An investigation on behalf of investors in shares of Medco Health Solutions Inc. (NYSE:MHS) over possible breaches of fiduciary duty in connection with potential improper conduct by a former consultant was announced.

The investigation by a law firm focuses on possible shareholder claims in connection with probes by the Attorney General and the SEC regarding possible improper conduct by a former consultant.

In April 2010, the Attorney General for the State of California requested information from Medco Health Solutions Inc. about a former consultant, who was a former board member of California Public Employees' Retirement System (Calpers), engaged by Medco Health Solutions Inc.in 2004.
In February 2011, Medco Health Solutions Inc received an inquiry from the staff of the Securities and Exchange Commission (SEC) with respect to its investigation relating to this former consultant.

Medco Health Solutions Inc which has been providing about $500 million a year worth of drugs to CalPERS members said it had been cooperating with the SEC and the California Attorney General's office. In a filing with the SEC Medco said it hired the former consultant 'primarily' for his advice with a major audit by CalPERS in connection with previous work Medco Health Solutions had done for CalPERS.
On March 16, 2011 a media report stated that Calpers has ended talks with Medco Health Solutions Inc (MHS.N) for a new three year pharmacy benefits contract beginning next year. Earlier this month Calpers said it had been cooperating with federal and state probes into allegations that Medco Health Solutions Inc had paid a placement agent as a consultant for Calpers business. Placement agents are the middle men used by investment managers and other companies to secure contracts at pension funds.

Earlier this week Calpers released an internal report on its long-running review of placement agent activity that sharply criticized that placement agent who was a former Calpers board member and a former Calpers chief executive officer. According to the report some placement agents had been paid tens of millions of dollars in placement fees by some of its external managers and Medco Health Solutions Inc agreed to paid this former consultant $4 million to help secure the drug-benefit contract in 2006. By the time the contract expires at this years end Calpers reportedly will have paid Medco Health Solutions Inc some $48 million.

On Tuesday Medco Health Solutions said the CalPERS contract has not been material to Medcos historical earnings results and Medco Health Solutions does not anticipate that the loss of this contract will have a material adverse effect on the companys future financial results. Medco Health Solutions 12months Total Revenue went from $44.506billion in 2007 to $65.968billion in 2010. Its Net Income increased over the same time frame from $912million to $1427million.

Subsequently on Thursday Medco Health Solutions Inc was sued by a member of Calpers' health plan alleging that Calpers members had been paying too much for medications as a result of a pharmacy benefits contract between Medco Health Solutions Inc and Calpers.

Shares of Medco Health Solutions Inc. (Public, NYSE:MHS) traded during 2008 as low as $34.69 per share and rose during 2009 to $65.39 per share. In 2010 MHS shares started strong during the first months but then fell during mid 2009 to as low as $45.3. Until the end of 09 MHS stocks recovered and traded over $60 per share. During the first two months in 2011 MHS traded above $60 per share. However shares of Medco Health Solutions Inc. (Public, NYSE:MHS) fell from almost $65 in the beginning of March to under $53 per share and closed on Friday, March 18, 2011 at $53.19 per share.