State AG Monitor

State AGs in the News

By Bernard Nash , Divonne Smoyer , and Alison K. Gary on Posted in Consumer Financial Protection Bureau, Consumer Protection, Environment, For-Profit Colleges, Global Warming

Consumer Financial Protection Bureau (CFPB)

The CFPB Alleges Four Mortgage Insurance Firms Owe $15 Million in Fines

  • The Consumer Financial Protection Bureau slapped four of the nation’s largest mortgage insurance firms, Genworth Mortgage Insurance Corporation, United Guaranty Corporation, Radian Guaranty Inc., and Mortgage Guaranty Insurance Corporation, with more than $15 million in fines for alleged kickbacks they paid to lenders in order to boost business.
  • The CFPB alleges that the practice exacerbated the foreclosure crisis.
  • The practice, according to the CFPB allegations, involved the use of bogus reinsurance contracts and dates back to the early part of the last decade.

Consumer Protection

Washington Attorney General Settles with Financial Planning Companies

  • Washington Attorney General Bob Ferguson settled with four financial planning companies resolving allegations that the companies targeted senior veterans with asset management schemes.
  • Kansas-based American Benefits Advocates worked with three companies, Financial Concepts, Senior Advisory Services, Inc., and Equity Financial Freedom, doing business as American Veterans Financial, allegedly violating several Washington laws.
  • Under the terms of the consent decree, the companies paid attorney fees and provided restitution to customers. Civil penalties are suspended as long as the companies comply with the order, which also permanently prohibits the companies from advising people about estate documents in Washington.

Washington Attorney General Sues Florist for Consumer Protection Violations

  • Washington Attorney General Bob Ferguson announced that his office has sued Arlene’s Flowers and Gifts for refusing to provide flowers for a customer’s same-sex wedding.
  • AG Ferguson said, “[I]t is my job to enforce the laws of the state of Washington. Under the Consumer Protection Act, it is unlawful to discriminate against customers on the basis of sexual orientation. If a business provides a product or service to opposite-sex couples for their weddings, then it must provide same-sex couples the same product or service.”
  • The AG seeks a permanent injunction requiring the florist to comply with consumer protection laws and seeks $2,000 fines for each violation of the law.

Environment/Global Warming

New Hampshire Attorney General Announces $700,000 Settlement with Concrete Company

  • New Hampshire Attorney General Michael Delaney announced that his office and the state Department of Environmental Services settled with Torromeo Industries, Inc., a concrete and gravel company, resolving allegations of improper wetlands filling.
  • Torromeo Industries allegedly engaged in the unpermitted filling of approximately 12.5 acres of wetlands and diverted more than one mile of perennial streams at its gravel mine.
  • The unpermitted fill is thought to be the largest in the state’s history.
  • Under the settlement, Torromeo has agreed to pay a $700,000 civil penalty, of which $225,000 will be suspended once the company completes restoration of the wetlands. The state accepted $175,000 in cash and more than 8,000 tons of stone as payment of the non-suspended fine.

For-Profit Colleges

Massachusetts Attorney General Focuses On For-Profit College

  • Massachusetts Attorney General Martha Coakley has announced that her office is conducting “an extensive investigation” into the for-profit school industry. Generally, the AG is concerned that some for-profit colleges have made false and deceptive statements in advertising and enrollment materials, and misled website users about the rate at which its students were able to obtain employment.
  • AG Coakley believes that these practices violate consumer protection laws and have left graduates with large amounts of debt and few opportunities.
  • In addition to investigating industry practices, the Massachusetts Attorney General’s Office also launched an initiative to educate students about the for-profit school industry. As part of that initiative, the office has launched a new website offering resources for consumers related to for-profit schools.

 

State AGs in the News

By Bernard Nash , Divonne Smoyer , and Alison K. Gary on Posted in Consumer Protection, Environment, State AGs in the News

State AGs in the News

Joseph Foster Tapped To Be New Hampshire Attorney General

  • New Hampshire Governor Maggie Hassan announced that former state Senator Joseph Foster is her top choice for the position.
  • If the Executive Council confirms the nomination, Governor Hassan will formally nominate Foster.
  • Foster currently leads the bankruptcy practice for the McLane Law Firm.
  • Last week, New Hampshire AG Michael Delaney announced that he will return to private practice after 14 years of public service, serving as AG since 2008.

Consumer Protection

Ohio Attorney General Settles Claims That Veteran Services Groups Misused Donations

  • Ohio Attorney General Mike DeWine announced that a state investigation revealed that AMVETS Department of Ohio, AMVETS Career Center, and AMVETS Department of Ohio Service Foundations  misused $10 million.
  • The money was to be used to create satellite offices to provide veterans with training and employment services. Instead, the investigation allegedly found that many of the satellite offices were merely facades. AG DeWine alleged that across a six-year span, nearly $1.8 million was diverted to subsidize non-charitable activities, such as travel reimbursement.
  • The AG reported that AMVET officials have cooperated and started implementing a number of reforms. No criminal charges have been filed so far.

Ohio Attorney General Files Suit Against Pole Barn Company

  • Ohio Attorney General Mike DeWine announced that his office has sued MidOhio Buildings, Inc., doing business as Mustang Building Corp., for allegedly violating Ohio’s Consumer Sales Practices Act.
  • Seven consumers filed complaints either with his office or the Better Business Bureau alleging more than $100,000 total in losses.
  • Mustang allegedly entered into contracts with consumers to build pole barns and similar buildings, but did shoddy work, misled consumers, operated without proper licensing, and failed to deliver promised services after tender of payment.
  • The suit seeks restitution, injunctive relief, and civil penalties.

Environment

Missouri Attorney General Sues Landfill Owner

  • Missouri Attorney General Chris Koster announced that his office filed suit against Republic Services, Inc., owner of the Bridgeton Landfill in St. Louis County, alleging that the company violated several of the state’s environmental protection laws.
  • The alleged violations are related to an underground landfill fire burning since January, causing violations of Missouri’s air, hazardous waste, solid waste, and clean water laws.
  • The lawsuit also seeks restitution for neighbors of the landfill, alleging that the odors have significantly impacted their ability to go about day-to-day activities.

Arkansas Attorney General Requests Exxon Preserve Spill Records

  • After the Exxon Mobile Corp. Pegasus Pipeline ruptured, causing thousands of gallons of crude oil to leak into a residential neighborhood, Arkansas Attorney General Dustin McDaniel has requested that Exxon preserve all records related to the spill.
  • AG McDaniel states that his office will open an investigation into the cause of the spill and the extent of the damage.
  • AG McDaniel asks the company to require all employees to preserve “all documents, data compilations, tangible objects, or other information.”
  • AG McDaniel expects Exxon to cooperate with the request.

State AGs in the News

By Bernard Nash , Divonne Smoyer , and Alison K. Gary on Posted in Consumer Financial Protection Bureau, Contingency-Fee Counsel, Environment, State AGs in the News

CFPB

CFPB Finalizes Revision to Credit Card Rules

  • The CFPB announced that it has finalized a change to Regulation Z of the Truth in Lending Act, modifying the credit card rule so that the limit on credit card fees applies only during the first year the account is open.
  • The rule is the CFPB’s response to a federal court case that blocked an earlier rule from taking effect.

Contingency Fee Counsel

West Virginia Attorney General Proposes Outside Counsel Hiring Policy

  • West Virginia Attorney General Patrick Morrisey announced a proposal intended to increase fairness and transparency in the state’s hiring of outside counsel to represent the state or agencies in legal proceedings.
  • The proposed policy outlines a bidding process and contingency fee agreements with outside counsel. It also ensures that all outside counsel will work under the direct supervision of the Attorney General’s Office.
  • Attorney General Morrisey seeks public comment on the proposal.

Environment

Missouri Attorney General Settles with Fitness Center

  • Missouri Attorney General Chris Koster announced that his office has settled with Cape Girardeau Family Fitness Center, resolving allegations that the center violated the state’s Safe Drinking Water Law.
  • The settlement follows an investigation commenced after several children in a neighborhood fell ill after drinking water contaminated with E. coli. The Missouri Department of Health and Senior Services allegedly traced the contamination back to the center.
  • The center will pay a civil penalty of $22,500, with $15,000 suspended upon compliance of the consent judgment, which requires the center to come into compliance with the Safe Drinking Water Law.

State AGs in the News

New Hampshire Attorney General to Leave Office

  • New Hampshire Attorney General Michael Delaney announced that he will leave the Attorney General’s Office after serving for 14 years.
  • Governor Patrick Lynch appointed General Delaney in 2009.
  • He intends to return to private practice.

State AGs in the News

By Bernard Nash , Divonne Smoyer , and Alison K. Gary on Posted in Consumer Financial Protection Bureau, False Claims Act, Healthcare, Medicaid Fraud, Securities

CFPB

CFPB to Increase Oversight of Student Loan Servicers

  • The Consumer Financial Protection Bureau (CFPB) proposed a rule that will allow it to supervise non-bank student loan financers to ensure compliance with federal laws.
  • At the end of 2012, outstanding student loan debt exceeded $1 trillion.
  • A loan servicer is responsible for collecting payments and is often different than the lender. A borrower has no choice of which company will service the loan.

Healthcare

Massachusetts Attorney General Settles with Transamerica for $1.3 Million

  • Massachusetts Attorney General Martha Coakley announced that her office has settled with Transamerica for $1.3 million, resolving allegations that the company sold unauthorized health insurance to Massachusetts residents.
  • The settlement also resolves allegations that the company violated the state’s Consumer Protection Act by failing to cover health services required by law.
  • The settlement includes $750,000 in consumer relief for residents who purchased the subject insurance.

Medicaid Fraud

Missouri Attorney General Settles with Adult Daycare Provider over Medicaid Billing

  • Missouri Attorney General Chris Koster announced that his office has settled with Adult Daycare Villas, LLC resolving allegations that the daycare failed to provide full-day services to several patients yet billed Medicaid for the full-day care.
  • The daycare will pay the state $8,800 for its allegedly fraudulent billings, in addition to nearly $70,000 in damages, penalties, and costs.
  • The daycare is also prohibited from providing any services under the Medicaid program.

Securities

New Jersey Attorney General Reaches $450,000 Settlement with Investment Bank

  • Attorney General Jeffrey Chiesa announced that his office has settled with Canadian investment bank RBC Capital Markets LLC, resolving allegations that the bank failed to perform required reviews of accounts held by a person convicted of securities fraud.
  • The monthly reviews, required by the banks’ own procedures, were allegedly up to eight months overdue.
  • The settlement includes $300,000 in disgorgement, which will be distributed to the affected investors. An additional $100,000 in penalties was suspended because RBC cooperated with the state.

State AGs in the News

By Bernard Nash , Divonne Smoyer , and Alison K. Gary on Posted in Consumer Protection, Data Privacy, Environment, Pharmaceuticals

New State AG Client Resource: 2013 Guide to State Attorneys General

Dickstein Shapiro’s State Attorney General Practice is pleased to introduce our newest client resource, the 2013 Guide to State Attorneys General. Developed by attorneys in the practice, the guide includes information on AGs in all 50 states and the District of Columbia, including a photo and website address, year first elected or appointed, political party affiliation, AG association leadership positions, and brief background and priority summary. An electronic version of the guide can be found on our website and we hope that you find it to be a valuable resource.

Consumer Protection

Florida Attorney General Pam Bondi Sues Four Timeshare Companies

  • Florida Attorney General Pam Bondi announced that her office executed a “Timeshare Fraud Sweep” that resulted in filing suit against four companies: A1 Marketing Unlimited, Access Travel Network, Inc., International Timeshare Exchange/Network, and Travel Buy Owner/CFL Ventures.
  • The suits allege that the companies acted as telemarketers and used false promises to entice consumers to pay between $400 and $2,500 in up-front fees for advertising services to sell or rent their timeshares.
  • AG Bondi immediately secured an injunction enjoining the companies from operating in Florida and also won an order to freeze the companies’ assets.
  • The suits seek restitution for consumers. The companies could also face penalties of up to $15,000 for each violation.

Texas Attorney General Resolves Claims Against Tanning Salon

  • Texas Attorney General Greg Abbott announced that his office has resolved its enforcement action against tanning salon Darque Tan resolving allegations of improper advertising.
  • Texas law prohibits tanning salons from advertising health benefits. Darque Tan allegedly advertised that customers would benefit from increased Vitamin D provided by Darque Tan’s tanning beds.
  • The settlement agreement prohibits Darque Tan from continuing to unlawfully advertise its businesses. Darque Tan will also pay $88,000 in civil penalties and $45,000 for the state’s attorney fees.

Data Privacy

Thirty-eight State Attorneys General Reach $7 Million Settlement with Google

  • Thirty-eight State AGs reached a $7 million settlement with Google, resolving allegations that the company’s street view Wi-Fi data collection practices violated privacy protections.
  • As part of the settlement, Google has agreed to train its employees about privacy and confidentiality for at least the next 10 years. Google will also destroy or secure any improperly collected information.
  • The executive committee for the settlement included the Attorneys General of Connecticut, Arizona, Florida, Illinois, Kentucky, Massachusetts, Missouri, and Texas.

Environment

Wisconsin Attorney General Wins $40,000 Judgment Against Cheese Manufacturer

  • Wisconsin Attorney General J.B. Van Hollen announced a $40,000 judgment against Saputo Cheese USA, Inc., resolving allegations that the company violated a pollution permit.
  • The violation allegedly occurred when lift pump stations at the facility failed and caused untreated water to overflow, bypassing the company’s wastewater treatment plant, and enter the Little River.
  • The company cooperated with the state and will institute new employee training regarding spill notification and improve tracking for the operation of the wastewater plant.

Pharmaceuticals

Forty-eight Attorneys General Urge Anti-Abuse Measures for Generic Drugs

  • Forty-eight state and territorial Attorneys General sent a letter to the Federal Drug Administration (FDA) urging the body to adopt tamper-resistant standards for generic drugs that would reduce abuse.
  • The letter applauds the FDA for developing guidelines that will assist with the formulations of opioid drugs with abuse-deterrent properties but encourages the agency to ensure generic versions of such products are designed with similar features.
  • The letter is an “open sign-on letter” organized through the National Association of Attorneys General (NAAG), which assists AGs in coordinating joint actions and policy positions.

State AGs in the News

By Bernard Nash , Divonne Smoyer , and Alison K. Gary on Posted in Consumer Protection, Environment

Consumer Protection

Colorado Attorney General Wins $6 Million Judgment Against Magazine Telemarketing Company

  • Colorado Attorney General John Suthers announced that a District Court has ordered magazine telemarketing company World Wide Readers to pay $6 million to resolve allegations of scamming consumers.
  • World Wide Readers and its owner Michael Brian Patterson allegedly collected fraudulent subscription contracts through telemarketers.
  • AG Suthers filed suit in 2011 against more than 20 telemarketing companies owned by Patterson.
  • Patterson and the company will pay $5 million in civil penalties and $1 million in consumer restitution.

Missouri Attorney General Secures Judgment Against Wedding Venue

  • Missouri Attorney General Chris Koster announced that his office has secured a judgment against West Bottoms Hospitality LLC.
  • West Bottoms Hospitality allegedly contracted with 73 couples to provide a wedding venue, but allegedly failed to secure the needed construction permits and did not provide refunds when the couples needed to cancel the contract and find a new venue.
  • West Bottoms Hospitality will pay $43,464 in restitution and $87,346 in penalties.

New York Attorney General Probing Bank of America

  • New York Attorney General Eric Schneiderman is reportedly investigating Bank of America’s mortgage and lending practices.
  • AG Schneiderman is a member of President Obama’s Financial Fraud Enforcement Task Force and has investigated other large financial institutions.
  • Bank of America has said that the AG’s investigation into its mortgage practices could cost the bank $3 billion or more in penalties and that the bank is cooperating with the investigation.

Environment

Illinois Attorney General Settles with Firm Accused of Improperly Disposing of Waste

  • Illinois Attorney General Lisa Madigan announced that her office has reached a settlement with Freeman Environmental Services over allegations that it improperly disposed of dry cleaner waste in a landfill without testing and identifying the waste as hazardous.
  • Under the terms of the consent order, the firm will pay a $15,000 civil penalty.
  • The consent order resolves a four-count complaint against the company.

California Lawmakers Propose Legislation Addressing Internet Privacy

By Divonne Smoyer , Aaron R. Lancaster , and Alison K. Gary on Posted in Data Privacy

Last year, California was at the forefront of the movement to increase consumer privacy online. The state legislature updated its data breach notification law, bringing it in line with some of the most strict notification laws in the country by requiring, for example, companies that send notices of a data breach to more than 500 California residents to also give notice to the Attorney General.

California Attorney General Kamala Harris herself was also very active last year in data privacy, working with app platform developers to devise a “Statement of Principles” to protect mobile app users’ personal information. She also established a privacy protection division in her office. AG Harris closed out 2012 by bringing suit under the California Online Privacy Protection Act (CalOPPA) against Delta Airlines for failing to include a privacy policy with its “Fly Delta” app.

This year, California lawmakers continue efforts to enhance consumer privacy, particularly online. AG Harris published a report in early January outlining recommendations to protect privacy in a society that increasingly uses mobile devices for business and personal purposes. In the legislature, two privacy-focused proposals are already on the legislative agenda:

  • AB 242: CalOPPA requires an operator of a “commercial website” or “online services” that collect personally identifiable information to make its privacy policy and data collection and protection practices available to consumers. AB 242 would require that the published privacy policy be 100 words or less and be written in “clear and concise language” at or below an 8th grade reading level.
  • AB 257: AB 257 also would expand CalOPPA, requiring that entities that collect personal information enact certain safeguards to protect it. Currently, CalOPPA applies to operators of “commercial websites” or “online services.” AB 257 would amend the current CalOPPA definitions of “online market” and “mobile application” to include apps intended for download onto a device, ensuring that app developers are also required to follow the strictures of CalOPPA. Finally, the bill governs advertisements on mobile apps, such as requiring the ad to identify the sponsor and  requiring consumer consent before displaying the ad.

The California Legislature is not alone in considering updates to enhance citizens’ privacy protections. On the other side of the country, for example, Maryland AG Doug Gansler appealed to the Maryland Legislature to enact legislation that would allow him to bring federal COPPA claims in state courts as a violation of the state’s Unfair and Deceptive Trade Practices Act.

Legislation increasing consumer protection is often spurred by AG activity in that area. The California and Maryland legislative proposals were both introduced following a year in which both states’ AGs received significant publicity related to their efforts in the area of consumer and data privacy. Legislative proposals can also foreshadow areas of law that may see increasing AG enforcement; the Maryland and California legislative proposals, if passed, will provide more tools with which those states’ AGs can target data-collecting practices that harm consumers. As legislative sessions continue in 2013, expect to see more legislation addressing Internet and data privacy in California, Maryland, and other states.

State AGs in the News

By Bernard Nash , Divonne Smoyer , and Alison K. Gary on Posted in Consumer Protection, Environment, Pharmaceuticals, State AGs in the News, States v. Federal Government

Hot News

Dickstein Shapiro Hosts Second-Annual Executive Briefing at NAAG Meeting

  • The Dickstein Shapiro State Attorney General Practice hosted its second-annual Executive Briefing coinciding with the National Association of Attorneys General Winter Meeting. The session consisted of two panels, the first with three state Chief Deputies, and the second featuring three newly elected Attorneys General.
  • The first panel featured Travis LeBlanc, California Special Assistant Attorney General, Staci Schneider, Indiana Chief of Staff, and Kevin Turner, Chief Deputy AG of Alabama. JB Kelly, a former Chief Deputy in the North Carolina AG’s Office and current partner in the State AG Practice, moderated the first panel. The panelists discussed office organization, their roles in the offices, and the important roles filled by staff attorneys and political appointees.
  • The second panel featured three Attorneys General who took office earlier this year: West Virginia AG Patrick Morrisey, Montana AG Tim Fox, and Utah AG John Swallow. Milton Marquis, State AG Practice partner, moderated. The AGs discussed their priorities for the office, changes they are making to office organization, and provided tips on how businesses can better interact with their offices.

Consumer Protection

Florida Attorney General Announces Multimillion Dollar Settlement with Law Book Publisher

  • Florida Attorney General Pam Bondi announced that her office has reached a multimillion dollar settlement with law book publisher CCH Inc., resolving allegations related to automatic subscription renewals, a negative option plan.
  • Under the agreement, CCH will mail refund notices to 5,000 consumers to provide $5 million in refunds. The AG’s Office will receive $1.4 million for investigation and enforcement costs and attorney fees.
  • The company allegedly failed to include adequate disclaimers and information when automatically renewing subscriptions for consumers who signed up for trial offers.

Environment

Oklahoma and Arkansas Attorneys General Sign Illinois River Agreement

  • Oklahoma Attorney General Scott Pruitt and Arkansas Attorney General Dustin McDaniel sign Illinois Water Agreement providing for a three-year study of the river’s water quality.
  • The agreement extends a similar 2003 pact.
  • The stressor response study will determine the amount of phosphorus that can be contained within the watershed without negatively impacting water quality.

8 States Reach $8.5 Million Settlement with American Electric Power

  • Eight states have reached an $8.5 million settlement with Ohio-based American Electric Power (AEP), which has also agreed to reduce pollution in states downwind of its coal-fired electric power plants.
  • The agreement enhances a 2007 air pollution settlement with AEP.
  • Under the agreement, AEP and its subsidiaries must meet more stringent emissions reductions of sulfur dioxide (SO2) at its plants east of the Mississippi River.

Pharmaceuticals

47 States Receive Funds from Healthpoint Settlement

  • The 47 states that joined the U.S. Department of Justice in a suit against Healthpoint Ltd. will share in the $48 million settlement.
  • The settlement resolves allegations related to the efficacy of Xenaderm ointment.
  • The case was brought by 15 states and the U.S. Department of Justice in Massachusetts District Court.

State v. Federal

West Virginia Joins Other States in Two Legal Challenges

  • West Virginia’s new Attorney General Patrick Morrisey has joined other states in challenging New York’s new gun law that would require a person to demonstrate need before they may obtain a concealed weapons permit. He filed a friend of the court brief.
  • AG Morrisey also joined the bankruptcy challenge related to the Dodd-Frank Act, stating that West Virginia holds investments in many institutions that would be covered by the “bail-out” provisions.

State AGs in the News

RAGA re-elects Oklahoma Attorney General as Chairman.

  • The Republican Association of Attorneys General re-elected Oklahoma Attorney General Scott Pruitt to be Chairman at its winter meeting in Washington, DC.
  • This is a rare second-term for a RAGA Chairman.
  • AG Pruitt was elected by his 23 Republican Attorney General colleagues.

State AGs in the News

By Bernard Nash , Divonne Smoyer , and Alison K. Gary on Posted in Consumer Protection, Environment, False Claims Act, Medicaid Fraud, Mortgages/Foreclosures, Pharmaceuticals, State AGs in the News

State AGs in the News

D.C. Announces Plan to Transition Attorney General to Elected Position in 2015

  • Mayor Vincent Gray announced proposed legislation that would implement voters’ 2010 decision to give D.C. an elected Attorney General.
  • D.C. Attorney General Irvin Nathan supports the proposal and urged the D.C. Council to act quickly so that the set of reforms are in place before candidates emerge.
  • The bill reflects the core government principle that the chief executive must control budget and policy choices of the executive branch while the Attorney General must control the executive’s litigation and legal opinions.
  • Under the proposal, the Attorney General would not report to the mayor. The mayor would create a small new office of lawyers that will handle duties currently carried out by the Office of the AG— including directing cross-agency coordination on subordinate executive branch agency legal issues and lawyer training responsibilities.

Consumer Protection

29 States Reach $29 Million Settlement with Toyota Over Involuntary Acceleration Claims

  • Twenty-nine State Attorneys General announced that the $29 million settlement resolves an investigation following Toyota’s 2010 recall of 10 million vehicles because of alleged problems of sudden acceleration.
  • The settlement comes just a few weeks after Toyota agreed to pay $1.1 billion to resolve a national class action related to the same allegations.
  • The states will split the settlement money, with an additional $5 million to be used to reimburse consumers. Toyota also agreed to amend certain business practices, including, for example, improving communication between Toyota subsidiaries in the United States and the corporate headquarters in Japan.
  • For more information on the settlement, read our blog post here.

Arkansas Attorney General Settles with Online Payday Lending Company

  • Arkansas Attorney General Dustin McDaniels announced that his office has entered a consent judgment that will prohibit online payday lending company Sure Advance LLC from offering payday loans that violate Arkansas law to Arkansas residents.
  • The consent judgment resolves allegations that the company offered loans that violated the state’s usury laws.
  • The company also agreed to cancel all outstanding loans made to Arkansas residents and will pay the state $50,000.

Environment

New Hampshire and CITGO Reach $16 Million Settlement

  • New Hampshire Attorney General Michael Delaney announced that his office will be responsible for distributing the funds from a $16 million settlement with petroleum company CITGO.
  • The settlement resolves allegations that the company contaminated groundwater with MTBE, a gasoline additive. New Hampshire banned MTBE use in gasoline in 2007.
  • The AG’s Office will use the funds to monitor and remediate contamination of drinking water.
  • The settlement came two days into trial. The state brought suit against 26 petroleum companies a decade ago. When trial began this January, CITGO and ExxonMobil were the only remaining defendants. Shell Oil and Sunoco settled in December for a total of $35 million. This is the only lawsuit brought by a state over MTBE contamination to proceed to trial.

Mortgages and Foreclosures

Multistate Action Brought Against Standard & Poor’s for Mortgage Ratings

  • Sixteen State AGs, the District of Columbia AG, and the federal government filed suit against Standard & Poor’s (S&P) over allegations that the credit ratings agency inflated the ratings of risky mortgages, contributing to the 2008 financial crisis.
  • The AGs from California, Connecticut, Delaware, Mississippi, Illinois, and Iowa joined U.S. AG Eric Holder in announcing the suits.
  • California AG Kamala Harris’ suit alleges that S&P knowingly inflated the ratings of structured finance investments, which California’s pension system, CalPERS, relied on, allegedly causing the program to lose approximately $1 billion.

Pharmaceuticals

CVS and Indiana Attorney General Announce $400,000 Settlement

  • Indiana Attorney General Greg Zoeller announced a $400,000 settlement with CVS stores resolving allegations of illegal prescription billing practices that caused the state’s Medicaid program to overpay for prescriptions.
  • CVS has also agreed to inform pharmacy employees of their obligations under Medicaid’s Restricted Card Program (RCP), which is intended to help reduce prescription drug abuse. CVS had been accused of filling prescriptions not written by an RCP-approved physician and submitting claims to Medicaid falsely identifying the prescribing physician to ensure Medicaid paid for the drugs.
  • For information about AG action on pharmaceutical issues in 2012, please visit our blog.

$29 Million Settlement Ends Two Year Multi-State Investigation into Sales Practices

By Divonne Smoyer , Aaron R. Lancaster , and Alison K. Gary on Posted in Consumer Protection

On February 14, 2013, 29 State Attorneys General (AGs) announced that they had reached a $29 million settlement with Toyota and its U.S. subsidiaries to resolve an investigation launched in the aftermath of the 2010 recall of more than 10 million vehicles related to alleged defects associated with sudden, unintentional acceleration. AGs cooperated to investigate allegations that Toyota had misled consumers about the safety of its vehicles. California and New York were not involved in the investigation or settlement, having reached settlements with Toyota in 2010 to provide special accommodations for customers who had purchased defective cars.

This most recent resolution is the latest in a series of events following Toyota recalls over the past two years. On December 26, 2012, Toyota agreed to pay a record-setting $1.1 billion to resolve a national class action that also followed the 2010 recall. Toyota also has paid at least $66 million in fines to federal agencies. Hundreds of consumer lawsuits remain in state and federal courts.

New Jersey Attorney General Jeffrey Chiesa, who led the investigation, lauded the settlement “not only because of the dollars,” but because the settlement also included a pledge by Toyota to change certain business practices that will protect consumers in the future. Many settlements with AGs contain, in addition to monetary penalties, provisions for the targeted company to alter the behavior that prompted the investigation. For example, in this settlement, Toyota has agreed 1) to improve communications between its Japanese and American counterparts, 2) not to advertise safety claims without significant engineering proof to support the claim, 3) not to state that a car with alleged defects is “Toyota certified,” and 4) to warn customers in the future of any known defects in its used cars.

The AGs of Connecticut, Florida, Louisiana, Michigan, Nevada, Ohio, South Carolina, and Washington assisted with the investigation. Alabama, Arizona, Arkansas, Colorado, Illinois, Kansas, Maryland, Minnesota, Mississippi, Nebraska, Texas, Virginia, and Wisconsin also participated in the settlement.

For more information on AG actions in the area of consumer protection, visit our blog.