The State AG Report Weekly Update November 29, 2018

Breaking News

Wyoming Governor-Elect Announces Appointment of Attorney General

  • Bridget Hill has been appointed to serve as the Wyoming AG by Governor-elect Mark Gordon (R).
  • Since 2013, Hill has served as Director of the Wyoming Office of State Lands and Investments, and previously worked in the Wyoming AG’s Office.
  • Hill succeeds AG Peter Michael, who was appointed in 2013.

Antitrust

North Carolina Attorney General and U.S. Department of Justice Reach Settlement with Health Care System Over Allegedly Anticompetitive Contract Provisions

  • North Carolina AG Josh Stein, along with the U.S. Department of Justice (“DOJ”), reached a settlement with health care system the Charlotte-Mecklenburg Hospital Authority d/b/a Atrium Health f/k/a Carolinas HealthCare System (“Atrium Health”) to resolve allegations that it used anticompetitive steering restrictions in its contracts with commercial health insurers.
  • According to the DOJ, Atrium Health allegedly prohibited steering in its contracts, a method utilized by health insurers to offer consumers options to reduce their healthcare expenses, which in turn prevented the insurers from, among other things, promoting innovative health benefit plans and more cost-effective health care services to their plan enrollees.
  • Under the terms of the proposed final judgment, Atrium Health will be prohibited from enforcing its contractual steering restrictions or from seeking contract terms in the future that prohibit, prevent, or penalize steering.

Consumer Protection

Washington Attorney General Reaches Agreements with Four Franchisors to Eliminate “No Poach” Provisions in Franchise Contracts

  • Washington AG Bob Ferguson reached agreements with franchisors QIP Holder, LLC d/b/a/ Quiznos (“Quiznos”), Massage Envy Franchising, LLC (“Massage Envy”), Frontier Adjusters of America, Inc. (“Frontier Adjusters”), and Sport Clips, Inc. (“Sport Clips”) to eliminate “no-poach” provisions in their franchise contracts.
  • According to the AG’s office, the franchisors utilized provisions in their contracts with franchise owners that prohibited employees from moving among stores within the same corporate chain.
  • According to the AG’s office, each of the franchisors signed a legally binding commitment to cease enforcing the no-poach provisions currently in their franchise contracts and to remove such provisions from current and future franchise contracts.
  • As previously reported, AG Ferguson filed a lawsuit against a fast food franchisor in October 2018 over its alleged use of no-poach provisions, and reached settlements with fast food franchisors in July 2018August 2018, and September 2018  to resolve investigations regarding their uses of no-poach provisions.

Virginia Attorney General Obtains Court Order for $50 Million in Penalties and Debt Relief from Pension Sale Company

  • Virginia AG Mark Herring obtained a court order against Future Income Payments, LLC, FIP, LLC, and their owner, Scott Kohn, (collectively “FIP”) for allegedly making illegal, high-interest loans to veterans and civil servants with pensions, in violation of the Virginia Consumer Protection Act (“VCPA”).
  • According to AG Herring’s March 2018 complaint, FIP allegedly misled pensioners into believing that FIP was buying portions of their pension payments, when in actuality FIP was making illegal, high-interest loans to the pensioners.
  • According to the AG’s announcement, FIP has been ordered to provide over $20 million in debt forgiveness, over $31.7 million in civil penalties, nearly $415,000 in restitution, and $198,000 in costs and attorneys’ fees, and has been enjoined from further violations of the VCPA.
  • As previously reported, Illinois AG Lisa Madigan and Minnesota AG Lori Swanson previously filed lawsuits against FIP, and former North Carolina AG Roy Cooper and Massachusetts AG Maura Healey previously reached settlements with FIP for similar conduct.

Pharmaceuticals

Florida Attorney General Files Amended Complaint in Opioid Lawsuit

  • Florida AG Pam Bondi filed an amended complaint adding Insys Therapeutics, Inc. (“Insys”), Walgreen Co. (“Walgreens”), and CVS Healthcare Corporation and CVS Pharmacy, Inc. (“CVS”) as defendants in a lawsuit against opioid industry players for alleged violations of the state’s Deceptive and Unfair Trade Practices Act, Racketeer Influenced and Corrupt Organization Act, and the common law related to their marketing and dispensing of opioids in the state.
  • According to the amended complaint, Insys allegedly offered kickbacks to physicians to prescribe its opioid product Subsys, and Walgreens and CVS allegedly failed to stop suspicious opioid orders and dispensed unreasonable doses of prescription opioids in the state.
  • The amended complaint seeks declaratory and injunctive relief, damages, restitution, disgorgement, divestment, forfeiture, dissolution of the enterprise, revocation of licenses and permits, civil penalties, attorneys’ fees and costs, and abatement, among other things.

Indiana Attorney General Files Lawsuit Against Opioid Manufacturers for Allegedly Misrepresenting Risks of Prescription Opioids

  • Indiana AG Curtis Hill filed a lawsuit against opioid manufacturers Purdue Pharma L.P., Purdue Pharma Inc., and The Purdue Frederick Company (collectively, “Purdue Pharma”) for allegedly violating the state’s Deceptive Consumer Sales Act, Prescription Drug Discount and Benefit Cards Statute, False Claims Act, and Medicaid False Claims Act by allegedly engaging in deceptive marketing and misrepresentation of the risks of prescription opioid use.
  • According to the AG’s office, Purdue Pharma allegedly used deceptive promotional campaigns to convince healthcare providers to prescribe opioids at higher doses and for longer periods of time than medically necessary and minimized the risks and overstated the benefits of long-term use of prescription opioids to treat chronic pain, which caused submission of false or fraudulent claims for payment or approval from Medicaid.
  • The complaint seeks declaratory and injunctive relief, treble damages, civil penalties, costs, and attorneys’ fees, among other things.

Kentucky Attorney General Files Lawsuit Against Opioid Manufacturer for Allegedly Deceptive Marketing of Prescription Opioids and Fraudulent Business Practices

  • Kentucky AG Andy Beshear filed a lawsuit against opioid manufacturer Insys Therapeutics, Inc. (“Insys”) for allegedly violating the state’s Consumer Protection Act, Medicaid Fraud Statute, and Assistance Program Fraud Statute, as well as committing various alleged violations of the common law, by engaging in deceptive marketing, fraud, and commercial bribery to promote its prescription opioid product Subsys.
  • According to the complaint, Insys allegedly marketed Subsys for off-label, non-cancer use, despite that it was only approved by the U.S. Food and Drug Administration for breakthrough pain in cancer patients; attempted to pay doctors to prescribe the drug at higher doses and with higher frequency than appropriate; and falsified information about patients’ diagnoses and treatment histories to obtain payment from insurance companies.
  • The complaint seeks declaratory and injunctive relief, civil penalties, abatement, damages, restitution, disgorgement, attorneys’ fees, and costs, among other things.

Vermont Attorney General Reaches Settlement with State’s Pharmacy Benefits Manager Over Contractual Dispute

  • Vermont AG TJ Donovan and the Vermont Department of Human Resources reached a settlement with pharmacy benefits manager Express Scripts Holding Company (“Express Scripts”) to resolve a contractual dispute.
  • According to the AG’s office, the state disputed the payments it had made to Express Scripts for managing prescription benefits for the state’s employees and retirees.
  • According to the AG’s office, the state will receive $503,500 in guaranteed prescription rebates from Express Scripts for prescriptions it purchased in 2018.

State AGs in the News

Wisconsin Governor Appoints Wisconsin Attorney General to Waukesha County Circuit Court

  • Wisconsin Governor Scott Walker (R) appointed Wisconsin AG Brad Schimel to a judgeship on the Waukesha County Circuit Court.
  • AG Schimel recently conceded to Democrat Josh Kaul in the state’s AG election held earlier this month.
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