State AG Monitor

State AGs in the News

Posted in Antitrust, Consumer Financial Protection Bureau, Consumer Protection, Data Privacy, Employment, Environment, For-Profit Colleges, Medicaid Fraud, Mortgages/Foreclosures

HOT NEWS

New Jersey Governor Nominates Chief of Staff Kevin O’Dowd as Attorney General

  • One month after winning his second term, New Jersey Governor Chris Christie has nominated Kevin O’Dowd to serve as Attorney General. O’Dowd, who must be confirmed by state lawmakers, has already received public support from both Democrats and Republicans following the announcement.
  • O’Dowd served as the governor’s chief of staff since January 2012 and deputy chief counsel from January 2010 to 2012. Before joining the Christie Administration, he was chief of the Securities and Healthcare Fraud Unit in the U.S. Attorney’s Office for the District of New Jersey.
  • John Hoffman has been serving as the Acting AG since Governor Christie appointed former AG Jeffrey Chiesa as interim U.S. Senator following the death of Sen. Frank Lautenberg.

STATE AGs IN THE NEWS

Virginia Attorney General Race: Herring Declared Victorious, Obenshain Requests Recount

South Carolina Attorney General Alan Wilson Elected Chairman of RAGA

  • RAGA was founded in the late 1990s to help Republicans get elected to attorney general positions in the states. In 2014, more than a dozen Republican attorneys general will be up for re-election.
  • “I still believe the primary role of the attorney general is strictly state-centric,” Wilson told The Associated Press in a recent interview. “But … it’s becoming more important for the AGs to become more involved in the national dialogue.”

Attorneys General File Amicus Brief over NLRB Appointments

  • Seventeen AGs filed an amicus brief in the Supreme Court urging it to uphold the D.C. Circuit’s decision invalidating President Obama’s recess appointment of three members of the National Labor Relations Board.
  • The AGs’ brief asserts that the president unconstitutionally bypassed the Advice and Consent Clause of the U.S. Constitution when making the appointments during a break between pro-forma meetings of the U.S. Senate, when the Senate allegedly was not technically in recess.
  • Invalidation of the appointments could potentially nullify a wide range of actions taken by the NLRB, as well as other agencies like the CFPB whose officials were appointed during the same recess.
  • In addition to Alabama, the AGs of Arizona, Colorado, Florida, Georgia, Idaho Kansas, Michigan, Montana, Nebraska, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Virginia, and West Virginia joined the brief.

ANTITRUST

West Virginia Leads Nine AGs in Amicus Brief over Authority of Professional Licensing Boards

  • West Virginia AG Patrick Morrisey announced that he and a bipartisan group of nine additional AGs filed an amicus brief urging the U.S. Supreme Court to grant review in a case addressing the extent to which the state-action doctrine in antitrust law applies to state professional licensing boards.
  • The AGs wrote in support of an attempt by the North Carolina State Board of Dental Examiners to reverse a Fourth Circuit Court of Appeals’ decision that the Board’s regulatory activities violated antitrust laws by dictating who may provide certain dental services, holding that the state-action doctrine did not apply because the board was comprised primarily of practicing dentists and North Carolina did not actively regulate and review board decisions.
  • The AGs argue that the Fourth Circuit’s ruling conflicts with rulings issued by other appellate courts, creating an uneven playing field between states, and that the requirement that states provide more oversight for licensing boards will result in more levels of bureaucracy in already resource-strapped states.

CONSUMER FINANCIAL PROTECTION BUREAU

CFPB to Supervise Nonbank Student Loan Servicers

  • The rule expands the supervisory authority over any nonbank student loan servicer that handles more than one million borrower accounts, regardless of whether they service federal or private student loans. The CFPB estimates this new rule will give it authority to supervise the seven largest student loan servicers, representing over 49 million borrower accounts.
  • “Student loan borrowers should be able to rest assured that when they make a payment toward their loans, the company that takes their money is playing by the rules,” said CFPB Director Richard Cordray. “This rule brings new oversight to those large student loan servicers that touch tens of millions of borrowers.”

First Enforcement Action Against Payday Lender by CFPB Settled for $19 Million

CONSUMER PROTECTION

Manufacturer of Pediasure SideKicks Settles Allegations of Misleading Advertising with New York

  • The AG alleged that Abbott’s “You Are What You Eat” campaign conveyed the impression that children who consume SideKicks were more active and perform better in sports than those who did not consume the product.
  • Abbott has agreed to cease the use of the advertising campaign and pay the state $25,000 in penalties. The company also agreed to not misrepresent the health or performance benefits of SideKicks and to remove depictions of fruit or fruit names in the marketing and labeling of the product.

Attorneys General Announce Mobile Firms to Discontinue Billing for Commercial Premium Text Message Services

  • The AGs of 45 states have announced that AT&T Mobility, Sprint, and T-Mobile will stop billing mobile customers for commercial Premium Short Messaging Services (also known as PSMS or premium text messages).  Verizon announced separately that it is also winding down its PSMS business.
  • The AGs, led by Vermont, Delaware, Florida, Maryland, Oregon, Texas, and Washington, disclosed in their announcement that they “have been engaged in discussions aimed at stopping the practice of mobile cramming–unauthorized third-party charges that appear on mobile telephone bills.”

New Hampshire Attorney General Reaches Agreement with Discount Travel Organizations

  • New Hampshire AG Joseph Foster announced an Assurance of Discontinuance with Coastal Management and Consolidators and Saver Express, LLC, over their alleged offering of illusory discounts on travel and vacations.
  • The Assurance claims that the organizations engaged in unfair or deceptive acts or practices by luring consumers in with a post card promising free airline tickets plus a hotel stay if the consumer calls the phone number on the card when, in fact, the consumer also was required to pay for a non-refundable one-year membership in the buying club, among other acts.
  • As part of the Assurance, Coastal and Saver agreed to cease all business in New Hampshire until compliant, provide a corrected membership agreement to members, respond to consumer complaints forwarded to them by the AG’s office, consent to monitoring by the AG for three years, and pay the costs of the investigation.

West Virginia Attorney General Settles Allegations of Deceptive Payment Protection Programs

  • West Virginia AG Patrick Morrisey announced settlements with Discover Financial Services and HSBC Finance Corporation resolving allegations that the banks engaged in misleading and deceptive tactics to enroll customers in credit card protection programs.
  • AG Morrisey applauded the use of private outside counsel as special assistant attorneys general, a practice that was upheld in an earlier ruling by the West Virginia Supreme Court of Appeals, which he asserted has saved the state approximately $1 million since being implemented this summer.
  • Under the settlements, each bank will pay $1.95 million.

Wisconsin Attorney General Settles with Dating Service Provider

  • The judgment resolves the AG’s 2009 enforcement action alleging that the companies engaged in deceptive marketing by misleading consumers into believing that they would be connected with local singles, but instead were called by Great Expectations telemarketers.
  • As part of the judgment, the companies denied any violations of law but agreed to pay $500,000.

New York Attorney General Reaches Settlement with Debt Collector

  • AG Schneiderman announced a settlement of $165,000 with an operator of several debt collection companies for collecting on payday loans, which are illegal in New York.
  • According to the AG, Joseph Bella III, who operates Check Systems DBA Lighthouse Recover, further violated the law by soliciting consumers’ personal information through employers and sending letters that purported to be from a former attorney of the debt collector in order to collect.
  • As part of the settlement, seven consumers will receive $2,261 in restitution and the company will pay the remaining $162,738 in penalties.

DATA PRIVACY

New Jersey AG Settles with Gaming Company over Privacy Violations and Bitcoin Mining

  • Acting New Jersey AG John Hoffman announced a settlement with the online video game company E-Sports resolving allegations that the company unlawfully infected its customers’ computers with software allowing it to monitor their use and harness their computers to “mine” for bitcoins.
  • Bitcoins are a virtual currency that can be obtained by using computers to solve algorithms available through the Internet, a process called “mining.” The AG alleges that E-Sports software networked consumers’ computers, even when not signed onto E-Sports services, to mine for bitcoins worth approximately $3,500.
  • Under the settlement, E-Sports agreed to stop deploying software downloads without consumers’ consent and to provide information on what data it collects and how it is used, as well as to pay a $325,000 of a $1,000,000 suspended penalty.

New Jersey AG Settles Alleged COPPA Violations with Application Maker

  • Acting New Jersey AG John Hoffman announced a settlement with application developer Dokogeo resolving allegations that the company unlawfully collected information about children in violation of the Children’s Online Privacy Protection Act (COPPA) and New Jersey’s Consumer Fraud Act.
  • The settlement resolves allegations that the company’s animation-based “Dokobots” application targeted children and required them to provide their names, locations, photographs, and other information in order to participate in a “geolocation scavenger hunt.”
  • Under the settlement, the company must disclose the types of information it collects and how that information is used, and cannot collect the personal information of children ages 13 and younger unless it makes these disclosures and complies with COPPA.

EMPLOYMENT

Coalition of 14 Attorneys General Urge House Vote on Employment Non-Discrimination Act of 2013

  • ENDA, which was passed by the U.S. Senate in November, would ensure that lesbian, gay, bisexual, and transgender (LGBT) people could not be fired or denied employment solely because of their sexual orientation or gender identity.
  • The coalition’s letter notes that in 29 states, lesbian, gay, and bisexual people can be fired solely because of their sexual orientation, and in 33 states, transgender individuals face the same risks for their gender identity.

ENVIRONMENT

New York Attorney General Reaches Settlement for Oil Contamination Found in 2001

  • New York Attorney General Eric Schneiderman announced an $8 million settlement with ExxonMobil for the cleanup of oil spilled in northern New York at an oil storage facility along the St. Lawrence and Oswegatchie rivers that operated from the late 1800s to 1984.
  • The settlement will reimburse the state for costs incurred to investigate and remediate the oil spill by the New York Environmental Protection and Spill Compensation Fund within the Office of the State Comptroller.

Colorado AG and United States Reach Agreement with Suncor for 2011 Oil Spill

  • The spill is alleged to have resulted from a broken pipe beneath storage tanks, and the oil spread benzene to local groundwater and the South Platte River and Sand Creek.
  • The filed Consent Decree, which forestalls further legal action unless the spill worsens, is subject to the approval of the U.S. District Court after at least 30 days for public notice and comment.

FOR-PROFIT COLLEGES

Massachusetts AG Proposes Broad Regulations for For-Profit and Occupational Schools

  • The proposed regulations would require disclosure in advertisement and recruitment materials of tuition, fees, placement statistics, graduation rates, and completion times, and would also bar the use of high-pressure sales tactics on prospective students.
  • The AG’s office will hold public hearings on the proposed regulations in Boston on January 7 and in Springfield on January 9 before they are to take effect.

Minnesota AG Settles Accreditation Issues with For-Profit College

  • Minnesota AG Lori Swanson announced a settlement with Herzing University resolving allegations that the college did not provide students complete information about the accreditation of certain programs.
  • The school, a Milwaukee-based for-profit college with a campus in Crystal, Minnesota, in 2011 began offering a two-year associate degree in clinical medical assisting that the AG alleges was not accredited by two organizations that many employers prefer for certification, a fact that the school allegedly did not adequately disclose to students.
  • Under the settlement, the college must offer refunds or credits to students enrolled in the two-year medical assisting associate degree program, and fully disclose the accreditation of its programs and the impact of accreditation on students’ ability to obtain licenses or certification upon graduation.

MEDICAID FRAUD

CVS’ Caremark Settles Medicaid Pharmacy Reimbursement False Claims Allegations

  • Five states and the U.S. Department of Justice have settled with Caremark LLC, a pharmacy benefit management company, for its alleged failure to reimburse Medicaid for prescription drug costs that were eligible for coverage under Caremark-administered private health plans. United States ex rel. Ramadoss v. CVS Caremark Inc., SA-12-CA-929WRF (W.D. Texas).
  • This False Claims Act qui tam lawsuit was filed in 1999 by a former Caremark quality assurance representative. The United States intervened in the matter, which was litigated along with AGs from Arkansas, California, and Louisiana. Delaware and Massachusetts were also involved with the settlement.

MORTGAGES/FORECLOSURES

New Jersey Settles with Mortgage Company Over Loan Modification and Servicing Practices

  • The investigation targeted statements by the company, alleged to be potential violations of the New Jersey Consumer Fraud Act, regarding the time required to make loan modifications, the details of foreclosure proceedings, and late fees and other fees.
  • The $6.25 million settlement includes $3.61 million in restitution for 2,000 borrowers nationwide, and $2.64 million to be paid to the state. PHH also will be required to provide the state with detailed quarterly information on mortgage modifications, foreclosures, and the resolutions of borrower calls to company’s loss mitigation department.