The State AG Report Weekly Update January 24, 2019

Cozen in the News

Cozen O’Connor’s State Attorneys General Practice Analyzes 2018 Attorney General Activity and Trends

  • With 18 new state AGs elected or appointed to office in the last three months, our State AG Practice expects 2019 to be an active year of AG scrutiny for businesses in every sector.
  • In an analysis of AG activity, Ann-Marie Luciano and Jawaria Gilani provide a recap of the significant litigation, settlements, and legislative advocacy by AGs in 2018 and forecast the AG trends that we expect to see in 2019.  Their review summarizes AG actions involving various topics, including data privacy, labor issues, opioids, financial services, healthcare, and big technology.
  • Our State AG Practice has covered nearly 1,500 stories on our State AG Report since 2015.  You can stay current on the latest AG news by subscribing to our weekly update here.

2019 AG Elections

Republican Daniel Cameron Announces Bid for Kentucky AG

  • Daniel Cameron, a Republican, has announced his candidacy for Kentucky AG in 2019.
  • Cameron previously worked as an attorney for U.S. Senate Majority Leader Mitch McConnell and is currently in private practice in Louisville.
  • Cameron joins state Senator Whitney Westerfield in seeking the Republican nomination, while former Kentucky AG Greg Stumbo is the only Democrat to announce his candidacy to date.
  • As previously reported, incumbent AG Andy Beshear is seeking the Democratic nomination for Governor in 2019.

Consumer Protection

Florida Attorney General Settles with Auto Rental Company Over Allegedly Misleading Customers Regarding Optional Products

  • Florida AG Ashley Moody reached a settlement with auto rental company Dollar Thrifty Automotive Group, Inc. (“Dollar Thrifty”) to resolve allegations that it misled rental consumers regarding its optional toll road payment product and mislabeled related charges on consumers’ bills in violation of the state’s Deceptive and Unfair Trade Practices Act.
  • According to the complaint, Dollar Thrifty allegedly advertised its PlatePass product—which offers consumers the option of paying a daily flat rate for all cashless tolls incurred during a rental period—by overstating the prevalence of cashless toll roads and the likely cost of tolls that would be incurred without PlatePass, misrepresented consumers’ ability to access certain roads without PlatePass, charged consumers who declined to use PlatePass excessive and inadequately disclosed administrative fees, and misrepresented these fees as government-imposed fines, tickets, or penalties.
  • Under the terms of the settlement agreement, Dollar Thrifty will pay $330,000 to the AG’s office and up to $500,000 in refunds to consumers, revise its rental agreements and other communications with consumers to include accurate information related to PlatePass, and train its counter service representatives to relay accurate information to consumers, among other things.
  • As previously reported, former Florida AG Pam Bondi originally filed a complaint against Dollar Thrifty over these allegations in September 2018.

Maine Attorney General Settles with Home Loan and Real Estate Firm Over Allegedly Misleading Marketing of Home Ownership Plan

  • Maine AG Aaron Frey reportedly reached a settlement with home loan and real estate firm Linnehan Homes to resolve allegations that it misled consumers who enrolled in its home ownership plan in violation of the state’s Unfair Trade Practice Act.
  • The AG’s office alleged that Linnehan Homes enrolled consumers in its “American Dream Path to Home Ownership Plan” (“Plan”) despite the fact that those consumers could not afford the plan, and advertised the Plan as enabling consumers who were unable to qualify for a traditional mortgage to purchase a home when the Plan actually only allowed consumers to rent a home with the option to purchase it at a later date.
  • According to reports, under the terms of the settlement Linnehan Homes will refund $18,000 to consumers and reform its business practices to include clear disclosure of the rent-to-own terms of the Plan, allow consumers a week to review contracts prior to signing, and allow for partial refunds of option payments within a specified term.

Data Privacy

North Carolina Attorney General Proposes New Data Breach Law

  • North Carolina AG Josh Stein and state Representative Jason Saine announced their intent to introduce legislation that will “strengthen” North Carolina’s data breach prevention laws.
  • According to the AG’s office, the so-called “Strengthen North Carolina Identity Theft Protection Act” expands what constitutes a security breach, requires entities to report breaches as soon as possible and no later than 30 days after discovery, maintain “reasonable security procedures,” and provide free credit monitoring to affected consumers, among other things.
  • Under the proposed legislation, violations will also constitute violations under the state’s Unfair and Deceptive Trade Practices Act.

Health Care

46 AGs Settle with Medical Device Manufacturers Over Alleged False Marketing of Hip Implant Devices

  • 46 AGs, led by Texas AG Ken Paxton and South Carolina AG Alan Wilson, reached a settlement with Johnson & Johnson and its subsidiary Medical Device Business Services, Inc. f/k/a DePuy Inc. and affiliates (collectively, “DePuy”) to resolve allegations that DePuy falsely advertised hip implant devices in violation of the states’ consumer protection laws.
  • According to the complaint, DePuy allegedly misrepresented the stability, fixation, longevity, and rate of wear of its hip implant devices in advertisements and did not redesign the device even though it knew that the device needed to be implanted at a precise angle that was difficult to achieve consistently.
  • Under the terms of the consent decree, Johnson & Johnson and DePuy must pay $120 million to the states, cease making false claims about the longevity of their devices, ensure accuracy of their advertising claims, and reform consumer complaint procedures, among other things.

40 AGs and U.S. Department of Justice Settle with Nationwide Pharmacy Chain Over Allegedly Improper Billing

  • 40 AGs and the U.S. Department of Justice reached two settlements with pharmacy companies Walgreens Co. and Walgreens Boots Alliance, Inc. (“Walgreens”) to resolve allegations that it over-dispensed insulin products and billed Medicare, Medicaid, and other federal healthcare programs for those excess products, and overbilled Medicaid for certain prescription drugs that it should have been discounted, all in violation of state and federal False Claims Acts.
  • According to the complaint regarding insulin pen dispensing, Walgreens allegedly filled prescriptions by dispensing boxes of five insulin pens regardless of the number of pens prescribed to the patient, and submitted reimbursement claims for the over-dispensed pens to state and federal healthcare programs, and inaccurately reported pharmacy supply data to state Medicaid programs.
  • According to the complaint regarding drug pricing, Walgreens allegedly submitted reimbursement claims to state Medicaid programs reflecting the non-discounted prices of certain prescription drugs, when lower prices were available through Walgreens’ discounted drug program.
  • Under the terms of the stipulations and orders of settlement regarding insulin pen dispensing, Walgreens will pay over $168 million to the United States and $41.2 million to the states. Under the terms of the stipulations and orders of settlement regarding drug pricing, Walgreens will pay $32 million to the United States and $28 million to the states.

Connecticut Attorney General Settles with Behavioral Health Provider Over Alleged Submission of False Medicaid Claims

  • Connecticut AG William Tong reached a settlement with behavioral health provider Davis Group, LLC d/b/a Caring Family Solutions and its owner (collectively, “Davis Group”) to resolve allegations that it submitted claims for behavioral health services to the state Medicaid program in violation of the state’s False Claims Act.
  • According to the complaint, Davis Group allegedly falsely claimed that behavioral health services were rendered by licensed providers when services in fact were rendered by unlicensed providers, submitted claims for those services to the state Medicaid program’s fiscal agent, and submitted claims for other services that were not provided.
  • Under the terms of the stipulation for judgment, Davis Group will pay $100,000 to the state.

North Carolina Attorney General Conditionally Approves Health Care Service Provider’s Proposed Acquisition of Hospital System

  • North Carolina AG Josh Stein has conditionally approved the proposed acquisition of hospital system Mission Health System, Inc. and related charitable corporations (collectively, “Mission Health”) by HCA Healthcare, Inc. affiliate MH Master Holdings (“HCA”)—a health care service provider—following review under the AG’s statutory authority to review transactions in which a nonprofit corporation sells substantially all of its assets.
  • According to the AG’s letter to Mission Health, HCA and Mission Health must amend their Asset Purchase Agreement to extend HCA’s commitments to provide services at local hospitals, keep existing hospitals open, build new health care facilities in certain parts of the state, and increase spending on community service and emergency medical service programs, among other things.

Pharmaceuticals

Massachusetts Attorney General Settles with Pharmacy Chain Over Allegedly Dispensing Controlled Substances in Exchange for Out-of-Pocket Payments

  • Massachusetts AG Maura Healey reached a settlement with pharmacy chain Rite Aid of Massachusetts, Inc. (“Rite Aid”) to resolve allegations that its controlled substance dispensing practices violated state Medicaid regulations.
  • According to the AG’s office, Rite Aid allegedly dispensed controlled substances to Medicaid patients in exchange for out-of-pocket payments rather than billing MassHealth—the state’s Medicaid program—and failed to monitor drug utilization patterns of MassHealth members enrolled in a program that tracks individuals who use large quantities of prescription drugs.
  • According to the AG’s office, under the terms of the assurance of discontinuance, Rite Aid will pay $177,000 to the state’s Municipal Naloxone Fund— which funds the purchase of life-saving overdose drug Naloxone—and correct its controlled substance dispensing practices.

State AGs in the News

Colorado Attorney General Creates “Chief Innovation Officer” Position

  • Colorado AG Phil Weiser announced the creation of a Chief Innovation Officer (“CIO”) position in his leadership team—the first position of its kind in an AG’s office—and selected Lisa Neal-Graves for the position.
  • Neal-Graves previously served as Vice President of the Cloud Strategic Product Group at Zayo Group, a network solutions provider, and held various leadership positions at Intel Corporation.
  • According to the AG’s office, the CIO will spearhead technology solutions and establish new processes for attorneys and staff to enhance the efficiency and efficacy of the AG’s office.

Montana Attorney General Announces Bid for Governor

  • Montana AG Tim Fox, a Republican, announced his intention to enter the state’s open gubernatorial race in 2020.
  • AG Fox, who is serving his second term and term-limited from running for AG in 2020, joins Montana Secretary of State Corey Stapleton in seeking the Republican nomination for Governor.
  • Current Governor Steven Bullock, a Democrat who is serving his second term, is term-limited.
FacebookTwitterShare