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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date earliest event reported) June 30, 1997
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CORAM HEALTHCARE CORPORATION
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(Exact name of registrant as specified in charter)
Delaware 1-11343 33-0615337
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1125 Seventh Street, Suite 2100, Denver, Colorado 80202
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (303) 292-4973
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On June 30, 1997, Coram Healthcare Corporation ("Coram") reached a
settlement of its lawsuit against Caremark International, Inc. and Caremark,
Inc. (collectively, "Caremark"). The lawsuit and other related issues arose
out of the acquisition by Coram of Caremark's home infusion business in 1995.
The suit against Caremark was originally filed in September, 1995, in the
Superior Court of the State of California in the City and County of San
Francisco. In addition, Caremark filed a related lawsuit against Coram in the
United States District Court, Northern District of Illinois, as well as a
counterclaim against Coram in the San Francisco lawsuit.
Under the settlement, Caremark will forgive all of the promissory
notes (totaling approximately $120 million) that Coram issued to Caremark in
connection with the acquisition of Caremark's home infusion business. Caremark
is also required to pay $45 million in cash to Coram on or before September 1,
1997. As a result, Coram will record a one-time pretax gain of approximately
$165 million in connection with the settlement. The parties have also
exchanged mutual releases of claims and disputes between them and have
dismissed their lawsuits and counterclaims. In connection with this
settlement, Caremark assigned to Coram certain claims against Price Waterhouse
LLP with respect to the issues arising in the litigation with Coram. On July 7,
1997, Coram filed a lawsuit against Price Waterhouse LLP alleging professional
negligence in connection with such assigned claims.
As previously disclosed, one of Coram's insurance carriers, which
contributed approximately $8.8 million to the settlement of certain shareholder
litigation by Coram, has asserted its contractual subrogation rights against
any recovery Coram realizes from Caremark. Such claim has been submitted to
binding arbitration. If the carrier prevails, it may be entitled to receive a
portion of the payment received by Coram in connection with the Caremark
settlement, up to $8.8 million. There can be no assurance that the other
carrier, which paid $15 million in connection with the shareholder litigation
settlement, will not pursue similar claims against Coram.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CORAM HEALTHCARE CORPORATION
Date: July 9, 1997 By: /s/ RICHARD M. SMITH
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Name: Richard M. Smith
Title: Chief Financial Officer
