The State AG Report Weekly Update October 26, 2017

AG Elections

Democrat Jesse Ruiz Announces Bid for Illinois Attorney General

  • Democrat Jesse Ruiz declared his candidacy in the open 2018 race for Illinois AG. He is currently a partner at a Chicago law firm. Ruiz previously chaired the Illinois State Board of Education and served as Vice President of the Chicago Board of Education.
  • Ruiz joins four fellow Democrats—state Representative Scott Drury, Sharon Fairley, state Senator Kwame Raoul, and Highland Park Mayor Nancy Rotering—seeking the Democratic nomination for AG. Erika Harold is the sole Republican to announce her candidacy to date.
  • Incumbent Illinois AG Lisa Madigan, a Democrat, announced last month that she will not seek re-election in 2018.

Democrat Tim Mullaney, Sr. Declares Candidacy for Delaware Attorney General

  • Democrat Tim Mullaney, Sr. announced his bid in the open 2018 race for Delaware AG. Mullaney, who is currently the National Fraternal Order of Police’s Director of Labor Services, previously served as chief of staff to former AG Beau Biden from 2011 to 2014.
  • Mullaney is the sole candidate—Democrat or Republican—to announce his candidacy.
  • As previously reported, Delaware AG Matt Denn announced on his public Facebook page that he will not seek re-election in 2018.

Consumer Financial Protection Bureau

U.S. Senate Votes to Rollback CFPB Rule Banning Restrictive Mandatory Arbitration Clauses 

  • In a 51-50 vote, with Vice President Mike Pence casting the tie-breaking vote, the U.S. Senate voted to pass J. Res. 111, nullifying a Final Rule submitted by the Consumer Financial Protection Bureau (“CFPB”) relating to consumer arbitration agreements.
  • The now-nullified Final Rule, which was released by the CFPB in July, sought to prohibit the use of pre-dispute arbitration agreements to prevent consumers from filing or participating in certain class action suits arising from credit card, checking account, and other financial product and service agreements.

Consumer Protection

50 AGs Reach Settlement with Major Automobile Company to Resolve Allegations of Defective Ignition Switches

  • 50 AGs from 49 states and the District of Columbia reached a settlement with General Motors Company (“GM”) to resolve allegations that it violated state consumer protection laws by misrepresenting the safety and reliability of its vehicles and failing to adequately address known safety concerns.
  • According to the AGs, GM allegedly failed to issue recalls for defective ignition switches that, under certain conditions, could cause drivers to lose control of their vehicles, until 2014, up to ten years after GM allegedly knew of the alleged ignition switch issues.
  • As a part of its settlement, GM has agreed to pay $120 million to the 49 states and the District of Columbia.
  • According to reports and the settlement, Arizona was not a part of the multistate settlement. In November 2014, former Arizona AG Tom Horne filed a separate lawsuit against GM over similar allegations that have yet to be settled.

California Attorney General Files Lawsuit Against Electronics and Appliance Retail Store Chain Over Allegedly Unfair Business Practices

  • California AG Xavier Becerra filed a lawsuit against electronics and appliance retail store chain Adir International, LLC d/b/a La Curacao and Curacao (collectively “Curacao”) for allegedly violating the state’s Unfair Competition Law and other consumer protection state statutes.
  • According to the complaint, Curacao allegedly engaged in unlawful business practices by targeting low-income, Spanish-speaking immigrants who lacked access to traditional credit through allegedly misleading advertising, unwanted contract add-ons, illegal sales of warranties or failed warranties, and illegal debt collection practices. Further, Curacao allegedly violated consumers’ rights by bringing small claims actions over allegedly delinquent loans without issuing proper notice to consumers.
  • The lawsuit seeks to permanently enjoin Curacao from making any false or misleading statements in violation of state consumer protection laws and from engaging in unfair business practices. It also seeks restitution on behalf of affected consumers and monetary penalties in the amount of $2,500 for each violation of state consumer protection statutes, as well as an additional $2,500 for violations perpetrated against senior citizens and the disabled.

President Trump Nominates Joseph Simons as Chairman of the FTC

  • President Donald Trump has nominated Joseph Simons as Chairman of the Federal Trade Commission (“FTC”).
  • Joseph Simons is currently a partner and co-chair of a corporate antitrust group for an international law firm.
  • Simons previously served as Director of the FTC’s Bureau of Competition during the George W. Bush administration.

Employment

New York Attorney General Opens Inquiry Into Film Studio Over CEO and Founder’s Harassment Allegations

  • New York AG Eric Schneiderman’s Civil Rights Bureau sent a subpoena to the Weinstein Company (“TWC”), regarding allegations of sexual misconduct and harassment against its co-founder Harvey Weinstein.
  • According to recent reports, the subpoena is allegedly seeking personnel files, including criteria for hiring or firing employees, formal and informal complaints of harassment or discrimination, and records on how complaints were handled as they relate to sexual misconduct, harassment, gender discrimination, and other civil rights violations against Harvey Weinstein.

Insurance

Illinois Attorney General Files Lawsuit Against Veterans’ Association Over Alleged Insurance, Pension Benefits Scheme

  • Illinois AG Lisa Madigan filed a lawsuit against the Association for Wartime Veterans (“AAWV”), Atlantis Marketing Solutions Inc. (“AMS”), and AAWV’s owner and regional director for allegedly violating the state Consumer Fraud Act.
  • According to the AG’s office, AAWV allegedly sent sales associates, who were not registered as required under federal law, to solicit veterans and widows receiving pension benefits. These associates allegedly targeted consumers under the pretext of providing a “community outreach service,” but in reality were allegedly attempting to generate business leads for AMS and convince consumers to pay for AMS’s annuities and other insurance products.
  • The lawsuit seeks to ban AAWV from using deceptive or unfair business tactics, seeks to force AAWV to rescind all contracts with Illinois consumers, requests full restitution for affected consumers, and imposes a civil penalty of $50,000. If the court finds AAWV and AMS acted with the intent to defraud, it can require the companies to pay a civil penalty of $50,000 per violation and an additional $10,000 for violations against elderly consumers.

Medicaid Fraud

Maryland Attorney General Reaches Settlement with Medical Equipment Provider Over Medicaid Fraud Allegations

  • Maryland AG Brian Frosh reached a settlement with medical equipment provider Medi-Rents & Sales, Inc. (“Medi-Rents”) to resolve allegations that it violated state and federal Medicaid regulations by improperly billing Medicaid and receiving improper payments.
  • According to the AG’s office, Medi-Rents allegedly billed Medicaid for medical supplies using an improper billing code designated only for medical repairs, which resulted in Medicaid issuing overpayments to Medi-Rents.
  • According to the AG’s office, Medi-Rents will pay $450,000 to the state.

State AGs in the News

19 AGs Urge Health Care Companies to Implement Opioid Mitigation Programs

  • A bipartisan coalition of 19 AGs, led by Connecticut AG George Jepsen, sent letters to health care companies that provide pharmacy benefit management (“PBM”) services encouraging them to implement new programs that mitigate prescription opioid abuse.
  • According to the letters, which were sent to 15 health care companies, the AGs recommend that companies providing PBM services limit the supply of opioids dispensed for certain acute prescriptions to seven days, limit the daily dosage of opioids dispensed based on the strength of the opioid, and require the use of immediate-release formulations of opioids before prescribing extended-release opioids.
  • The AGs also applauded CVS Health Corporation (“CVS”) for its recent program that automatically enrolled all commercial, health plan, employer, and Medicaid clients in an opioid abuse mitigation program.
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