State AG Monitor

State AGs in the News

By Bernard Nash, Divonne Smoyer, and Christopher J. Allen on Posted in Antitrust, Consumer Protection, Environment, Pharmaceuticals

Antitrust/Consumer Protection

45 AGs, FTC Settle Deceptive Advertising Claims with Skechers over “Toning” Shoes

  • 45 AGs and the FTC reached a settlement with shoe-maker Skechers resolving allegations that the company deceptively marketed its “toning” sneakers.
  • The company agreed to pay a total of $50 million to resolve claims that it misled consumers with advertisements that its “Shape-ups” and other toning sneakers would help consumers lose weight and tone their lower bodies, when the company allegedly could not substantiate such claims.

More AGs Join E-Book Pricing Suit against Apple and Two Publishing Companies, Bringing Total to 31 States 

  • 16 AGs have joined the AGs of 15 other States, the District of Columbia, and Puerto Rico, as well as the U.S. Department of Justice, in a lawsuit against Apple and publishing companies Penguin and Holtzbrinck Publishers (which operates Macmillan) on allegations that the companies conspired to raise the prices of e-books.
  • Three other publishers have either already settled or are close to settling with the DOJ and the States over the same allegations.

Massachusetts AG Settles Deceptive Marketing Allegation with Car Dealerships 

  • Massachusetts AG Martha Coakley announced a settlement with a group of car dealerships resolving allegations that the company misrepresented the price and features of its cars in violation of Massachusetts consumer protection laws.
  • Under the terms of the settlement, the company will pay $225,000 in restitution, civil penalties, and attorneys fees to resolve allegations that the company listed low prices in online and print advertisements that it had no intention of actually meeting, had consumers fill out incomplete purchase documents and then filled in a higher purchase price than agreed, and charged fees for unwanted or undisclosed warrantees and services.

Indiana AG Sues 5 Foreclosure “Rescue” Firm over Alleged Deceptive Practices 

  • Indiana AG Greg Zoeller announced five lawsuits against foreclosure “rescue” companies that promised to reduce homeowners’ interest rates or monthly payments in exchange for an upfront fee.
  • In each case, the AG has alleged that the companies made unsolicited calls to homeowners facing potential foreclosure and requested thousands of dollars in upfront fees, but that once they were paid they then failed to take any action to complete the promised services.

Pharmaceuticals

41 AGs Support Federal Legislation Allowing Generic Drug Makers to Correct Label Warnings 

  • 41 AGs joined a letter sponsored by the National Association of Attorneys General to the U.S. Senate Judiciary Committee urging adoption of legislation that would give manufacturers of generic drugs the ability to make corrections to the warning labels on their products.
  • The legislation, S.2295, is intended to address the U.S. Supreme Court’s 2011 decision in PLIVA, Inc. v. Mensing, which held that state laws requiring generic manufacturers to adequately warn consumers of dangerous side effects are preempted because current federal law permits only brand-name manufacturers to independently change label warnings.

Kentucky AG Settles AWP Claims with Forest Pharmaceuticals

  • Kentucky AG Jack Conway announced a settlement with Forest Pharmaceuticals resolving allegations that the company improperly inflated the reported average wholesale price (AWP) for its drugs.
  • Under the settlement, Forest will pay $1.75 million to reimburse the State for alleged overpayments by Medicaid for its products that resulted from the alleged inflated AWP.

Environment 

Illinois AG Sues Mineral Company over Alleged Water Pollution 

  • Illinois AG Lisa Madigan sued a mineral company over alleged pollution to Illinois waterways from its transportation of salt.
  • The company, which receives shipments of salt from the Illinois River and stockpiles at its facility for future sales, allegedly allowed quantities of salt to spill into the river from its conveyor system and to leach into groundwater through its drainage system, which the AG alleges can be very toxic to freshwater aquatic life.

 

State AGs in the News

By Bernard Nash, Divonne Smoyer, and Christopher J. Allen on Posted in Consumer Protection, Environment, Pharmaceuticals

Consumer Protection

Texas AG Settles Consumer Protection Claims with Mobile Messaging Company

  • Texas AG Greg Abbott announced a settlement with JAWA and numerous related entities resolving allegations that they improperly added expensive, unauthorized charges to consumers’ monthly mobile phone bills.
  • The entities, which allegedly deceived consumers into subscribing to receive premium text messages on mobile phones without proper disclosures, will pay a total of $2 million to the State, repay customers for all unauthorized charges, and establish both a toll-free telephone number and a website to help all affected customers.

Pharmaceuticals

49 AGs, US DOJ Settle Drug-Pricing Marketing Claims with Abbott Labs

  • 49 AGs and the federal government reached a settlement with Abbott Labs under which the company will pay the States $240 million to resolve Medicaid fraud claims, in addition to another $1.26 billion in criminal and civil penalties to the federal government.  Abbott also agreed to pay $100 million to 45 States to resolve consumer protection claims related to the same allegations.
  • Under the terms of the agreement, Abbott pleaded guilty to misbranding Depakote by training its sales force to promote the drug for uses not approved by the FDA, making this matter the latest in the series of cases involving so-called “off-label” marketing claims that we commented on last month.

Environment

Massachusetts AG Settles Natural Resource Damage Claims with General Motors Successor

  • Massachusetts AG Martha Coakley announced that a federal bankruptcy court has approved a settlement of claims for environmental damages between the State and a successor entity established to handle claims unresolved by General Motors’s 2009 bankruptcy.
  • The settlement, under which the entity will pay $875,000, resolves claims that GM’s operations at a former auto plant resulted in discharges of hazardous materials that contaminated a riverbed, banks, and surrounding wetlands, which impaired birds, animals, and other wildlife.

Missouri AG Announces Agreement with City of Springfield over Sewer System

  • Missouri AG Chris Koster announced an agreement with the City of Springfield, Missouri, under which the city will spend $50 million over the next seven years to make major modifications to its sewer system.
  • The agreement resolves allegations that untreated raw sewage was overflowing from the city’s wastewater collection system and from bypasses from the city’s two wastewater treatment plants, which risked contaminating drinking water and the local environment.

State AGs in the News

By Bernard Nash, Divonne Smoyer, and Christopher J. Allen on Posted in Antitrust, Consumer Protection, Employment, Energy, Environment, Mortgages/Foreclosures

Antitrust/Consumer Protection

Publishers Reach Tentative Settlement with 15 AGs over E-Book Price-Fixing Claims

  • 15 AGs have reached a tentative settlement with HarperCollins Publishers and Hachette Book Group to resolve a lawsuit claiming that the companies conspired with other publishers and Apple to raise the prices of e-books.
  • The two publishers already had settled similar allegations with the federal government, and a third publisher, Simon & Schuster, is reported to be nearing its own settlement; meanwhile, litigation filed by the AGs and the U.S. Department of Justice against two other major publishers, Penguin and Holtzbrinck Publishers (which operates Macmillan), and Apple remains pending in federal court.

Texas AG Investigates State Farm over Non-Renewal of Gulf Coast Insurance Policies

  • Texas AG Greg Abbott is investigating State Farm over allegations that the company may have misled policyholders regarding its decision not to renew thousands of residential and commercial insurance policies along the Gulf Coast.
  • In response to the investigation, State Farm has filed a lawsuit to prevent the AG from enforcing a request issued in April seeking documents related to the company’s decision not to renew the more than 11,000 contracts.

West Virginia AG Sues Chemical Manufacturer over Products Allegedly Used in Designer Drugs

  • West Virginia AG Darrell McGraw sued chemical-maker Nutragenomics Manufacturing under the State’s consumer protection law, claiming that the company falsely claims that its products, which the AG alleges are used to manufacture synthetic “designer” drugs, such as “bath salts” and synthetic marijuana, are safe and legal under state law.
  • The lawsuit seeks to prevent the company from advertising its products as legal and safe and to force the company to identify West Virginians who purchased its products, and it also seeks penalties under the consumer protection law.

Judge Dismisses Virginia AG’s Currency Exchange Lawsuit against BNY Mellon

  • A state judge has dismissed Virginia AG Ken Cuccinelli’s lawsuit against Bank of New York Mellon alleging that the bank defrauded state pension funds by failing to provide those funds with the best exchange rates for foreign currency trades.
  • The judge ruled that the State could not proceed on the suit, one of several qui tam actions filed against BNY Mellon under various state false claims acts, because the lawsuit did not allege that the company submitted a false claim for payment, which the judge said is required to state a claim under the Virginia Fraud Against Taxpayers Act.

Mortgages/Foreclosures

Arizona AG Settles with Mortgage “Rescue” Company over Alleged Deceptive Practices

  • Arizona AG Tom Horne reached a settlement with Underwater Property Solutions, a mortgage “rescue” company that offered to assist homeowners facing foreclosure to modify the terms of their mortgages by encouraging them to retain a law firm, operating as The Mortgage Law Group, which the AG also is suing over alleged deceptive foreclosure services.
  • The settlement, under which the company is barred from operating in Arizona and must provide restitution to consumers, resolves allegations that the company collected fees upfront for its services, which is prohibited by state law, and made false claims that modification was guaranteed and would save consumers hundreds of dollars a month.

Employment

New York AG Settles with Construction Companies over Alleged Unpaid Wages

  • New York AG Eric Schneiderman announced that a group of construction companies owned by a husband and wife will pay $500,000 in restitution to workers who allegedly were not paid the hourly prevailing wage required by the State.
  • The settlement also requires the companies and owners to provide the AG’s Office with advance notice about any bids to perform work, as well as documentation showing payment of prevailing wage for any such accepted bids.

Energy

North Carolina AG Report Urges Legal Protections for Landowners Impacted by Fracking

  • North Carolina AG Roy Cooper released a report recommending legislative measures to strengthen protections for property owners and consumers who enter agreements to permit natural gas extraction by hydraulic fracturing, or “fracking” on their property.
  • The report, conducted by the AG’s Consumer Protection Division, proposes such measure as requiring leases to include written disclosures for consumers on the impact fracking will have on their property and require approval by their mortgage lender; imposing a mandatory cooling off period for landowners who sign a lease to combat high-pressure sales tactics; requiring registration of lease brokers; and expanding potential compensation for damages to land and water from fracking.

Environment

 Washington AG Leads Effort to Compel NRC to Complete Review of Yucca Mountain Nuclear Waste Storage Facility

  • Washington AG Rob McKenna’s office is leading an effort before the U.S. Court of Appeals for the District of Columbia to compel the Nuclear Regulatory Commission (NRC) to complete the review process for the Yucca Mountain Nuclear Waste Storage Facility in Nevada.
  • The Washington AG has been litigating the NRC’s termination of the development of Yucca Mountain since 2010, alleging that the Nuclear Waste Policy Act requires the agency to reach a final decision on the merits of that application within a certain timeframe.

New Hampshire AG Obtains Penalty against Petroleum Storage Company for Alleged Non-Compliance with Court Order

  • New Hampshire AG Michael Delaney announced a $192,000 fine against a petroleum storage company over its alleged failure to take measures to minimize the risk of oil seepage from the company’s above ground tanks.
  • The company was subject to a 2010 court order, which the AG alleged it had violated, requiring it to bring its storage tanks into compliance with state laws mandating technology to prevent oil from leaking into nearby rivers in the case of a breach or leak.

$1.1 Billion Verdict Demonstrates Continued Allure to AGs of Drug-Marketing Lawsuits

By Bernard Nash, Divonne Smoyer, Milton A. Marquis, and Christopher J. Allen on Posted in Consumer Protection, Contingency-Fee Counsel, Healthcare, Medicaid Fraud, Pharmaceuticals

As we noted earlier this month, an Arkansas state court recently handed down a $1.1 billion judgment in a lawsuit brought by the Arkansas AG against Janssen Pharmaceuticals and its parent Johnson & Johnson after a jury found that the company had concealed the risks associated with its antipsychotic drug Risperdal. The size of the award was based on the judge’s determination that in marketing the drug the company had committed more than 240,000 violations of the State’s Medicaid fraud statute – one for each prescription written to a state Medicaid patient – and more than 4,500 violations of the state’s consumer protection law.

This verdict is one of the latest in a series of actions filed by state AGs against pharmaceutical companies over alleged misconduct in marketing their medications. As in Arkansas’s suit, these actions typically assert that drug companies either failed to report or actively concealed risks posed by their medicines or promoted drugs for uses not approved by the FDA (so-called “off-label” uses). The AGs allege that these actions cause consumers or Medicaid to pay for drugs that doctors would not have prescribed had they been fully aware of the risks, and they seek damages and civil penalties under consumer protection and Medicaid fraud laws. While some AGs have joined multi-state settlements, in which 20, 30, or more states simultaneously resolve such claims against a given drug-maker, other AGs, often using outside law firms compensated on a contingency fee basis, have continued to trial on claims seeking millions or billions of dollars in damages and fines.

Johnson & Johnson, for example, also has been sued over Risperdal by the AGs of Alaska, Massachusetts, Mississippi, Montana, New Mexico, Pennsylvania, South Carolina, and Utah, and the company is subject to already-rendered verdicts of $327 million in South Carolina and $258 million in Louisiana and a $158 million settlement with Texas reached on the eve of trial in February 2012.

Among the other companies that have faced or are facing AG lawsuits are Eli Lilly for its drug Zyprexa and AstraZeneca for Seroquel. In some of these cases, drug-makers have challenged the role played by outside counsel in conducting these suits on behalf of the States, questioning whether permitting attorneys for the State to be compensated via contingency fees or to have such fees include a share of civil penalties may violate due process, although the final results of those challenges remains to be seen.

The takeaway is that, as Medicaid spending on prescription drugs continues to increase and outside firms recover substantial contingency fees,  these actions by state AGs emphasize the need for continued diligence by pharmaceutical companies.

State AGs in the News

By Bernard Nash, Divonne Smoyer, and Christopher J. Allen on Posted in Consumer Protection, Environment, Mortgages/Foreclosures

Hot News

Recording of “A Conversation with State Attorneys General” Webcast Now Available

On April 18, 2012, State AG Practice Partner Divonne Smoyer was joined by Maryland AG and National Association of Attorneys General (NAAG) Incoming President Doug Gansler. AG Gansler provided insightful commentary about his experience as an AG and the considerations AGs face when undertaking their various roles. Please click here to access a recording of the webcast.

Oregon AG to Leave Office This Summer

  • Oregon AG John Kroger announced that he would depart office in summer 2012, before his term ends, in order to accept a position as president of Reed College.
  • AG Kroger, who announced last year that he would not seek a second term, vowed to work with the governor in order to prepare a smooth transition for his successor, who will be elected in November 2012.

Consumer Protection

Wisconsin AG Creates New Consumer Protection and Antitrust Unit

  • Wisconsin AG J.B Van Hollen announced the creation of a new Consumer Protection and Antitrust Unit within the AG’s office that will focus on mortgage-related complaints as well as other consumer protection and antitrust matters.
  • The AG Office’s Criminal Litigation Unit has long enforced State consumer protection, unfair and deceptive trade practices, and antitrust laws, but this shift is intended to give new emphasis to such laws by tasking a specific unit with full-time enforcement.

MetLife Reaches Settlement with 30 States over Life Insurance Payouts

  • Life insurer MetLife has reached an agreement with 30 States resolving a multi-state investigation into allegations that the company improperly retained unclaimed life insurance payouts potentially worth hundreds of millions of dollars.
  • Under the agreement, which results from a three-year investigation into claims that MetLife and other insurers should have taken more direct steps to track down beneficiaries of life insurance policies, MetLife will pay $40 million to the States and distribute as much as $438 million in proceeds to beneficiaries or escheat those funds to the States as unclaimed property.

Massachusetts AG Settles Deceptive Marketing Claims against Health Plan

  • Massachusetts AG Martha Coakley announced a settlement with Texas-based health plan provider Careington International resolving allegations that the company deceptively marketed its discount health plans to Massachusetts consumers.
  • Under the settlement, the company will pay $190,000 in restitution to resolve allegations that it gave consumers misleading descriptions of the provisions of its health plans and failed to properly disclose that those health plans are not the same as health insurance.

New York AG Alleges Fraud against Credit Card Machine Leasing Company

  • New York AG Eric Schneiderman filed suit against Northern Leasing Systems, which leases credit card machines to small businesses, alleging that it attempted to extract unauthorized fees from thousands of customers.
  • The lawsuit alleges that the company, which leases machines to thousands of sole proprietors and small businesses, debited former customers with expired contracts, including many who had received releases from their contracts, allegedly resulting in more than $10 million in unauthorized payments.

Virginia AG Sues Former Reality Star over Cancelled Wine Tours

  • Virginia AG Ken Cuccinelli has sued Tareq Salahi over allegations that a company that he owned and operated defrauded consumers by failing to provide promised tours of Virginia vineyards and failing to provide refunds to consumers after those tours were canceled.
  • The lawsuit against Mr. Salahi, who is known for crashing a White House State Dinner for the Prime Minister of India while starring in a reality television show, seeks to enjoin the company from offering tours, restitution for consumers, and civil penalties under the Virginia Consumer Protection Act.

Mortgages/Foreclosures

Arizona AG Sues Mortgage Modification Company over Alleged Deceptive Practices

  • Arizona AG Tom Horne sued Mortgage Relief Group and its owner for allegedly making false promises and urging consumers to pay upfront fees for mortgage modification services.
  • The lawsuit seeks restitution and penalties of up to $10,000 on allegations that consumers paid between $1,000 and $3,300 for the company’s assistance in negotiating modifications for homeowners facing foreclosure, but failed to perform those services or to keep homeowners informed of the status of their applications for modification.

Environment

New Jersey AG and U.S. DOJ Reach $46 Million Settlement with Oil Refiner over Emissions

  • New Jersey AG Jeff Chiesa and the U.S. Department of Justice reached a settlement with Hess Corp. over alleged violations of state and federal laws regulating the emission of gases and particulates from one of the company’s oil refineries.
  • The settlement, under which Hess will pay a $850,000 fine and spend $45 million to improve its facilities, resolves a lawsuit filed earlier this week that alleged that the company inappropriately made major modifications to its facilities that lacked proper pollution controls, resulting in significant net increases of gases and particulates.

Missouri AG Settles Environmental Claims with Mine Operator

  • Missouri AG Chris Koster announced a settlement with mine operator Doe Run over alleged risks for lead contamination from its Sweetwater Mine and Mill, one of the largest metal mines in the country.
  • The settlement addresses a large waste pile at the mine which contains sandy, lead-containing materials that the AG is concerned can blow off-site and contaminate surrounding areas, and the agreement requires the company to develop procedures and engage in work at the site to prevent such potential contamination.

Wisconsin AG Resolves Licensing Claims with Well-Drilling Company

  • Wisconsin AG J.B. Van Hollen announced that the State settled a lawsuit with a water well-drilling company and one of its employees over allegations that the company operated without a proper license and violated other regulations.
  • The lawsuit, which the company and its employee have agreed to pay $24,000 in fines to resolve, alleged that, in addition to failing to have a Wisconsin license, the Minnesota-based company failed to adhere to regulations and filed false statements that its operations were supervised by an employee that no longer worked at the company.

State AGs in the News

By Bernard Nash, Divonne Smoyer, and Christopher J. Allen on Posted in Consumer Protection, Environment, Mortgages/Foreclosures

Hot News

A Conversation with State Attorneys General Webcast with Maryland Attorney General Gansler

Thanks to all who joined our webcast with Doug Gansler, Attorney General of Maryland and incoming president of the National Association of Attorneys General (NAAG), as part of “A Conversation with State Attorneys General,” Dickstein Shapiro’s ongoing webcast series. AG Gansler shared a number of his thoughts with AG Practice Partner Divonne Smoyer regarding his role and priorities as Maryland’s chief legal officer. A link to a recording of the program will be available soon on our website.

Michael Geraghty Confirmed as Alaska AG

The Alaska Senate unanimously confirmed Michael Geraghty as the State’s AG. AG Geraghty has been serving as interim AG since January 2012, when Governor Sean Parnell appointed him to the seat vacated by John Burns.

Consumer Protection

Ohio AG Sues Owner of Allegedly Deceptive Investment Company

  • Ohio AG Mike DeWine has sued the owner of an Ohio-based firm over allegations that the company falsely guaranteed steady returns on investments to international investors solicited on the internet.
  • The lawsuit alleges that the company and its owner collected hundreds of thousands in deposits from investors in Europe based on its promise to provide daily compound interest of up to 1.25 percent, but it did not fulfill this guarantee and eventually shut down without any advance notice to investors.

New Jersey AG Announces Freeze of Paving Company’s Assets over Consumer Protection Judgment

  • New Jersey AG Jeff Chiesa announced that he obtained a temporarily freeze of the assets of a paving company that has been ordered to pay $17 million in civil penalties, fees, and restitution to consumers for fraudulent practices in the state.
  • The AG stated that the Arkansas-based company, which a New Jersey state court found in December 2011 to have misrepresented its services to consumers, engaged in bait-and-switch advertising, performed shoddy work, and failed to honor warranties to customers, was planning to auction off property in Arkansas to avoid paying the New Jersey judgment.

West Virginia AG Sues 7 Collection Firms for Alleged Unlawful Practices

  • West Virginia AG Darrell McGraw announced lawsuits against seven debt collection agencies for alleged abusive and unlawful debt collection practices in the State, as well as operating without licenses.
  • The lawsuits, which the AG said follow the agencies’ refusal to respond to investigative subpoenas, allege that the firms’ abusive and unfair practices include repeatedly made harassing phone calls, impersonating law enforcement and judicial officers, making false threats of arrest or criminal prosecution, and collecting nonexistent debts or debts that have already been paid.

Mortgages/Foreclosures

11 AGs Petition Federal Housing Finance Agency to Permit Principal Write-Downs

  • 11 AGs, led by Massachusetts AG Martha Coakley, sent a letter to the Federal Housing Finance Agency, the conservator for Fannie Mae and Freddie Mac, urging it to permit the two mortgage giants to implement loan modifications, including principal writedowns, for underwater borrowers.
  • The AGs urged the FHFA, which has resisted principal write-downs as contrary to its responsibility to preserve Fannie Mae and Freddie Mac’s assets, to reconsider its position in light of alleged benefits that writedowns would have in stabilizing borrowers and the national housing market.

California AG Urges Passage of Bills Providing Greater Authority over Mortgage Fraud

  • California AG Kamala Harris applauded the progress of a number of bills that she argues will provide greater tools for the AG and local governments to protect homeowners and communities from the effects of unfair mortgage lending practices.
  • However, several other bills supported by the AG have faced resistance in gathering sufficient support to pass both chambers of the legislature and have been pulled from finance panel hearings for review by a conference committee.
  • The bills, which together have been called the “California Homeowners Bill of Rights,” include a number of provisions expanding the AG’s authority and imposing new requirements on lenders, such as increasing penalties against lenders who own blighted, foreclosed-upon property; preventing banks from initiating foreclosures if homeowners seek loan modifications; requiring purchasers of foreclosed homes to honor the terms of existing leases; and extending the statute of limitations on mortgage fraud; and authorizing the AG to convene a special grand jury for financial crimes involving multiple jurisdictions.

Environment

Alabama AG Sues Oil Storage Companies over Leaks

  • Alabama AG Luther Strange and the U.S. EPA jointly filed suit alleging violations of the Clean Water Act and other environmental laws against three companies that each, at some point, owned an oil storage site in Alabama.
  • The lawsuit alleges that the owners are jointly responsible for a number of incidents since 2000 in which petroleum or oil had leaked off the site through a storm drain and into river systems, which allegedly resulted from the companies’ failures to heed EPA and State warnings and to perform preventative inspections and maintenance on storage tanks.

Massachusetts AG Sues Hess over Hazardous Cleanup Funds Fraud Allegations

  • Massachusetts AG Martha Coakley filed a lawsuit against Hess claiming that the company falsely sought millions of dollars in payment from a state fund for hazardous waste clean-up.
  • The lawsuit asserts claims, similar to those settled by the AG with Sunoco last week, that Hess improperly sought reimbursement from the state fund for claims that it also had submitted to its private insurers related to its clean-up of leaks from underground fuel storage tanks.

Illinois AG Sues Composting Facility for Violations of Waste Management Laws

  • Illinois AG Lisa Madigan filed suit against a waste compost company for allegedly accepting and processing waste after its permit to do so expired.
  • In addition to alleging that the company operated without a valid license, the lawsuit further alleges other violations, such as allowing a fire at the facility to spread to incoming waste piles, failing to process landscape waste in timely manner, and failing to prevent the pooling of runoff from landscape waste.

Wisconsin AG Settles Water Pollution Claims with Shoe-Maker

  • Wisconsin AG J.B. Van Hollen announced a settlement under which General Shoe Supplies Limited will pay penalties and fees related to its alleged unlawful discharge of pollutants into municipal sewer systems.
  • Under the settlement, the company agreed to pay $122,500 to resolve claims that it discharged wastewater containing excessive pollutants, including zinc and phosphate, through floor drains to municipal sewers leading to public water treatment plants, and that it failed to submit regular reports to the Department of Natural Resources concerning its discharges.

State AGs in the News

By Bernard Nash, Divonne Smoyer, and Christopher J. Allen on Posted in Antitrust, Environment, Healthcare, Securities

Hot News

A Conversation with State Attorneys General Webcast | Wednesday, April 18, 2:00 PM (ET)

Join Doug Gansler, Attorney General of Maryland and incoming president of the National Association of Attorneys General (NAAG), for the next installment of “A Conversation with State Attorneys General,” Dickstein Shapiro’s ongoing webcast series. State AG Practice Partner Divonne Smoyer will interview AG Gansler about his role and priorities as Maryland’s chief legal officer. AG Gansler will also answer questions from the audience. Please click here to register for this complimentary program.

Antitrust

16 AGs Sue Publishers, Apple over Alleged E-Book Pricing Conspiracy

  • 16 AGs, along with the U.S. Department of Justice, filed suit against Holtzbrinck Publishers (known by the trade name Macmillan), Penguin Publishing Co., and Apple over allegations that the companies conspired to raise the price of electronic books by restricting the ability of retailers to offer those books at a discount to consumers, potentially costing consumers up to $100 million over a two-year period. A third publisher, Simon & Schuster, was named in the AGs’ complaint but is reportedly negotiating with AGs, having already settled with the U.S. DOJ.
  • Two other publishers, Hachette and HarperCollins, already have settled with the federal government and the AGs, agreeing to end their restrictions on retailer discounts and agreeing to a combined $51 million in restitution to e-book customers nationwide.

Healthcare/Pharmaceuticals

Arkansas AG Obtains $1.1 Billion Verdict in Lawsuit against Janssen Pharmaceuticals

  • An Arkansas judge levied $1.1 billion in fines and payments against Janssen Pharmaceuticals and its parent Johnson & Johnson after a jury ruled for the State in a lawsuit brought by Arkansas AG Dustin McDaniel alleging that Janssen concealed the risks associated with its antipsychotic drug Risperdal.
  • The judge found that the company, by downplaying risks of strokes, seizures, and other side-effects allegedly associated with prescriptions for Risperdal paid by Arkansas Medicaid, committed more than 240,000 violations of the State’s Medicaid fraud statute and more than 4,500 violations of the consumer protection act.

Securities

New York AG Petitions State Court to Intervene in Bank of America Bond Settlement

  • New York AG Eric Schneiderman has filed a petition in state court to intervene and object to Bank of America’s proposed $8.5 billion settlement with holders of mortgage bonds issued by Countrywide Financial Corporation.
  • AG Schneiderman, who intervened and objected in federal court before the action was remanded to New York state court, has asserted that the proposed settlement, in which Bank of New York Mellon is acting as trustee for investors, would be unfair because it represents only a small percentage of the total losses to all investors.

Environment

Massachusetts AG Settles Hazardous Cleanup Funds Fraud Allegations with Sunoco

  • Massachusetts AG Martha Coakley announced a settlement with Sunoco to resolve allegations that the company falsely sought payment from a state fund for hazardous waste clean-up.
  • Under the settlement, the company agreed to pay $2.2 million to resolve allegations that it improperly sought reimbursement from the state fund for claims that it had also submitted to its private insurers related to its clean-up of leaks from underground fuel storage tanks.

Wisconsin AG Settles Air Pollution Claims with Ethanol Producer

  • Wisconsin AG J.B. Van Hollen announced a settlement with Valero Renewable Fuels Company, an ethanol producer, over allegations that the company violated Wisconsin air pollution laws.
  • The company, now bankrupt, allegedly operated in violation of its air pollution permit for a four month period in 2010, and has agreed to $17,000 in penalties to resolve the claims.

State AGs in the News

By Bernard Nash, Divonne Smoyer, and Christopher J. Allen on Posted in Consumer Protection, Energy, Environment, Healthcare

Hot News

A Conversation with State Attorneys General Webcast | Wednesday, April 18, 2:00 PM (ET)

Join Doug Gansler, Attorney General of Maryland and incoming president of the National Association of Attorneys General (NAAG), for the next installment of “A Conversation with State Attorneys General,” Dickstein Shapiro’s ongoing webcast series. State AG Practice Partner Divonne Smoyer will interview AG Gansler about his role and priorities as Maryland’s chief legal officer. AG Gansler will also answer questions from the audience. Please click here to register for this complimentary program.

Consumer Protection

Texas AG Obtains $195 Million Verdict against Tax Consultants for Alleged Deceptive Practices

  • Texas AG Greg Abbott announced a $195 million verdict obtained by the State against TaxMasters over allegations that the company made false statements and engaged in other misconduct in offering to assist consumers with IRS tax bills.
  • The verdict results from a lawsuit filed by the State in 2010 alleging that the company misled customers about its service contract terms, failed to disclose its no-refunds policy, falsely claimed that the firm’s employees would immediately begin work on a case when they did not actually begin work until customers paid in-full for services, and in some cases failed to contact and consult with the IRS or appear its client’s behalf.

Healthcare/Pharmaceuticals

Rhode Island AG, Other State Law Enforcement Receive $230 Million from Google Forfeiture over Canadian Drugs

  • Rhode Island AG Peter Kilmartin and other Rhode Island law enforcement agencies will receive $230 million for their part in a joint state-federal investigation into Google’s role in facilitating unlawful pharmaceutical purchases from Canadian pharmacies.
  • Google forfeited a total of $500 million in gross revenue to the state and federal government to resolve allegations that it permitted Canadian pharmacies that allegedly illegally exported drugs into the United States to advertise on its AdWords platform.

9 AGs Settle Fraudulent Billing Claims with Wellcare

  • The AGs of Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Missouri, New York, and Ohio reached a settlement with health insurer Wellcare Health Plans resolving allegations that the company fraudulently billed Medicaid for treatment provided to patients.
  • Under the settlement, the company will pay $137.5 million to resolve allegations that it inflated the amount it claimed to be spending on medical care to avoid returning the money to Medicaid, knowingly retaining overpayments and falsifying data to misrepresent the medical conditions of patients and treatments they received.

Massachusetts AG Settles Fraud Allegations with Medical Testing Company

  • Massachusetts AG Martha Coakley announced a settlement with Calloway Laboratories to settle allegations that the company defrauded Medicaid regarding testing at homes for recovering drug addicts.
  • The company will pay $20 million to resolve allegations that it established straw companies to funnel bribes to managers of homes for recovering drug addicts to entice those managers to require unnecessary urine testing, for which the company billed Medicaid.

Energy

Massachusetts AG Appeals NRC Decision to Proceed with Hearings to Extend Pilgrim License

  • Massachusetts AG Martha Coakley is appealing the Nuclear Regulatory Commission’s (NRC) decision to proceed with hearings to grant a 20-year license extension to the Pilgrim Nuclear Power Plant in Massachusetts.
  • AG Coakley has opposed the relicensing since 2006 and more recently has argued that the 2011 disaster at Japan’s Fukushima Daiichi power plant demonstrates the need for additional review before the Pilgrim plant can be relicensed, a position rejected by the NRC.

Environment

Massachusetts AG Fines Landowner for Oil Spill

  • Massachusetts AG Martha Coakley announced $38,000 in fines levied against a landowner over alleged violations of state water pollution laws.
  • The owner will take steps to mitigate environmental risks posed by the property in question, which was formerly used for manufacturing and which the State alleges still sits on soil and groundwater contaminated by an earlier oil spill that has not been abated in accordance with state law.

State AGs in the News

By Bernard Nash, Divonne Smoyer, and Christopher J. Allen on Posted in Antitrust, Consumer Protection, Employment, Environment, Mortgages/Foreclosures, State AGs in the News

Hot News

A Conversation with State Attorneys General Webcast | Wednesday, April 18, 2:00 PM (ET)

Join Doug Gansler, Attorney General of Maryland and incoming president of the National Association of Attorneys General (NAAG), for the next installment of “A Conversation with State Attorneys General,” Dickstein Shapiro’s ongoing webcast series. State AG Practice Partner Divonne Smoyer will interview AG Gansler about his role and priorities as Maryland’s chief legal officer. AG Gansler will also answer questions from the audience. Please click here to register for this complimentary program.

Antitrust/Consumer Protection

Scottrade Agrees to Cooperate in AG Antitrust Investigation

  • The AGs of Connecticut, Iowa, and Missouri reached an agreement with Scottrade as part of a broader inquiry into potential collusive conduct by several retail securities brokers and firms that assist brokers that may have hindered competition.
  • As part of the agreement, Scottrade did not admit to any wrongdoing but agreed to cooperate with the ongoing investigation and create a training program for employees to ensure compliance with antitrust laws.

Missouri AG Settles Deceptive Advertising Allegations with Auto Dealer

  • Missouri AG Chris Koster announced a settlement with American Suzuki Motor Corporation resolving allegations that a former auto dealer for the company engaged in deceptive advertising practices.
  • Under the settlement, the company will pay $500,000 in restitution to consumers and $40,000 in fines to the State to resolve claims that the dealer had inaccurately represented that consumers could purchase cars for no or very small monthly payments.

Pharmaceuticals

Texas Settles Pharmaceutical Fraud Claims against Johnson & Johnson

  • Texas AG Greg Abbott announced a settlement with Johnson & Johnson resolving allegations that the company improperly promoted Risperdal for uses not approved by the FDA and downplayed its side effects.
  • Under the agreement, the company will pay a total of $158 million to the State and the federal government, with $61 million going to reimburse Texas for alleged improper payments by state Medicaid.

Kentucky AG Settles AWP Claims with Novartis

  • Kentucky AG Jack Conway reached a settlement with Novartis Pharmaceuticals resolving allegations that the company inflated the value of average wholesale prices for drugs.
  • Under the agreement, Novartis will pay $2.75 million to reimburse the State for alleged overpayments by the State.

California AG Announces Settlement with Medco over Alleged CalPERS Bribery

  • California AG Kamala Harris announced a settlement with Medco Health Solutions over its alleged misconduct in bidding for a contract to provide pharmaceutical benefit management for CalPERS, the state employee retirement system.
  • Under the settlement, Medco will pay $2.75 million and adopt changes to its business practices to resolve allegations that one of its agents made improper gifts and contributions to CalPERS board members and officials and met with them during restricted periods in order to influence the bidding process.

Employment

Massachusetts AG Settles Unpaid Vacation Wage Claims with Healthcare Company

  • Massachusetts AG Martha Coakley announced an agreement with healthcare company Genesis Healthcare resolving allegations that it and its affiliates unlawfully withheld vacation wages from employees who were terminated from their positions.
  • Under the settlement, the company will pay more than $826,000 in back wages to employees for paid vacation time that they allegedly had accrued at the time they were terminated, as well as $200,000 fine to the State.

Mortgages/Foreclosures

Oregon AG Files Amicus Brief in 9th Circuit Case over Use of Mortgage Database

  • Oregon AG John Kroger announced that he filed an amicus brief in the U.S. Court of Appeals for the 9th Circuit in a case brought by a homeowner challenging the legality of a foreclosure in which the servicer relied on MERS, the electronic mortgage recording database established by the mortgage industry.
  • The AG’s brief argued that the servicers’ reliance on recordings made using MERS could not substitute for state law recording requirements, which call for every transfer of a mortgage to be recorded by the beneficiary of the mortgage when the transfer is made.

Environment

5th Circuit Rules for Texas AG in Challenge to EPA’s Rejection of Texas’s Pollution Standards

  • Texas AG Greg Abbott announced that the U.S. Court of Appeals for the 5th Circuit had overturned the EPA’s decision to reject Texas’s Pollution Control Project Standards Permit.
  • The Court accepted Texas’s argument that in rejecting the State’s proposal to regulate air pollution without a proper basis, the EPA improperly infringed on Texas’s authority under the Clean Air Act to create its own unique air quality programs that ensure compliance with federal standards.

Massachusetts AG Fines Companies for Allegedly Improper Asbestos Removal

  • Massachusetts AG Martha Coakley announced $80,000 in fines levied against companies for allegedly improperly removing asbestos in violation of the State’s Clean Air Act.
  • The companies, which include the owners of the building and the firm hired to demolish the property, allegedly failed to use proper containment and mitigation procedures to prevent the release of asbestos when removing pipe-covering insulation and ceiling tiles.

AGs Continue Focus on Data Privacy

By Bernard Nash, Divonne Smoyer, and Aaron R. Lancaster on Posted in Data Privacy, State AGs in the News

Even in the midst of high-profile activities like the national mortgage settlement and the U.S. Supreme Court argument over challenges by States (among others) to the “Obamacare” health care law, AGs still have time to continue their focus on data privacy, which remains a hot-button issue.

For example, numerous AGs recently have been investigating a variety of Google’s privacy practices, suggesting that AGs doubt that Google is living up to its corporate motto (“Don’t be evil”). More than three dozen AGs sent a letter to Google last month outlining concerns with newly announced changes to Google’s privacy policy, which allow Google to combine users’ personal information across all Google platforms, with no opt-out option. More recently, a group of AGs (led by New York AG Eric Schneiderman and Connecticut (CT) AG George Jepsen) started investigating Google for bypassing the privacy settings of users of Apple’s Safari Web browser, allowing Google to track their Web browsing activity.

Individual AGs also have been very active in data privacy efforts, none more so than California AG Kamala Harris. In late February, AG Harris announced a sweeping agreement with the six largest mobile app distributors (Google, Apple, RIM, Hewlett-Packard, Amazon and Microsoft), requiring all apps distributed on their platforms to have privacy policies, to allow app purchasers to review the privacy policies before purchase, and to require app developers to disclose to consumers what private information they collect, how they use and with whom they share it. More recently, AG Harris entered into an agreement with three of the largest online dating services (eHarmony, Match.com and Spark Networks), under which the companies will use a variety of online tools to protect members, including checking subscribers against sex offender registries and providing a rapid reporting system for abuse (including physical safety concerns and fraud).

Other AGs who have been very active in this area recently include:

  • CT AG Jepsen, who recently entered into settlements with MetLife (in late January) and Wells Fargo (in early February) as a result of large data breaches and who is continuing investigations into data breaches suffered by Central Connecticut State University and the CT Department of Labor;
  • Illinois AG Lisa Madigan, whose office just released guidance on complying with the State’s information and security breach notification laws. The guidance, much like that issued by Vermont AG Bill Sorrell’s office, suggests that companies that experience data breaches should notify the AG’s office and affected consumers despite the absence of a legal requirement to do so; and
  • Maryland AG Doug Gansler, whose 2012-2013 NAAG Presidential Initiative will focus on protecting  personal information privacy, particularly financial data and the use of personal data for marketing.

Companies that hold consumers’ personal data should take note of this recent activity and ensure that they: have robust privacy policies in place; maintain and enforce those policies strictly; and are cognizant not only of their obligations under federal law, but also of  state data privacy laws.