The State AG Report Weekly Update March 15, 2018

Cozen in the News

Cozen O’Connor’s State Attorneys General Practice Analyzes the Illinois State Attorney General Primary Election

  • The first high-profile and competitive AG primary election, the open-seat race for Illinois AG, will take place on March 20, where a total of 10 candidates (eight Democrats and two Republicans) are vying for their parties’ nominations. Incumbent Illinois AG Lisa Madigan is not seeking a fifth term.
  • Our latest analysis and video discuss the shifting dynamics of the primary races over the last month.
  • For daily coverage of AG election news, insights, and polls, visit Cozen O’Connor’s State AG Election Tracker. This online portal provides information on all Republican and Democratic AG candidates and allows users to sign up for primary and general election night emails and/or text messages.

Consumer Protection

Arizona Attorney General Announces Settlement with Auto Manufacturer Over Alleged Ignition Switch Defects

  • Arizona AG Mark Brnovich reached a settlement with auto manufacturer General Motors LLC (“GM”) to resolve allegations that it violated the Arizona Consumer Fraud Act by allegedly concealing product defects and engaging in false advertising related to its use of faulty ignition switches in certain vehicle models.
  • According to the AG’s office, GM allegedly concealed that certain GM vehicles sold between 2009 and 2014 contained faulty ignition switches, created a corporate culture that devalued vehicle safety, and engaged in false advertising practices that misled consumers.
  • Under the terms of the consent decree, GM agreed to pay nearly $6.3 million into an escrow fund to be distributed to affected consumers, $1 million to the state, and the costs and fees related to the administration of the escrow fund.
  • As previously reported, a multistate coalition of 50 AGs, representing 49 states and the District of Columbia, reached a settlement with GM over similar allegations in October 2017.

Massachusetts Attorney General Announces Settlement with Utility Provider Over Alleged Improper Billing Practices

  • Massachusetts AG Maura Healey announced a settlement with utility provider National Grid to resolve allegations that it violated its prior 2010 agreement to eliminate a $50 reconnection fee for certain customers.
  • According to the AG’s office, National Grid agreed in 2010 to stop charging a $50 reconnection fee to residential customers whose gas was shut off for non-payment, but allegedly continued to charge the reconnection fee more than 76,000 times.
  • According to the announcement, National Grid has agreed to pay over $3.8 million in consumer credits, refunds, and related interest payments, $3 million to assist Massachusetts gas consumers with their bills, $180,000 to the state, and $20,000 in investigative costs.

Washington Attorney General Files Lawsuit Against Estate-Planning Company Over Allegedly Misleading Sales Practices

  • Washington AG Bob Ferguson filed a lawsuit against estate-planning companies CLA Estate Services, Inc. and CLA USA, Inc. and one of their former agents (collectively “CLA”) based on allegations that they violated the state’s Consumer Protection Act and Estate Distribution Documents Act by allegedly engaging in deceptive marketing practices in connection with their sale of estate planning and related financial products.
  • According to the AG’s office, CLA allegedly misled seniors by inviting them to attend “free lunch” workshops where seniors were subjected to deceptive advertising, unlicensed legal advice, and encouraged to purchase an array of financial planning and insurance products and services without adequate consideration and in some instances without full disclosure of the products and services’ terms.
  • The complaint seeks an injunction against CLA, restitution on behalf of affected consumers, civil penalties, and costs and attorneys’ fees.

Environmental

California Attorney General Announces Settlement with Home Improvement Retailer Over Alleged Environmental and Consumer Privacy Violations

  • California AG Xavier Becerra reached a settlement with home improvement retailer Home Depot U.S.A., Inc. (“Home Depot”) to resolve allegations that it violated California’s Hazardous Waste Control Law and its Unfair Competition Law by allegedly improperly disposing of hazardous waste materials and customer records.
  • According to the AG’s office, Home Depot allegedly disposed of hazardous waste—such as batteries, aerosol cans, paint, and electronic devices—and customer records containing sensitive personal information in store dumpsters in violation of state-mandated protocols for the disposal of these materials.
  • Under the terms of the Stipulated Final Judgment and Permanent Injunction, Home Depot agreed to, among other things, pay over $16.6 million in civil penalties, over $2.5 million to fund environmental protection projects, and $1.85 million in investigative and law enforcement costs, spend at least $6.84 million on improved environmental compliance measures, and be subject to a permanent injunction barring future violations.

New Mexico Attorney General Files Lawsuit Against Solar Energy Company Over Allegedly Misleading Contracts and Door-to-Door Sales Practices

  • New Mexico AG Hector Balderas filed a lawsuit against solar energy companies Vivint Solar Developer, LLC, Vivint Solar, Inc., and Vivint Solar Holdings, Inc. and three of their officers (collectively “Vivint”) based on allegations that they violated the New Mexico Unfair Practices Act, False Advertising Act, Racketeering Act, and civil fraud statute by allegedly deceptively marketing long-term solar energy contracts to New Mexico homeowners.
  • According to the AG’s office, Vivint allegedly offered to set up solar systems on homeowners’ properties in exchange for the homeowners’ agreement to 20-year contracts to purchase the electricity supplied by Vivint’s equipment at rates that increased over the course of the contracts’ terms. The AG’s office further alleges that Vivint advertised these energy contracts by means of misleading, high-pressure door-to-door solicitations and that the contracts sometimes clouded homeowners’ titles, making it difficult for those homeowners to sell their homes.
  • The complaint seeks declaratory, injunctive, and equitable relief, including the voiding of Vivint’s contractual arbitration provisions, a declaration that affected consumers may choose to void their contracts with Vivint, restitution on behalf of affected consumers, disgorgement of allegedly illegally obtained money, civil penalties, costs, and attorneys’ fees.

False Claims Act

New York Attorney General Announces Settlement with Medical Practice Over Alleged Medicaid False Billing

  • New York AG Eric Schneiderman announced a settlement with pediatric medical practice Freed, Kleinberg, Nussbaum, Festa & Kronberg M.D., LLP and various current and former partners in the practice doing business as Pediatrics and Adolescent Medicine (collectively “Practice”) to resolve allegations that they violated the New York False Claims Act and the federal False Claims Acts by billing Medicaid for treatment performed by health care providers who were allegedly not enrolled in the Medicaid program at the time they treated Medicaid beneficiaries.
  • According to the original 2014 complaint, the Practice’s providers who were not enrolled or not yet enrolled in Medicaid allegedly billed for services provided to Medicaid beneficiaries using the Medicaid identification numbers of other, properly enrolled providers.
  • According to the AG’s office, the Practice will pay $750,000 to resolve the lawsuit, $450,000 of which will go to the state’s Medicaid program.

State v. Federal

17 Democratic Attorneys General Pen Letter Opposing Proposed Department of Labor Health Insurance Rulemaking

  • A coalition of 17 Democratic AGs, led by AG Healey, submitted a letter to the U.S. Department of Labor (“DOL”) challenging a proposed rule by the agency that would expand the eligibility criteria for employers seeking to purchase so-called Association Health Plans (“AHPs”) that permit individuals and small employers to group together as associations to qualify as exempt from the requirements of the Affordable Care Act (“ACA”).
  • In the letter, the AGs argue that AHPs are prone to fraud, mismanagement, and deception and are otherwise unfavorable to consumers. The AGs further contend that the DOL’s proposed rule change would be arbitrary and capricious, would cause DOL to unlawfully exceed its authority as an executive agency, and would infringe upon Congress’s legislative authority to amend the terms of the ACA.
  • The AGs request that the DOL withdraw the proposed rule as unlawful and open the rulemaking to a public hearing.

State AGs in the News

Bipartisan Coalition of 44 Attorneys General Submits Amicus Brief to the Supreme Court of the United States Over Physical-Presence Taxation Rule

  • A bipartisan coalition of 44 AGs, representing 41 states, two territories, and the District of Columbia and led by Colorado AG Cynthia Coffman, filed an amicus brief in the United States Supreme Court matter of South Dakota v. Wayfair, Inc., No. 17-494, asking the Supreme Court to abrogate its previously-recognized “physical-presence” rule, which interprets the Commerce Clause of Article I of the U.S. Constitution as barring a state from requiring a company to charge sales tax on purchases made by in-state customers when the company does not have a cognizable physical presence in the state.
  • According to the brief, the rise of the online retail industry and online retailers’ reliance on the physical-presence rule has deprived states who depend on sales tax revenue of billions of dollars in annual revenue and placed brick-and-mortar retailers at a competitive disadvantage vis-à-vis their online-only competitors. The AGs further argue that the physical-presence rule is outmoded, is inconsistent with the intent of the drafters of the Constitution, and unlawfully infringes on state sovereignty.
  • The brief requests that the Court abrogate the physical-presence rule and reverse the Supreme Court of South Dakota’s contrary ruling.
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