The State AG Report Weekly Update May 9, 2019

2020 AG Elections

Democrat Raph Graybill Announces Candidacy for Montana Attorney General

  • Raph Graybill, a Democrat, announced his candidacy for Montana AG in 2020.
  • Graybill is Chief Legal Counsel to Montana Governor Steve Bullock’s and previously worked as an attorney in private practice and clerked on the U.S. Court of Appeals for the Ninth Circuit.
  • As previously reported, state Representative Kimberly Dudik is also seeking the Democratic nomination for AG, and Chief Deputy AG Jon Bennion is seeking the Republican nomination.
  • Current AG Tim Fox, a Republican who is serving his second term, is term-limited and seeking the Republican nomination for Governor.

Cannabis/Marijuana

Michigan Attorney General Forms Marijuana Legal Workgroup

  • Michigan AG Dana Nessel announced that the AG’s office has established a workgroup to discuss and provide opinions regarding laws and regulations concerning the recreational and medicinal use of marijuana.
  • The workgroup will also make recommendations on clarifying the state’s marijuana law to the state legislature, law enforcement, judiciary, prosecutors, defense attorneys, and the Department of Licensing and Regulation.
  • The workgroup held its first monthly meeting in April 2019.

Consumer Financial Protection Bureau

CFPB Settles With Federal Student Loan Servicer Over Alleged Failure to Adjust Principal Balances of Student Loans

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with federal student loan servicer Conduent Education Services, LLC f/k/a ACS Education Services, Inc. (“CES”) to resolve allegations that it failed to adjust principal balances of student loans in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
  • According to the consent order, CES allegedly failed to make required adjustments to principal balances of student loans made under the Federal Family Education Loan Program to account for circumstances, such as deferment, forbearance, or the borrowers’ entrance into an income-based repayment program, causing some borrowers to pay off loans with inaccurate balances and delays in loan consolidation.
  • Under the terms of the consent order, CES must pay a $3.9 million civil money penalty to the CFPB, conduct reviews of affected loans, and provide remediation by adjusting the principal balances of affected loans.

CFPB Proposes Rule to Implement Fair Debt Collection Practices Act

  • The Consumer Financial Protection Bureau (“CFPB”) issued a Notice of Proposed Rulemaking (“NPRM”) that would amend rules implementing the Fair Debt Collection Practices Act (“FDCPA”), which governs the activities of debt collectors.
  • The proposed rules would limit debt collectors to seven attempts to contact a consumer by telephone per week and, once contact is made, require the debt collector to wait a week before calling again; require debt collection disclosures to include specific information about the itemization of the debt and a “tear-off” portion for consumers to use to respond to the debt collection attempt; clarify how debt collectors may communicate via newer communication technologies such as voicemails, emails, and text messages; prohibit debt collectors from suing to collect on a debt for which the statute of limitations on collection has expired; and require debt collectors to notify consumers prior to furnishing debt information about the consumer to credit reporting agencies.
  • The deadline for submitting comments in response to the NPRM will be 60 days after the Federal Register Notice is published.
  • As previously reported, the CFPB and the Federal Trade Commission released an annual report to Congress on administration of the FDCPA, in which the CFPB indicated its intention to issue this NPRM.

Consumer Protection

Bipartisan Coalition of 42 Attorneys General Submits Comments to Federal Communications Commission in Support of Proposed Rule to Enhance Caller ID Rules

  • A bipartisan coalition of 42 AGs led by Pennsylvania AG Josh Shapiro submitted comments in response to a public notice issued by the Wireline Competition Bureau of the Federal Communications Commission (“FCC”) urging the FCC to adopt its proposed rule that would expand the scope of its Truth in Caller ID Act rules.
  • In their comments, the AGs state that the proposed rule would broaden the FCC’s authority to hold spoof callers accountable by enabling it to combat caller ID spoofing activities that originate outside the country or use alternative voice and text messaging services.
  • As previously reported, a bipartisan coalition of 34 AGs submitted comments to the FCC in October 2018 urging it to adopt rules that would expand telephone service providers’ ability to block certain types of illegal robocalls.

Data Privacy & Security

Indiana Attorney General Sues Credit Reporting Agency Over Data Breach

  • Indiana AG Curtis Hill filed a lawsuit against credit reporting agency Equifax Inc. and its subsidiaries over allegations that it failed to secure consumers’ personal information in violation of the state’s Disclosure of Security Breach Act and Deceptive Consumer Sales Act.
  • According to the complaint, Equifax’s alleged failure to implement certain security measures or disclose security deficiencies contributed to a data breach that occurred from mid-May to July 2017.
  • The complaint seeks injunctive relief, penalties, restitution, costs, and attorney’s fees.
  • As previously reported, West Virginia AG Patrick Morrisey filed a lawsuit against Equifax over similar allegations in April 2018, nearly 40 AGs launched an investigation into the data breach in September 2017, and by February 2018 every AG had opened an investigation.

Oregon Attorney General Supports Bill Enhancing Regulation of Internet-Connected Devices

  • Oregon AG Ellen Rosenblum testified before the Oregon Senate Judiciary Committee in support of a bill that would enhance regulation of internet-connected devices.
  • The bill, HB 2395, would require manufacturers to equip internet-connected devices—such as virtual home assistants, home security systems, and kitchen appliances—with reasonable security features that protect those devices and information stored on them from unauthorized access, destruction, use, modification, or disclosure, and make failure to meet those requirements a violation of the state’s Unlawful Trade Practices Act.
  • AG Rosenblum testified that internet-connected devices are vulnerable to external attack and exploitation and that requiring manufacturers to equip devices with reasonable security features at inception is the most effective solution.
  • The bill is currently pending in the Senate Judiciary Committee.

Financial Industry

New Jersey Attorney General Settles With Brokerage Firm Over Allegedly Selling Unregistered Securities

  • New Jersey AG Gurbir Grewal reached a settlement with brokerage firm LPL Financial LLC (“LPL”) to resolve allegations that it sold unregistered securities in violation of the state’s Uniform Securities Law and applicable regulations.
  • According to the consent order, LPL allegedly sold unregistered securities, failed to maintain adequate systems to prevent the sale of the securities, and failed to conduct due diligence on the retention, use, and cancellation of third-party services for compliance.
  • Under the terms of consent order, LPL must pay $499,000 in civil penalties and offer to repurchase the unregistered securities it sold to customers, among other things.

Medicaid Fraud

Massachusetts Attorney General Settles With Pharmacy Over Allegedly Improper Billing

  • Massachusetts AG Maura Healey reached a settlement with pharmacy BioScrip Inc. to resolve allegations that its billing practices violated the state’s Medicaid regulations.
  • According to the AG’s office, BioScrip allegedly automatically refilled prescriptions that were not requested by patients, which caused it to improperly bill MassHealth—the state’s Medicaid system—for the cost of the refills.
  • According to the AG’s office, under the terms of the settlement agreement, BioScrip must pay $1 million to MassHealth.

 Pharmaceuticals

West Virginia Attorney General Settles With Opioid Distributor Over Alleged Failure to Report and Investigate Suspicious Orders of Opioids

  • West Virginia AG Patrick Morrisey reached a settlement with opioid distributor McKesson Corporation to resolve allegations that it failed to report or investigate suspiciously large orders of prescription opioids in violation of the state’s Uniform Controlled Substances Act, Consumer Credit and Protection Act, and the common law.
  • According to the complaint, McKesson allegedly failed to report and investigate suspiciously large orders of prescription opioids from manufacturers, thereby breaching its duty to ensure that it was not filling suspicious orders and allowing excessive amounts of prescription opioids to be improperly diverted for illegal use.
  • According to the AG’s office, under the terms of the settlement agreement, McKesson must pay $37 million to the state over a five-year period.
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