florida filed a pre-bankruptcy lawsuit in the Circuit Court of the Second Judicial Circuit in and for Leon County, Fla., against each of the debtors and their dissolved subsidiary Ethex Corp.

In the lawsuit, Florida alleged various violations related to Medicaid drug reimbursement and price reporting, and it sought monetary damages and injunctive relief.

On May 15, 2012, Florida filed a motion for dismissal, in which the state, Ven-a-Care and the defendants agreed to toll the prescriptive period for some defenses to the alleged claims, as well as equitable defenses for a period extending to June 1, 2014.

On Jan. 30, 2013, Florida filed a $17.38 million proof of claim against K-V Pharmaceutical, based on the allegations covered in the lawsuit.

Under the settlement, Florida's proof of claim will be allowed as a $1.5 million fixed, liquidated general unsecured claim against K-V.

The lawsuit will be dismissed under the settlement.

In addition, the settlement includes an acknowledgement that Ven-a-Care and the United States are entitled to a portion of the allowed Florida claim, with that allocation to be handled separately among Florida, Ven-a-Care and the United States.

Florida will be solely responsible for allocating any distributions received on account of the claim.

K-V Pharmaceutical, a St. Louis specialty pharmaceutical company, filed for bankruptcy on Aug. 4, 2012. Its Chapter 11 case number is 12-13346.

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