The State AG Report Weekly Update September 21, 2017

AG Elections

Illinois Attorney General Will Not Seek Reelection in 2018; Democrats Scott Drury and Kwame Raoul Announce Bid for Seat

  • Illinois AG Lisa Madigan, a Democrat, announced on her campaign website that she will not seek re-election in 2018.
  • AG Madigan, was elected to her first term in 2002 and reelected for three more terms in 2006, 2010, and 2014. Before becoming AG, she served in the state Senate.
  • Following AG Madigan’s announcement, Democratic state Representative Scott Drury and Democratic state Senator Kwame Raoul have announced their candidacies to become Illinois AG. They join Republican Erika Harold, who announced her candidacy for the seat in August.

Democrat Matt Pelikan Announces Bid for Minnesota Attorney General

Republican Tonya Schuitmaker Announces Bid, Democrat Patrick Miles, Jr. Files to Run for Michigan Attorney General

  • Republican state Senator Tonya Schuitmaker, currently serving as state Senate President Pro Tempore, announced her candidacy to become Michigan AG. She is the first Republican to enter the race.
  • According to reports, Democrat Patrick Miles, Jr., former U.S. attorney for the Western District of Michigan, has filed paperwork to run for the Democratic nomination for the seat.
  • Schuitmaker and Miles join Democrat and former assistant prosecutor Dana Nessel, who announced her candidacy earlier this year.
  • As previously reported, Republican incumbent AG Bill Schuette—who is unable to run for a third term due to term limits—announced last week that he will run for Governor of Michigan.

Consumer Financial Protection Bureau

CFPB Takes Legal Actions Against Student Loan Companies Over Allegedly Illegal Lawsuits

  • The Consumer Financial Protection Bureau (“CFPB”) filed a complaint against student loan owner and statutory trust conglomerate National Collegiate Master Student Loan Trust and its associated statutory trusts (collectively, “National Collegiate”) and entered a consent order against National Collegiate’s debt collector Transworld Systems, Inc. (“Transworld”) for allegedly violating the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act by filing illegal student loan debt collection lawsuits.
  • According to the complaint, National Collegiate and Transworld allegedly filed debt collection lawsuits without the documents necessary to prove that National Collegiate owned the loans or that consumers owed the debt, falsely claimed in affidavits to have personal knowledge of the student loan debts, and filed lawsuits after applicable statutes of limitations periods had expired.
  • Under the terms of the proposed final judgment and consent order, among other things, National Collegiate must conduct an audit of the student loans in its portfolio and pay $3.5 million in restitution, as well as additional restitution to consumers identified through the audit, $7.8 million in disgorgement, and $7.8 million in civil penalties. Transworld must pay $2.5 million in civil penalties. In addition, both companies must stop filing debt collection lawsuits where the applicable statutes of limitations periods have expired, stop attempting to collect on debt without proper documentation, and stop using false legal documents.

Consumer Protection

Virginia Attorney General Files Lawsuit Against Open-End Credit Plan Lender Over Allegedly Illegal and Unlicensed Loans

  • Virginia AG Mark Herring filed a lawsuit against open-end credit plan lender Allied Title Lending, LLC d/b/a Allied Cash Advance (“Allied Title Lending”) for allegedly violating the state’s open-end credit statute, consumer finance statute, and Consumer Protection Act by issuing illegal and unlicensed loans.
  • According to the complaint, Allied Title Lending allegedly charged its open-end line of credit customers a $100 origination fee during a statutorily-required finance charge-free grace period, charged annual interest rates of 273.5%, effectively treating the open-end lines of credit as payday loans, and has not held a required consumer finance license since January 2015.
  • The lawsuit seeks, among other things, restitution, civil penalties, attorneys’ fees, a declaration that all of the company’s open-end credit plan loans made in violation of the law are null and void, and penalties of up to $2,500 per violation.

Pharmaceuticals

41 AG Multistate Opioid Investigation Demands Documents from Manufacturers and Distributors

  • A bipartisan coalition of 41 AGs demanded information and documents from the manufacturers and/or the distributors of prescription opioid drugs as a part of an ongoing multistate investigation into whether the companies engaged in unlawful practices in their marketing and distribution of prescription opioids.
  • The AGs served written requests for documents and information, known as civil investigative demands (“CID”) or subpoenas, to pharmaceutical manufacturers Endo International PLC, Janssen Pharmaceuticals, Teva Pharmaceutical Industries Ltd./Cephalon Inc., Allergan Inc., and their related entities, and also served a supplemental CID on pharmaceutical manufacturer Purdue Pharma.  The AGs also sent letters to distributors Amerisource Bergen Corporation, Cardinal Health, Inc., and McKesson Corporation seeking documents pertaining to their opioid distribution business.
  • According to the AGs, this latest action marks a “dramatic expansion” of the coalition’s investigation which, as we previously reported, initially focused on manufacturers of opioids.

37 AGs Urge Health Insurance Companies to Reduce Provider Incentives for Opioid Prescriptions, Promote Non-Opioid Alternatives

  • The National Association of Attorneys General (“NAAG”) organized a bipartisan coalition of 37 AGs to send a letter to health insurance trade association America’s Health Insurance Plans (“AHIP”) to encourage its member health insurance companies to review their payment coverage policies and encourage health care providers to prioritize prescribing non-opioid alternatives for chronic, non-cancer pain.
  • In the letter, the AGs write that insurance companies should play a more prominent role in reducing the number of opioid prescriptions by adopting an incentive structure that rewards the use of non-opioid pain management, such as non-opioid medications, physical therapy, acupuncture, massage, and chiropractic care.
  • The AGs also note that since healthcare providers often favor treatment options that are most likely to be compensated, insurance companies are in a position to encourage the use of alternatives to opioids, which may also be more effective at mitigating chronic pain and more cost-effective.
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