Lieff Cabraser Heimann & Bernstein, LLP, Announces The Filing Of Motion To Amend The Complaint In the Merrill Lynch Mutual Fund Lawsuit Against McKesson HBOC For Securities Fraud To Name and Add Claims Against WebMD.

Business Editors/Legal Writers

SAN FRANCISCO--(BUSINESS WIRE)--Sept. 5, 2003

The national plaintiffs' law firm Lieff Cabraser Heimann & Bernstein, LLP, announced that yesterday it filed a motion to amend the complaint in an accounting and securities fraud lawsuit against McKesson HBOC, Inc.; its predecessor HBOC; Arthur Anderson, LLP; and certain individual defendants. The proposed amended complaint names WebMD as a defendant and adds allegations regarding the company's conduct. Lieff Cabraser serves as counsel for plaintiffs Merrill Lynch Fundamental Growth Fund, Inc. and Merrill Lynch Global Value Fund, Inc. ("Merrill Lynch Funds"). The motion was filed in California Superior Court.

The Merrill Lynch Funds charge that a massive accounting fraud occurred at HBOC before and following its 1999 acquisition by McKesson Corporation. The Merrill Lynch Funds allege that defendants artificially inflated the price of securities of McKesson HBOC, the name McKesson adopted after acquiring HBOC, as a result of improperly recognizing revenues and making false and misleading representations and omissions concerning the financial condition of HBOC. Once the fraudulent conduct of defendants was discovered and disclosed, the value of McKesson HBOC's shares fell sharply, causing significant losses to the Merrill Lynch Funds.

Yesterday, the Merrill Lynch Funds filed a motion to add WebMD as a defendant. The new allegations against WebMD consist of the following: WebMD agreed to enter into transactions which (a) allowed HBOC to improperly record $5 million in "revenue" for the quarter ending December 31, 1998 on a transaction that amounted to little more than an exchange of inventory; (b) permitted HBOC to record that revenue in the quarter ending December 31, 1998 even though the transaction was not completed nor even entered into as of that date; and (c) allowed McKesson HBOC to improperly record $9 million in "revenue" from a contract that was subject to undisclosed "options" which rendered the contract terms undeterminable, for the quarter ending March 31, 1999, all in violation of Generally Accepted Account Principals (GAAP).