State AG Monitor

State AGs in the News

Posted in Antitrust, Consumer Financial Protection Bureau, Consumer Protection, Data Privacy, Employment, False Claims Act, Healthcare, Pharmaceuticals, State AGs in the News, States v. Federal Government

Antitrust

Oklahoma Attorney General Sues to End Alleged Software Piracy

  • Oklahoma AG Scott Pruitt filed a lawsuit against an oil equipment supply company, Neway Valve Co., alleging that it used pirated software to sell equipment in Oklahoma at artificially low prices and to gain an unfair competitive advantage.
  • Neway allegedly stole manufacturing process-related software used by Oklahoma companies and used the pirated software to sell its equipment at lower costs creating an unfair market in violation of the state’s Antitrust Reform Act and state common law. The lawsuit is the first of its kind filed in Oklahoma.
  • The suit seeks to enjoin Neway’s allegedly unlawful business practices, impose civil fines and penalties, and award restitution, monetary damages, investigative costs and fees, and attorney fees.

Consumer Financial Protection Bureau

Consumer Financial Protection Bureau Attacks “Zombie” Foreclosures

  • The Consumer Financial Protection Bureau (CFPB) is beginning to look at “zombie” foreclosures, or foreclosures that banks allegedly begin and then abandon without notifying the homeowners, who may have moved out, that they are still responsible for the property.
  • According to the CFPB, banks and servicers are not technically required to communicate with borrowers about lien-interests or charge-offs, but the Truth-in-Lending Act, which requires periodic statements to borrowers who have liability for a delinquent mortgage debt, may push banks and servicers to release the borrower from liability for the debt.
  • To alleviate the alleged issues, the CFPB is proposing a national definition of “abandonment,” hastening the foreclosure process, and creating a national registry of “zombie” foreclosures.

Amicus Brief Filed by Consumer Financial Protection Bureau on Collection of Time-Barred Debt

  • The CFPB, in conjunction with the Federal Trade Commission (FTC), filed an amicus brief in the U.S. Court of Appeals for the Sixth Circuit regarding interpretation of the Fair Debt Collection Practices Act (FDCPA) as applied to the collection of time-barred debt.
  • Time-barred debt refers to a debt with an expired statute of limitations. According to the amicus brief, it is settled law that a collector who sues or threatens a suit based on a time-barred debt violates the FDCPA. The CFPB and FTC argue, however, that actual or threatened litigation is not necessary; a communication that deceives or misleads an unsophisticated consumer can be sufficient to violate the statute.
  • “[A] settlement offer can erroneously lead unsophisticated consumers to believe a debt is enforceable in court even if the offer is unaccompanied by any clearly implied threat of litigation,” reads the brief.

Consumer Protection

Washington State Passes “Pension Poacher” Legislation

  • Washington AG Bob Ferguson’s Pension Poacher Prevention Act passed the state legislature. “Pension poachers” are those who allegedly try to defraud elderly veterans on benefit matters.
  • AG Ferguson, working with State Senator Andy Hill and State Representative Kevin Parker, secured approval for Senate Bill 6208, which gives the AG enforcement authority and prohibits certain unfair and deceptive practices against elderly veterans, including:
    • Receiving compensation for advising or assisting with a veterans’ benefit matter;
    • Representing that the receipt of a certain level of veterans’ benefits is guaranteed; and
    • Misusing personal or financial information gathered in a veterans’ benefit matter.
  • The bill was delivered on March 13, 2014 to the Governor to sign.

South Dakota Strengthens Consumer Protection Laws

  • The South Dakota legislature passed Senate Bill 23, sponsored by the state senate judiciary committee at the request of AG Marty Jackley, to strengthen consumer protection laws—many of which had not been updated since their inception in 1971.
  • The laws introduce several new provisions, including:
    • Allowing the AG’s office to recoup attorney’s fees if it prevails;
    • Adding protection for consumers that are victim to identity theft through the use of their debit card;
    • Increasing the crime classification for deceptive acts; and
    • Creating the crime of “organized retail crime.”

Data Privacy

Child Online Protection Act Proposed by Delaware Attorney General Would Permit Children to Remove Online Posts

  • Delaware AG Beau Biden, with State Representative Darryl Scott, proposed new legislation titled Child Online Protection Act aimed at strengthening online privacy protections for children.
  • House Bill 261proposes that operators of Internet websites, online services, online applications, or mobile applications with actual knowledge that a child is using their site or service must:
    • Permit users to remove or request to remove content posted by those users when they were children;
    • Provide notice of the feature and instructions on use;
    • Not market certain products or services, including tobacco or alcohol, on their site;
    • Not use children’s personally identifiable information to direct marketing or advertising of prohibited products or services; and
    • Establish an age verification system.
  • Violations would be subject to prosecution by the AG under the existing state Consumer Fraud Act, with penalties of up to $10,000 per violation. The bill is modeled after California House Bill 261, a first of its kind state law scheduled to take effect in January 2015.

Ohio Attorney General Seeks Legislation for Harsher Identity Fraud Penalties

  • Ohio AG Mike DeWine, in collaboration with State Representatives Mike Dovilla and Terry Blair, proposed legislation to impose harsher penalties for those who commit identity fraud against active-duty military members and their spouses and to create a private cause of action for all identity fraud victims.
  • House Bill 471 amends the current identity fraud statutes to include active-duty service members in a protected class, as defined by the legislation, which was previously reserved only for elderly or disabled victims of identity fraud. The Bill also adds a private cause of action for all victims of identity fraud.
  • Active-duty-military reportedly experienced heightened exposure to identity fraud during periods of deployment, when service members may not be aware that their personal information has been compromised. Military identity fraud complaints increased in Ohio by almost 20 percent in the last year, according to the AG’s office.

Employment

New York Attorney General Addresses Alleged Illegal Hiring Practices Through Settlement With Employee Background Check Companies

  • New York AG Eric Schneiderman settled with four of the nation’s largest background check agencies over allegations that those companies automatically disqualified job applicants based solely on criminal history, in violation of New York state law.
  • HireRight Inc., First Advantage, General Information Services Inc., and Sterling InfoSystems agreed not to issue automatic rejection letters on behalf of employers based solely on criminal history to ensure that employers conduct an individualized assessment of candidates required under New York law.
  • New York law requires employers to consider a number of mitigating factors, including the nature and gravity of an applicant’s criminal conviction, its bearing on the specific responsibilities of the job, the time that has elapsed since the conviction, the age of the applicant when the offense was committed, and any evidence of rehabilitation.

Environment

Wisconsin Attorney General Settles Air Pollution Allegations Against Ethanol Plant

  • Wisconsin AG J.B. Van Hollen settled with Marquis Energy-Wisconsin, LLC for violations of the state’s air pollution control laws, requiring the company to pay $125,000 in penalties, fees, and costs.
  • Marquis allegedly failed to obtain timely air pollution control permits from the state department of natural resources, which are required if there is the potential to emit elevated levels of air contaminants, and allegedly violated the emission limits and other air pollution control requirements.

False Claims Act

New York Attorney General Settles Whistleblower Tax Fraud Allegations for $6.2 Million

  • New York AG Eric Schneiderman settled a qui tam action alleging that a medical imaging company, Lantheus Medical Imaging Inc., and its parent company at the time, Bristol-Myers Squibb, evaded applicable state franchise taxes, city corporation taxes, and Metropolitan Transportation Authority surcharges.
  • According to the AG’s office, out of the thirty state and the federal false claims acts, New York’s False Claims Act is the only one to cover tax fraud.

Healthcare

Twenty-Eight Attorneys General Urge Retailers with Pharmacies to Stop the Sale of Tobacco Products

  • Twenty-eight AGs sent letters to five of the nation’s largest retailers encouraging them to cease selling tobacco products in their retail stores that have pharmacies.
  • The letters, which were sent to Rite Aid Corporation, Walgreen Co., The Kroger Company, Safeway Inc., and Wal-Mart Stores, Inc., stated that there is a contradiction in selling tobacco products in a retail chain that services health care needs.
  • The letter follows the announcement of CVS Caremark Corporation that it will stop selling tobacco products in its stores that also have pharmacies, as the chain moves to offer more heath care provider services, such as in store mini-clinics. CVS estimated that the decision might cost the company up to $2 billion in sales.

Pharmaceuticals

Thirty Attorneys General Send Letter to FDA Supporting Its Proposed Generic Labeling Plan

  • Thirty AGs sent a letter to the Food and Drug Administration (FDA) supporting its proposed rule, titled Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products. The proposed rule would enable generic drug manufacturers to update labeling of their products without prior FDA approval under a process similar to that used for brand name drugs.
  • According to the letter, if the proposed rule were enacted, generic drug manufacturers would have the ability to keep the public informed of any risks or benefits of their products, inform consumers of any potential safety hazards, and allow consumers who are adversely harmed by generic drugs to sue manufacturers in court.
  • The AGs believe that allowing consumers access to courts will alleviate some of the burden on Medicaid programs, which are allegedly paying for healthcare costs that arguably should be recouped in lawsuits against manufacturers of defective generic drugs.

State AGs in the News

“Insider Trading 2.0” Alleged Against High-Frequency Traders by New York Attorney General

  • New York AG Eric Schneiderman called for tougher regulations and market reforms to address what he calls the unfair advantages obtained by high-frequency traders using high-speed technology to allegedly gain early access to market information—a practice he is calling “insider trading 2.0.”
  • AG Schneiderman believes that high-frequency traders have unique access to technology services offered by trading venues. These services include co-location of computer servers within trading venues, extra network bandwidth, and special high-speed connection cables and network switches. Allegedly, high-frequency traders are able to use these technologies to gain a timing advantage, often measured in milliseconds, which can potentially allow a technology enabled rapid trade before the rest of the market has access to the information.
  • To address this issue, the AG proposed a new methodology for processing orders in batches in frequent intervals, rather than continuously as the orders come in, to shift the deciding factor of who obtains a trade to price and not speed.

Court Validates Louisiana Attorney General’s Decision to Allow Use of Outside Counsel 

  • A state court held that Louisiana AG Buddy Caldwell acted within his authority under state law when he approved a resolution that allowed a state political subdivision to hire outside legal counsel.
  • The Southeast Louisiana Flood Protection Authority-East, a political subdivision of Louisiana, sued almost 100 oil and gas companies for alleged damage to coastal wetlands. AG Caldwell approved a resolution that allowed the Authority to hire outside legal counsel to represent it in this lawsuit rather than be represented by the AG. The Louisiana Oil and Gas Association filed a lawsuit challenging the AG’s approval.
  • State District Judge Janice Clark ruled that the AG’s approval was valid under state law and that the AG is only required to serve as the political subdivision’s counsel when called upon to do so. The media reports that the Association plans to file an appeal.

State v. Federal Government

New Mexico Attorney General Opposes Federal Government in the U.S. Supreme Court Regarding Rio Grande Water Rights

  • New Mexico AG Gary King filed a response to the U.S.’s motion for leave to intervene in an action between Texas and New Mexico regarding Rio Grande water rights. In that action, Texas alleges New Mexico is improperly allowing the flow of water to be diverted from a Rio Grande project.
  • In its brief to the U.S. Supreme Court, New Mexico argues that the U.S. fails to state a claim and that the U.S. should not be allowed to inject a new issue of whether groundwater is a source of water for the project because that issue has already been decided by the state court. New Mexico also argues that it should be allowed to combine its already planned motion to dismiss the Texas claims with a motion to dismiss the U.S. claims.

Filing Deadline Update: AG Races in Idaho, Iowa, and Nevada

Posted in 2014 Election

Last week, the filing period for candidates in state elections closed in Idaho, Iowa, and Nevada. Below is a list we compiled of those who have declared their candidacy for AG in those states.

Idaho Filing Deadline – Declared Candidates for May 20 Primary:

  • Democrat – Attorney Bruce Bistline
  • Republican – Incumbent Attorney General Lawrence Wasden, Attorney C.T. “Chris” Troupis

Iowa Filing Deadline – Declared Candidates for June 3 Primary:

  • Democrat – Incumbent Attorney General Tom Miller
  • Republican – No opponent

Nevada Filing Deadline – Declared Candidates for June 10 Primary:

  • Democrat – Secretary of State Ross Miller
  • Republican – Attorney Adam Laxalt
  • Independent American – Attorney Jonathan Hansen

We will continue to provide updates on AG filing deadlines and primary results on a weekly basis. For breaking news, please follow us on Twitter @Stateagmonitor.

State AGs in the News

Posted in 2014 Election, Antitrust, Consumer Protection, Environment, False Claims Act, Intellectual Property, Medicaid Fraud, Pharmaceuticals, State AGs in the News

Hot News

National Consumer Protection Week: Attorneys General List Top Consumer Complaints

  • In honor of National Consumer Protection Week, a number of AG offices have posted lists of the top consumer complaints received by their offices in 2013. Topics have included debt collection, telecommunications (mobile phones, cable, satellite television), lending, identity theft, health services, and more. For additional coverage, please see our in-depth blog post.

Filing Deadline and Primary Update: AG Races in Arkansas, California, Georgia, Nebraska, and Texas

  • With the 2014 election season well underway, the filing period for candidates in state elections closed last week in Arkansas, California, Georgia, and Nebraska. In addition, Texas recently held its primary election. We have compiled a list of those who have declared their candidacy for AG in these states, as well as the Texas primary results. Please see our recent blog post to learn more.

Antitrust/Energy

Michigan Attorney General Files Criminal Charges Against Two Energy Companies for Alleged Conspiracy to Cause Oil and Gas Lease Price Decline

  • Michigan AG Bill Schuette filed criminal charges against Chesapeake Energy Corporation and Encana Oil and Gas USA alleging that the two companies conspired to cause oil and gas lease prices to drop by collaborating to avoid bidding wars against each other both in Michigan public auctions and private negotiations for these leases.
  • The companies allegedly agreed to divide counties so that each company would be an exclusive bidder for public and private leases in those counties. In the auction that followed the alleged agreement, the state-held lease price dropped from $1,510 per acre to less than $40 per acre.
  • The companies were charged with one count each of antitrust violations relating to a contract or conspiracy in restraint of commerce and one count each of attempted antitrust violations. Representatives from each company are scheduled to be arraigned on March 19, 2014 before Cheboygan County’s 89th District Court.

Consumer Protection

North Dakota Attorney General Issues Cease and Desist Order Against Massachusetts Telemarketer

  • North Dakota AG Wayne Stenehjem issued a cease and desist order against Northshore Publishers (also doing business as Northshore Publishing and North Shore Marketing) for alleged violations of North Dakota’s consumer fraud, do not call, and home solicitation laws.
  • The AG alleges that Northshore Publishers solicited magazine renewal subscriptions from North Dakota consumers by telephone, including consumers who were registered on a do not call list, and charged their credit cards immediately in violation of a state law requiring a signed sales contract from the consumer.
  • The order prohibits future advertising, solicitation, or selling of merchandise to North Dakota consumers. Violations of the order are subject to a $1,000 penalty per violation, with additional penalties provided for violations of any consumer protection laws.

Missouri Attorney General Files Multiple Lawsuits Against Telemarketers

  • Missouri AG Chris Koster filed five lawsuits recently against telemarketers for allegedly violating the state’s no call and telemarketing laws. The AG seeks $5,000 per violation of Missouri’s No Call Law and $1,000 per violation of the Telemarketing Law, as well as injunctive relief prohibiting future telemarketing calls in the state.
  • Three of the lawsuits involved telemarketers allegedly attempting to sell home security systems by falsely telling consumers that law enforcement officials had reported an increased number of burglaries. According to AG Koster, home security companies generate the second highest number of complaints related to the state’s no call law. The other lawsuits relate to solicitations for timeshare liquidation services and home health care supplies.
  • AG Koster also recently settled two other telemarketer suits, for $30,000 and $75,000, and received a $150,000 judgment against another telemarketer.

Environment

In Second Lawsuit Against KCBX Terminals, Illinois Attorney General Alleges Water Pollution and Open Dumping Violations

  • Illinois AG Lisa Madigan sued KCBX Terminals Company alleging that it violated state laws by insufficiently storing piles of petroleum coke and coal, allowing storm runoff to contaminate a nearby river. KCBX allegedly maintained a narrow concrete walkway as a barrier between the mounds of petroleum coke and coal and the river, which the AG argued was insufficient to prevent runoff into the river.
  • AG Madigan previously sued KCBX in November 2013 for alleged air pollution violations at another site. AG Madigan also recently proposed legislation to strengthen regulation of bulk materials storage facilities that handle petroleum coke and other refinery production materials.

False Claims Act/Medicaid Fraud

Several Attorneys General and the Federal Government Settle With Genzyme for $22 Million

  • Several AGs and the federal government settled with Genzyme Corp. for $22.28 million to resolve state and federal Medicaid fraud and false claim allegations related to its product, Seprafilm.
  • Seprafilm is an adhesion barrier approved by the U.S. Food and Drug Administration (FDA) for use in open abdominal surgeries to create a barrier between abdominal tissue and organs to reduce adhesions after surgery. Genzyme allegedly taught doctors and staff  how to make a Seprafilm “slurry” to be used in laparoscopic surgeries, allegedly causing false claims to be submitted to state and federal health care programs for uses of Seprafilm that were not approved by the FDA and therefore not reimbursable.
  • The settlement stems from a qui tam action that was filed in the U.S. District Court for the Middle District of Florida.

Intellectual Property

Virginia Passes “Patent Troll” Legislation

  • Virginia AG Mark Herring crafted “patent troll” legislation that was recently passed by the state General Assembly.
  • Senate Bill 150, patroned by Senator Richard Stuart, and House Bill 375, sponsored by Delegate Israel O’Quinn, prohibit any person from making a bad faith assertion of patent infringement. Under the legislation, the AG is empowered to accept assurances of voluntary compliance and seek injunctive relief. The AG is also authorized to issue civil investigative demands.
  • “I’ve signed on to efforts to fight patent trolling because far too many of our businesses, especially small business, are being forced to spend huge sums of money defending themselves against these frivolous claims,” stated AG Herring.
  • This legislation is part of a growing trend: as recently reported on our blog, Oregon became the second state, behind Vermont, to enact “patent troll” legislation and Nebraska was considering similar legislation.

Louisiana Attorney General Settles Software Piracy Allegations

  • Louisiana AG Buddy Caldwell settled allegations of violation of the state’s unfair trade practices law with Guangdong Canbo Electrical Appliance Co. Ltd. (Canbo).
  • Louisiana’s unfair trade practices law includes software piracy as a form of unfair trade practices. Canbo was allegedly running company operations using pirated software.
  • The settlement requires Canbo to fully legalize all of its software and audit the software next year to ensure ongoing compliance.

Pharmaceuticals

Montana Attorney General Settles for $5.9 Million with Subsidiaries of Johnson & Johnson Over Allegations of Improper Marketing

  • Montana AG Tim Fox settled for $5.9 million with Janssen Ortho LLC and Janssen Pharmaceuticals, Inc. (Janssen), subsidiaries of Johnson & Johnson, over allegations of unfair and deceptive marketing of the drug Risperdal. As part of the settlement, Janssen agreed not to make misleading claims in the sale of their drugs and to present information about the benefits and risks of any drugs in promotional material.
  • Janssen allegedly concealed known risks associated with its antipsychotic drug Risperdal. According to the AG’s office, most of the settlement will be used for a new prescription drug abuse prevention program, mental health services and programs, and ongoing consumer protection services.
  • Johnson & Johnson and Janssen have had verdicts against them related to the marketing of this drug in cases with Louisiana (reversed on appeal) and Arkansas (on appeal) and have also entered into settlements related to the marketing of this drug with other states and the District of Columbia.

Ohio Attorney General Settles Conspiracy Allegations Against McKesson for More Than $18 Million

  • Ohio AG Mike DeWine announced that he has reached a settlement with McKesson Corporation for $18.3 million resolving allegations that it inflated the price of drugs prescribed for beneficiaries of the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio, and the Bureau of Workers’ Compensation.
  • AG DeWine accused McKesson of conspiracy to inflate average wholesale prices of hundreds of brand-name drugs that are used by the two state pensions and the state workers’ compensation system to set prescription drug reimbursement rates.
  • “When companies mark up prices, it increases costs for our pension systems, workers’ compensation system as well as their retirees and beneficiaries,” stated AG DeWine.
  • McKesson previously settled similar allegations of inflating prescription drug prices with other states, including Wisconsin, Virginia, and 29 other states and the District of Columbia. McKesson was also previously sued by Arizona, Oregon, Kentucky, and Michigan for similar claims.

Pharmaceuticals/Medicaid Fraud/False Claims Act

Illinois Attorney General and the Federal Government Settle with Teva Pharmaceuticals for $27.6 Million

  • Illinois AG Lisa Madigan and the federal government settled with Teva Pharmaceuticals USA Inc. and its subsidiary IVAX LLC for $27.6 million to resolve state and federal false claims and federal anti-kickback allegations related to the prescription drug Clozapine.
  • Clozapine is a rarely used anti-psychotic medication that is generally regarded as a drug of last resort allegedly due to potential serious potential side effects. Teva and IVAX allegedly paid a psychiatrist kickbacks to prescribe the drug to thousands of patients at nursing homes and hospitals, which resulted in the submission of more than 100,000 false claims to state and federal Medicaid and Medicare programs.

State AGs in the News

National Association of Attorneys General Sends Letter to West Virginia Legislative Leaders Regarding Bill Potentially Limiting Attorney General Powers

  • The National Association of Attorneys General (NAAG) sent a letter signed by 36 AGs to the West Virginia legislative leadership expressing concern about House Bill 4490, currently under consideration, which would allegedly impose unprecedented, strict new standards on the West Virginia Attorney General.
  • The letter focuses on a section of the bill that requires an attorney general to withdraw from any matter in which the office holder or member of his or her immediate family received economic compensation. NAAG states, “We are not aware of any statute that imposes such a broadly sweeping prohibition on an attorney general’s office— at the state or federal levels.”
  • The letter also expresses concern that the bill would prohibit the entire AG’s office from ever representing a state agency, official, or political subdivision if the attorney general asserts any legal position that is contrary to the legal opinion ever taken by a state agency, official, or political subdivision of the AG’s office.
  • Judiciary Committee chairman Senator Corey Palumbo states that there is little interest in his committee to hear the bill and that the bill is “close to dead.”

Five States Join Lawsuit Challenging California Farming Legislation

  • Alabama AG Luther Strange, Kentucky AG Jack Conway, Nebraska AG Jon Bruning, Oklahoma AG Scott Pruitt, and Iowa Governor Terry Branstad joined a lawsuit filed by Missouri AG Chris Koster last month in the U.S. District Court for the Eastern District of California. The lawsuit alleged that a California farming law violates the Commerce Clause of the U.S. Constitution and infringes on the state’s sovereignty.
  • As we previously reported, California legislation (AB 1437) requires all egg producers selling in California to comply with Proposition 2, a California voter-approved ballot initiative. Proposition 2 requires enclosures to provide “sufficient room” for egg-laying hens.
  • Plaintiff AGs believe that this lawsuit addresses the question of whether elected officials in one state may regulate another state’s citizens. A spokesperson for California AG Kamala Harris stated that if the lawsuit is successful, “it will limit the ability of voters in any state to enact laws they deem in their best interest.”

New York Attorney General Partners with Facebook to Curb Illegal Online Gun Sales

  • New York AG Eric Schneiderman joined Facebook and gun safety organizations to announce new policies to curb illegal sales of firearms on Facebook and Facebook’s photo-sharing platform, Instagram.
  • While Facebook and Instagram are not e-commerce sites, users have allegedly used these sites to promote the sale of firearms and negotiate terms of sale using comment features on the sites, sometimes promising no background check required.
  • The new educational and enforcement efforts will include:
    • Removing reported users that seek to circumvent gun laws
    • Taking action to prevent minors from viewing posts aimed at selling firearms
    • Providing education to better inform private sellers of guns
  • “I congratulate Facebook and Instagram for taking these simple, common-sense steps to protect the safety and security of their users, and encourage other social media sites to follow their lead,” stated AG Schneiderman.

Washington Attorney General’s Open Government Bill Passed by Legislature

  • The Washington state legislature recently passed AG Bob Ferguson’s bill to strengthen state open government laws by requiring training for most public officials.
  • AG Ferguson worked with Senator Joe Fain and Representative Gerry Pollet to secure approval of Washington Senate Bill 5964, also known as the “Open Government Trainings Act.” The law is meant to improve public disclosure practices through mandatory training.
  • “Open government is vital to a free and informed society. This new law will enhance government transparency and ensure that public officials know and understand our state’s public disclosure laws, which were overwhelmingly approved by voters,” provided AG Ferguson.

Filing Deadline/Primary Update: AG Races in Arkansas, California, Georgia, Nebraska, and Texas

Posted in 2014 Election

The 2014 election season is now well underway. Last week, the filing period for candidates in state elections closed in Arkansas, California, Georgia, and Nebraska.  Also, Texas held its primary election. Below is a list we compiled of those who have declared their candidacy for AG in those states, as well as the Texas primary results.

Arkansas Filing Deadline – Declared Candidates for May 20 Primary:

  • Democrat – State Representative Nate Steel
  • Republicans – Attorney Patricia Nation, Attorney Leslie Rutledge, Attorney David Sterling
  • Libertarian – Attorney Aaron Cash

California Filing Deadline – Declared Candidates for June 3 Primary:[1]

  • Democrats – Incumbent Attorney General Kamala Harris, Attorney Bob Conaway
  • Republicans – Attorney John Haggerty, Former State Representative and State Senator Phil Wyman
  • Libertarian – Attorney Jonathan Jaech
  • Independent – Attorney Orly Taitz

Georgia Filing Deadline – Declared Candidates for May 20 Primary:

  • Democrat – Former State Representative Greg Hecht
  • Republican – Incumbent Attorney General Sam Olens

Nebraska Filing Deadline – Declared Candidates for May 13 Primary:

  • Democrats – Attorney Allan Eurek, Attorney Janet Stewart
  • Republicans – Attorney Brian Buescher, Attorney Mike Hilgers, Attorney Doug Peterson, State Senator Pete Pirsch
  • AG Jon Bruning (R) has declared his candidacy for Governor, along with five other Republicans: State Senator Tom Carlson, State Senator Beau McCoy, State Auditor Mike Foley, Omaha business executive Pete Ricketts, and Omaha businessman Bryan Slone.

Texas Primary Results

  • Democrat – Attorney Sam Houston won the Democratic nomination.
  • Republicans – State Representative Dan Branch (32.24%) and State Senator Ken Paxton (43.09%) will compete in a May 27 runoff election after both failed to achieve the required majority.
  • In addition, Texas AG Greg Abbott easily won the Republican nomination for Governor. He will face Democratic nominee Wendy Davis in the general election November 4.

We will continue to provide updates on AG filing deadlines and primary results on a weekly basis. For breaking news, please follow us on Twitter @Stateagmonitor.


[1] The California Secretary of State lists six candidates that have filed “Statements of Intention” to run for AG.  Filers may not have qualified to appear on the ballot. The secretary of state, however, only provides the “Candidate Contact Information Form” for three candidates:  Attorney John Haggerty, Attorney Jonathan Jaech, and Attorney Orly Taitz. One candidate, Attorney Bob Conaway, publically announced that he is seeking congressional office.

Not Quite Letterman, But Still: AGs Publish Their Lists of Top Consumer Protection Issues

Posted in Consumer Financial Protection Bureau, Consumer Protection

This week is National Consumer Protection Week, and most AG offices have taken to their websites, Facebook, and Twitter, as well as traditional media, to draw public awareness to scams that criminals have attempted to perpetrate on consumers, and to highlight recent activities, priorities, and future potential areas of interest for their Consumer Protection Divisions.

In keeping with the spirit of the week, a number of AG offices have surveyed the complaints they received in  2013 and compiled lists of the top areas in which consumers alleged that they have been deceived, treated unfairly, or subjected to abusive practices.

Obviously, the lists vary somewhat across the states – New York’s economy and population being very different than, say, Iowa’s – but a number of commonalities transcend both geographic and demographic differences to provide a glimpse of what issues AGs likely will continue or even increase their focus on in the coming year:

  • In every state, debt collection ranked as one of the top issues, appearing in the top three in almost every list and taking the number one spot in Colorado, Illinois, and Michigan.
  • Although not as high-ranking, complaints about telecommunications services, including mobile phones, cable, and satellite television, also appeared on almost every list.
  • Consumer and mortgage lending was another oft-complained of subject, which is unsurprising considering AGs’ significant scrutiny of such issues in the wake of the financial crisis, increasingly in conjunction with the Consumer Financial Protection Bureau.
  • Complaints regarding Internet sales and marketing appeared on many lists, as did identity theft, a reflection of the continued growth of e-commerce as an integral part of daily life, as well as the challenge to regulators to patrol the reaches of the Internet and ensure the security of payment and other consumer data that businesses increasingly compile and on which electronic transactions progressively depend.
  • Complaints regarding health services and providers appeared on a number of lists, perhaps a harbinger of things to come as implementation of the Affordable Care Act allows an increasing number of consumers to use health services they may have previously forgone.
  • Rounding out the lists were complaints regarding automobile sales and services, energy and utilities, landlords, home improvement and construction, retail sales and promotions, and general fraud.

Below is a compilation of links to several states’ lists, although more may be forthcoming as National Consumer Protection Week draws to a close. Some states provide more detail than others regarding the number of complaints received and how they classified them, but each list is worth a quick skim as a unique indicator of AG consumer protection trends.

 

State AGs in the News

Posted in 2014 Election, Antitrust, Consumer Financial Protection Bureau, Consumer Protection, Data Privacy, Environment, False Claims Act, Financial Industry, Insurance, Intellectual Property, Medicaid Fraud, Pharmaceuticals, State AGs in the News

2014 Election

District of Columbia Dismisses Lawsuit Seeking to Place Attorney General on April Ballots 

  • The District of Columbia Superior Court granted a motion to dismiss in Paul Zukerberg v. District of Columbia Board of Elections and Ethics, et al., 2103 CA 8004 (D.C. Super. Ct. Feb. 26, 2014).
  • Zukerberg, a potential candidate for Attorney General, alleged that the D.C. Council violated the D.C. Charter by passing campaign procedure legislation providing that the election for the first AG shall not be before January 1, 2018. The D.C. Charter reads, “[t]he first election for the position of Attorney General shall be after January 1, 2014.” The Superior Court dismissed the suit, holding that based on the ordinary meaning of the words the language does not conflict.
  • Zukerberg has appealed the decision to the D.C. Court of Appeals, which recently upheld the Superior Court’s decision to deny Zukerberg’s request for an injunction. The Court of Appeals stated that the Superior Court had “considered the appropriate factors.”

Antitrust

Thirty-Four Attorneys General Settle Multistate DRAM Price-Fixing Case for $310 Million

  • Thirty-four AGs settled a price-fixing case against 12 companies that allegedly conspired to fix prices for Dynamic Random Memory Access (DRAM). As part of the settlement, a $310 million dollar fund was established to pay claims to consumers.
  • The lawsuits alleged that these companies fixed the prices of DRAM between 1998 and 2002 resulting in overcharges to people and businesses that bought DRAM or devices containing DRAM.
  • The U.S. District Court for the Northern District of California preliminarily approved the proposed settlements pending a fairness hearing scheduled for June. In the meantime, consumers are being notified and may file claims.

Consumer Financial Protection Bureau/For-Profit Colleges

CFPB Sues For-Profit College Chain for Student Loan Practices

  • The Consumer Financial Protection Bureau (CFPB) filed a lawsuit against ITT Educational Services, Inc., a for-profit college chain, for its alleged predatory student lending practices. The lawsuit is CFPB’s first public enforcement action against a company in the for-profit college industry.
  • The complaint alleges violations of the Consumer Financial Protection Act and the Truth in Lending Act. “We believe that ITT used high-pressure tactics to push many students into expensive private student loans that were likely to end in default,” according to CFPB Director Richard Cordray. The complaint states that ITT itself had projected that more than 60 percent of the students who had received private loans would default.
  • A broader investigation of student-lending practices seems to be underway. Recently, Discover Bank, a subsidiary of Discover Financial Services, disclosed in its annual filing that CFPB issued a civil investigative demand seeking documents and information regarding its student loan servicing practices. According to the filing, if CFPB brings an enforcement action, it could include demands for monetary penalties, changes to business practices, and customer restitution.
  • Illinois AG Lisa Madigan also recently confirmed a multistate investigation of student lending practices. The investigation focuses on debt collection and loan servicing practices. According to the AG’s office, “We’re looking into the increasing reports of abusive servicing practices involving customers who have taken on considerable student loan debts.”

Consumer Protection

Michigan Attorney General Settles Claims With Fundraiser for Alleged Deceptive Practices

  • Michigan AG Bill Schuette settled with Associated Community Services (ACS) for $45,000 related to allegations that it misled senior citizens during fundraising calls to convince them to provide credit card information.
  • ACS allegedly used a telemarketing script to mislead donors who were uncertain about providing credit card information to believe that the Attorney General’s office had approved or endorsed its credit card payment systems.
  • As part of the settlement, ACS must also revise its script for future solicitations. “Michigan law requires honesty of our professional fundraisers. We will not tolerate those that abuse the name of this office to deceive donors,” stated AG Schuette.

Data Privacy

California Attorney General Releases Cybersecurity Guide for Small Businesses

  • California AG Kamala Harris issued recommendations to California small businesses to help protect against and respond to the increasing threat of malware, data breaches, and other cyber risks.
  • The recommendations include having businesses implement an incident response plan and review data that they store or share with third parties, with the goal of eliminating what is not necessary and encrypting any remaining, necessary data.
  • “Technology has created new opportunities and new risks for California businesses, including cyber attacks. This guide offers specific, straightforward recommendations to help businesses continue to thrive by reducing cybersecurity risks to employees and customers,” stated AG Harris.

Environment

Massachusetts Attorney General Settles With Shell Oil for $4 Million for Hazardous Cleanup Funds Fraud Allegations

  • Massachusetts AG Martha Coakley settled with Shell Oil Company for $4 million to resolve allegations that the company falsely received reimbursement payments from a state fund for hazardous waste cleanup.
  • The settlement resolved claims similar to those settled by AG Coakley with Sunoco and those involved in a lawsuit brought by AG Coakley against Hess. In those matters, the companies allegedly sought reimbursement from the state fund for claims that they also had submitted to their private insurers related to their cleanup of leaks from underground fuel storage tanks.
  • “This program exists to help station operators clean up harm done to the environment, not for big oil companies to profit by double dipping,” commented AG Coakley.

Financial Industry

New York Attorney General Announces Agreements With Wall Street Firms to Stop Cooperation With Analyst Surveys

  • New York AG Eric Schneiderman, following a previously reported agreement with the world’s largest asset manager, BlackRock, to end its analyst survey program, has entered into interim agreements with 18 financial firms to discontinue or continue refraining from cooperating with analyst surveys. The analyst survey program allegedly captured non-public industry-leading analyst information on companies that could be used for trading before that information hit the market.
  • “At my request, these firms have agreed to stop a practice that can offer an advantage to powerful clients at the expense of others. Our markets will only be fair and healthy if everyone plays by the same rules,” said AG Schneiderman.

Insurance

Massachusetts Attorney General Testifies in Support of Flood Insurance Legislation

  • Massachusetts AG Martha Coakley testified in front of the state Joint Committee on Financial Services in support of proposed flood insurance legislation that would reduce flood insurance costs for homeowners by tying the amount of insurance to mortgage balances.
  • The proposed legislation, Bill H. 3783, titled An Act Relative to Flood Insurance, filed by AG Coakley and Speaker Robert DeLeo, would prohibit creditors from requiring homeowners to purchase flood insurance in an amount that exceeds the outstanding balance of their mortgage, requires coverage for contents, or includes a deductible of less than $5,000.
  • AG Coakley was concerned that new flood zone maps released by the Federal Emergency Management Agency would increase insurance rates. “We believe that dramatically increased flood insurance rates will tip the balance for many homeowners who weathered the economic downturn, but are still feeling the residual effects of the housing crisis. Without this help, we are gravely concerned that many additional homeowners will face foreclosure,” said AG Coakley.

Intellectual Property

Oregon Enacts Anti-“Patent Troll” Legislation

  • Oregon, with the support of AG Ellen Rosenblum, passed Senate Bill 1540, sponsored by Senator Jackie Winters, which makes “patent trolling” a violation of the state’s Unlawful Trade Practice Act.
  • The law allows an enforcement action against those who make a demand for patent infringement in bad faith. The law includes a list of conditions for a court to consider in determining whether the demand was made in bad faith, including whether:
    • The demand requires a response or payment within an “unreasonably short” time;
    • The demand provides the patent number, a statement of facts, or current contact information for the patentee, assignee, or licensee; and
    • The person making the demand knew or should have known that the demand was without merit or was deceptive.
  • Oregon is the second state to pass this type of legislation. Vermont, with the support of AG Bill Sorrell, passed a similar law in 2013. Nebraska, with the support of AG Jon Bruning, is currently considering a similar bill.

Pharmaceuticals/ Medicaid Fraud/ False Claims Act

Several Attorneys General and the Federal Government Settle With Omnicare for $4 Million

  • Several AGs and the federal government settled with Omnicare, Inc. for $4 million to resolve state and federal Medicaid fraud and false claim allegations related to the prescription drug Aranesp.
  • The settlement stems from a qui tam action that was filed in the U.S. District Court for the District of South Carolina.

State AGs in the News

Massachusetts Attorney General Encourages Stronger Standards for MBTA Retirement Fund Board

  • Massachusetts AG Martha Coakley sent a letter to the Massachusetts Bay Transportation Authority (MBTA) Retirement Fund Board asking it to increase transparency by adopting standards for conflicts of interest, financial disclosures, and public records. The letter cites to a recent loss of $25 million in investment funds and the board’s alleged failure to disclose the loss in a timely manner as a catalyst for this change.
  • The MBTA Retirement Fund Board operates as a private trust, but because MBTA receives a significant portion of its revenue from fares paid by transit riders and dedicated sales tax revenue, AG Coakley argues that the same ethical standards applied to other public institutions should apply to the board.
  • AG Coakley recommends a cooling-off period for former employees, greater disclosure of employees and former employees’ financial interests, and application of public records disclosure laws to the board. “We feel strongly that taking action to increase transparency is in the best interest of current and retired MBTA employees, as well as the public,” states AG Coakley.

State AGs in the News

Posted in Consumer Financial Protection Bureau, Consumer Protection, Environment, False Claims Act, Intellectual Property, Medicaid Fraud, Pharmaceuticals, State AGs in the News

Hot News

Multistate Investigation Best Practices Announced by Attorneys General at NAAG Meeting 

  • At the National Association of Attorneys General (NAAG) meeting in Washington, DC, Colorado AG John Suthers and Missouri AG General Chris Koster announced proposed best practices that would significantly change the process for AG approval and oversight of multistate investigations and large-scale consumer investigations. 
  • AG Suthers and AG Koster outlined several important issues for AGs to consider in changing their approval policies, including confirming the existence of a sufficient legal and factual threshold prior to initiating an investigation or lawsuit and requiring AG consent for the commencement of any multistate investigation. 
  • The movement by AGs towards multistate reform is a significant change that will provide AGs with greater oversight and control over the actions of their staff, and will give targets sufficient time to prepare a response to the multistate. 
  • Our more in-depth blog post on these announcements can be found here

Consumer Financial Protection Bureau 

Eleven Attorneys General Appeal Lawsuit Challenging Constitutionality of CFPB and Dodd-Frank 

  • Eleven AGs (as well as other appellants), filed briefs in the U.S. Court of Appeals for the D.C. Circuit in the case of State National Bank of Big Springs et al., v. Jacob J. Lew et al., Nos. 13-5247, 13-5248. The original lawsuit, which was dismissed by the U.S. District Court for the District of Columbia, posed a constitutional challenge to the Consumer Financial Protection Bureau and the Dodd-Frank Act. The District Court ruled that the appellants did not have standing to sue and did not show financial injury because of Dodd-Frank.
  • In the newly filed appeal brief, the AGs stated that the District Court erred in ruling that they lacked standing to bring constitutional challenges to Title II of Dodd-Frank. The AGs asserted that they were injured by Title II of Dodd-Frank, which they argued superseded and abridged the Bankruptcy Code’s guarantee that similarly situated creditors are entitled to equal treatment.
  • The AGs also stated that their constitutional claims are ripe before liquidation under Title II, arguing that Title II itself prohibits courts from hearing the States’ constitutional claims after liquidation begins.

Consumer Protection 

Washington Attorney General Settles With Online “File Locker” Company for Allegedly Deceptive Business Practices

  • In relation to allegations of deceptive business practices in violation of Washington’s Consumer Protection Act, the Washington AG Bob Ferguson’s Office settled with Ultra Mega Corp, LLC, also known as ultramegabit.com, for $20,000 and restitution to consumers who were charged for automatic renewals. Ultramegabit.com is a “file locker” website that stores files online and provides file download options.
  • According to the AG’s office, Ultra Mega Corp failed to adequately disclose automatic renewals of member subscriptions, did not adequately identify copyrighted material that could not be downloaded, and led members to believe that all content could be legally downloaded by charging for access to content. 
  • The AG’s office commented that the most popular files stored on the site are potentially copyrighted works, such as television shows and movies and the members may “unknowingly download copyrighted content illegally, opening themselves up to potential lawsuits by content owners.” 

Environment 

Illinois Attorney General Proposes Coke and Coal Dust Regulations 

  • Illinois AG Lisa Madigan, in conjunction with Rep. Barbara Flynn Currie, proposed new legislation to regulate bulk materials storage facilities that handle petroleum coke (“pet coke”) and other refinery production materials in response to the air pollution violations of several Chicago facilities. 
  • House Bill 5939prescribes specific operating and maintenance practices to minimize emissions of airborne particulate matter from storage, processing, and transloading of pet coke, metallurgical coke, and coal near specific areas, such as homes, schools, and hospitals. The bill would impose several protections, including: 
    • Requiring transfer and processing to occur indoors or with operation of dust suppression systems
    • Covering loads during transit
    • Paving and regularly cleaning roads used for transit
    • Requiring more permits
    • Conducting air monitoring 
  • “The goal of the legislation is to protect the health and safety of residents living near storage facilities and to prevent companies from relocating and perpetuating this problem in other Illinois communities,” according to AG Madigan

Intellectual Property 

National Association of Attorneys General Sends Letter to Senate Committee Leaders Regarding “Patent Troll” Legislation 

  • The National Association of Attorneys General sent a letter signed by 42 AGs to the United States Senate committee leadership offering support for federal patent reform legislation S. 1720 and H.R. 3309, which will help limit the power of patent trolls. 
  • The letter stated, “So-called patent trolls stifle innovation and harm our economy by making dubious claims of patent infringement and using the threat of expensive litigation to extort money from small businesses and nonprofits.” 
  • The AGs also suggested amendments to the legislation, including: 
    • Confirmation that state AGs have concurrent authority to bring the same types of enforcement actions under state law
    • Confirmation that state courts have personal jurisdiction over entities that direct unfair or deceptive patent demand letters into the state
    • Increased transparency for patentees that send demand letters by requiring disclosure of those with a financial interest in the patent at the time a patent demand letter is sent rather that at the time a patentee files a civil action alleging infringement. 

Medicaid Fraud/ False Claims Act

Tennessee Attorney General Settles False Claims Act Allegations With Mental Health Provider  

  • Tennessee AG Robert E. Cooper, Jr. settled with A.I.M. Center, Inc. (AIM), a community mental health facility, for $800,000 related to allegations that it violated the federal False Claims Act and the state Medicaid False Claims Act.
  • The investigation by AG Cooper began with a qui tam action filed by a former member of AIM. AIM allegedly knowingly submitted false claims to the state Medicaid program by overcharging for rehabilitation services in a practice known as “upcoding.” AIM also allegedly concealed its obligation to return funds that were improperly paid to the Medicaid program. 
  • AG Cooper stated, “Mental and behavioral health services are a vital component of the care provided to [state Medicaid] recipients. This office will continue to pursue providers that improperly bill for these needed services.”

Pharmaceuticals/ Medicaid Fraud/ False Claims Act

Several Attorneys General and the Federal Government Settle With Endo Pharmaceuticals for $171.9 Million 

  • Several AGs and the federal government settled with Endo Pharmaceuticals Inc. for $171,910,153 to resolve state and federal Medicaid and Medicare, unlawful marketing, and federal False Claims Act allegations related to the prescription drug Lidoderm. 
  • The FDA approved Lidoderm for treatment of pain associated with post-herpetic neuralgia, known as “shingles.” Endo allegedly violated the federal False Claims Act and knowingly practiced unlawful marketing by promoting Lidoderm for lower back pain and chronic back pain. Endo also allegedly caused claims for payment of Lidoderm to be submitted to state and federal Medicaid and Medicare programs that did not cover Lidoderm for conditions not approved by the FDA. 
  • As part of the settlement, Endo also entered into a deferred prosecution agreement with the United States Attorney’s Office for the Northern District of New York and the Consumer Protection Branch of the United States Department of Justice for allegations of misbranding Lidoderm in violation of the Federal Food, Drug, and Cosmetic Act. 

State AGs in the News 

District of Columbia Attorney General Settles With Online Travel Companies for $60.9 Million in Back Taxes 

  • District of Columbia AG Irvin B. Nathan announced a contingent settlement for $60.9 million with six online travel companies relating to back taxes for hotel rooms booked online. The settlement is contingent upon the D.C. Court of Appeals affirming a Superior Court ruling that established tax liability. 
  • The six travel companies allegedly sold hotel rooms in the District at retail prices, but remitted taxes for those rooms based on the lower wholesale prices that they paid to those hotels. The District argued that the travel companies owed taxes based on the retail price of the room.
  • If the District wins on appeal, the recovery would be the largest ever received by the city in a case it litigated. AG Nathan stated, “This case sends the message that the District will vigorously enforce its tax laws and that all corporations, no matter their size or industry, have to pay their fair share of taxes.” 

Pennsylvania High Court Rules State Agency Cannot Assert Attorney-Client Privilege in AG Probe

  • The Supreme Court of Pennsylvania ruled that a state agency could not assert attorney-client privilege or the work product doctrine to prevent the Pennsylvania AG, during a grand jury investigation, from reviewing allegedly privileged or protected communications between the agency and its counsel. 
  • The opinion, In Re: Thirty-Third Statewide Investigating Grand Jury, No. 85 MM 2012 (Pa. Feb. 18, 2014), affirmed the Investigating Grand Jury, which denied a motion by the Pennsylvania Turnpike Commission for a protective order that sought to prohibit the AG from reviewing communications between the Commission and its attorneys. The Grand Jury was investigating whether the Commission violated criminal statues in connection with its employment and procurement practices. 
  • The court reasoned that because the agency was being investigated by the commonwealth itself in grand jury proceedings for suspected wrongdoing, that the client of the agency’s attorneys is the public and the public impliedly waived privilege and protection.

AGs Announce Multistate Reform Best Practices at NAAG

Posted in Consumer Protection

Today at the National Association of Attorneys General (NAAG) meeting in Washington, DC, Colorado Attorney General John Suthers and Missouri Attorney General Chris Koster announced suggested best practices that could significantly change the process for AG approval and oversight of multistate investigations and large-scale consumer investigations.  AG Suthers outlined several important issues for AGs to consider in changing their approval policies:

  • The existence of a sufficient legal and factual threshold prior to initiating an investigation or lawsuit;
  • The extent to which AGs should personally consent, oversee, monitor, and control multistate investigations;
  • Whether to provide advance notice to targets, unless doing so would endanger the public or risk the destruction of evidence; and
  • The nature and extent to which NAAG should be involved in the multistate process, including whether NAAG should sign off on multistates after a certain state threshold, and whether to create a NAAG committee to address these issues.

AG Suthers informed the audience that although his personal approval was required prior for multistate litigation, he recently changed his office policy so that his consent is now required for the commencement of any multistate investigation. AG Suthers explained that this was necessary to ensure that any investigations start out and remain aligned with state interests.

AG Koster also announced significant policy changes at his office: approval from executive level administration is required before the commencement of any multistate investigation, or any large-scale consumer investigation of any publicly-traded company or private company with 10 or more employees. AG Koster discussed the information staff must provide in seeking approval for multistate investigations, such as an explanation of the alleged conduct, and a description of the involvement and role of other states. The AG emphasized his office always informs targets in advance of a Civil Investigative Demand (CID) or lawsuit because he believes it is important that the target is not surprised.

At the conclusion of the session, AG Koster stated that NAAG may compile a booklet for use in new AG orientation regarding different AG management structures and how they each address AG consent and oversight of multistate investigations.

The movement by AGs towards multistate reform is a significant change that will provide AGs with greater oversight and control over the actions of their staff, and will give targets sufficient time to prepare a response to the multistate.

State AGs in the News

Posted in Antitrust, Consumer Protection, Environment

ANTITRUST

New York Attorney General Settles Collusion Allegations With Generic Drug Manufacturers

  • New York AG Eric Schneiderman announced a settlement with Ranbaxy Pharmaceuticals, Inc. and Teva Pharmaceuticals USA, Inc. over allegations that the companies colluded to restrict competition in the generic drug market in the state.
  • AG Schneiderman alleged that Ranbaxy and Teva agreed not to challenge the regulatory exclusivity of each company relating to certain generic drugs, thereby protecting their relative market positions and reducing the risk of competition for the manufacturing of the drugs. The first manufacturer that seeks to market a generic version of brand-name drugs is granted exclusivity for 180 days in a practice known in as “first to file.”
  • The settlement agreement requires the companies to end the alleged collusive activity, to agree not to enter into any such agreements, and to each pay the state $150,000.

CONSUMER PROTECTION

Colorado Attorney General Files Suit Against Magazine Telemarketers Targeting Seniors

  • Colorado AG John Suthers filed a civil lawsuit against Rocio Trujillo and Anthony Trujillo, and the several companies that they operate for violations of the Colorado Consumer Protection Act by allegedly running a magazine telemarketing scam that targeted the elderly.
  • The Trujillos, and their associated telemarketing companies, are alleged to have sold magazine subscriptions by using a three-pronged business model, which entailed posing as magazine representatives when placing harassing sales calls to magazine subscribers to first deceive the consumer into believing they were their current magazine provider, deceiving consumers into participating in a recorded “verification” process, and then claiming a contract had been formed as a result of that verification process. The consumers were alleged to have been charged for subscriptions for thousands of dollars under these “contracts.”
  • The AG’s complaint seeks permanent injunctive relief against the defendants and a per person penalty of up to $10,000 for each elderly victim. Denver District Court Judge Laff has entered a temporary injunction shutting down the businesses and freezing their bank accounts.

California Company Sued by Washington Attorney General Over Alleged Job Site Poster Scam

  • Washington AG Bob Ferguson’s office filed suit against California company Labor Standards Compliance Office (LSCO) and its principal Fangliang Cui over alleged violations of the Washington State Consumer Protection Act.
  • LSCO is alleged to have sent official-looking letters, including “final notice” or “due now” stamps and a payment stub, to Washington businesses stating that they must buy posters for display at job sites for $295 or they would face fines and audits by the state. Though private vendors may sell the posters, the Washington State Department of Labor & Industries (WA L&I) provides the job site posters for free.  Many business owners who received these letters assumed they came from WA L&I and contacted them to inquire about their meaning.
  • The complaint seeks restitution for consumers and attorney’s costs and fees.

Ohio Attorney General Sues Loan Modification Service Company for Alleged Failure to Deliver

  • Ohio AG Mike DeWine announced a lawsuit against Home Remedy Center of Newport Beach, California for allegedly failing to provide loan modification services or to provide refunds to customers in violation of the Ohio Consumer Sales Practices Act and the Debt Adjuster’s Act.
  • The suit alleges that Home Remedy Center advertised that it could help consumers avoid foreclosure by working with their lenders to seek a loan modification or the adjustment of their debt in exchange for fees ranging from $3,500 to $5,000, but the company did little or no work after receiving their fees and failed to provide refunds.
  • The AG’s complaint seeks consumer restitution, injunctive relief, and an assessment of $25,000 per violation.

ENVIRONMENT

New York Attorney General Proposes Legislation Banning Plastic Microbeads in Beauty and Cosmetic Products

  • New York AG Eric Schneiderman and Long Island Assemblyman Robert Sweeney have proposed the Microbead-Free Waters Act, which if passed would prohibit the production, manufacture, distribution, and sale in New York of any beauty product, cosmetic, or other personal care product containing “microbeads,” which are plastic particles less than 5 millimeters in size.
  • AG Schneiderman proposed this first-in-nation legislation in response to potential environmental risks posed by the microbeads, which are too small to be caught by all water treatment plant filtration systems. He called the proposal “common-sense legislation” that would stop the flow of potentially harmful plastics into New York waters.
  • According to the AG’s office, some consumer product companies have already voluntarily committed to phase out the use of microbeads. The Act is proposed to take effect December 31, 2015.

State AGs in the News

Posted in Consumer Financial Protection Bureau, Data Privacy, Environment, Medicaid Fraud, Mortgages/Foreclosures, State AGs in the News

HOT NEWS

Maryland Attorney General Doug Gansler Talks Data Privacy and Enforcement With Dickstein Shapiro’s Divonne Smoyer

  • Maryland AG Doug Gansler joined Divonne Smoyer, a partner in Dickstein Shapiro’s State Attorneys General Practice, in a Q&A discussing his data privacy initiative and priorities.
  • In 2013, when AG Gansler was the president of the National Association of Attorneys General, his focus was “Privacy in the Digital Age,” which raised AG awareness about data privacy and security and has since spurred AG enforcement actions in the field.
  • When asked if he had any tips for an entity facing an inquiry into data loss or privacy protections by the AG’s office, AG Gansler replied: “Three tips: transparency, transparency, transparency. When companies are forthright with us from the beginning, and cooperate to provide us with all the information we need to evaluate their privacy incident, we are better able to seek resolution.”

CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)

The CFPB Considers Home Mortgage Disclosure Act Reporting Requirement Changes

  • The CFPB has signaled that it is considering revisions to the Home Mortgage Disclosure Act, which requires lenders to report detailed information to supervisory agencies about home mortgage loans and related information.
  • The proposals relate to which lenders will be required to report data, the types of loans and applications that need to be reported, the information reported for the loans and applications, and improvements in compliance.
  • The CFPB uses the reporting data to better understand U.S. consumer access to credit in the residential mortgage market.

DATA PRIVACY

Illinois Attorney General Testifies in Congress on Comprehensive Federal Data Breach Legislation

  • Illinois AG Lisa Madigan testified before the U.S. House Subcommittee on Commerce, Manufacturing and Trade about her inquiries into recent data breaches affecting national retailers. AG Madigan and Connecticut AG George Jepsen currently are leading a multistate investigation into the Neiman Marcus, Target, and Michaels Stores losses of consumer data to hackers.
  • Referring to these data breaches as a “wakeup call” to the government and the private sector to take the issue very seriously, AG Madigan noted that past investigations by her offices indicated that companies have repeatedly failed to take basic steps to protect Illinois consumer information.
  • AG Madigan urged Congress to adopt federal standards, without preempting state law, to require companies to adopt reasonable data security and destruction practices, limit the amount of consumer data collected, and to require timely notification to consumers affected by a data breach.

ENVIRONMENT

Twenty-One Attorneys General File Amicus Brief in Suit Challenging EPA’s Chesapeake Bay Cleanup Plan

  • Twenty-one State AGs have filed an amicus brief in the U.S. Court of Appeals for the Third Circuit in support of the American Farm Bureau Federation’s suit against the Environmental Protection Agency (EPA) over a proposed cleanup plan of the Chesapeake Bay.
  • The plan to clean up the nation’s largest estuary is argued to be an overreach of the EPA’s authority under the Clean Water Act and an impermissible intrusion into state land-use decisions.
  • The brief, led by the AGs of Kansas, Indiana, and Missouri, also includes Alabama, Alaska, Arkansas, Florida, Georgia, Kentucky, Louisiana, Michigan, Montana, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Texas, Utah, West Virginia, and Wyoming.

MEDICAID FRAUD

Maryland Attorney General Settles Allegations of Medicaid Fraud With Pharmacy

  • Maryland AG Doug Gansler has announced a settlement with Rite Aid of Maryland, Inc. over allegations of that the company did not refund Medicaid payments for prescriptions that were returned as “undeliverable.”
  • “Whether these actions were intentional or just sloppy, the patients who need these treatments and the taxpayers deserve better,” said AG Gansler. “We’ve secured these funds so they can be used to treat Maryland patients and send a message that, willful or not, such practices will not be tolerated.”
  • The company will pay $20,000 to the Maryland Medicaid Program which will be shared with the federal government.

New York Attorney General Settles With New York Hospital for Foster Children

  • New York AG Eric Schneiderman announced a settlement with New York Foundling Hospital, a provider of child foster care services over allegations that the hospital was billing Medicaid for the care of children while they were absent from the program in violation of Medicaid regulations.
  • “Taxpayer money spent on New York’s most vulnerable kids must be safeguarded – not wasted,” AG Schneiderman said. “My office will remain vigilant to ensure that providers bill Medicaid for services that are actually rendered and that funds meant to help our neediest kids are spent to care for them.”
  • New York Foundling will pay back $170,775 and an additional $85,387 in penalties under the New York State False Claims Act.

MORTGAGES/FORECLOSURES

New York Attorney General Takes the Lead in Fight Against Zombie Homes

  • New York AG Eric Schneiderman announced a statewide push for legislation that he hopes will require banks to take responsibility for “zombie” properties – homes that have been abandoned before the bank foreclosure process is completed.
  • The bill would require lenders to take responsibility for abandoned homes to keep them from falling into disrepair, resulting in blighted neighborhoods.
  • “The fact is if you have an abandoned property, it brings down the property values of the entire neighborhood; they are havens for crime,” the AG told reporters. “They hurt the whole community, not just the family that lost their home.”