Digest 05.14.2020: AG Investigates Nursing Homes | FTC Sends More COVID-19 Warning Letters | Zoom Agrees to Enhance Security


Who’s Watching Gramma? Pennsylvania Attorney General Investigates Nursing Homes for Criminal Neglect

  • Pennsylvania AG Josh Shapiro is investigating ”several” unidentified nursing homes in the state over COVID-19-related allegations of neglect of a care-dependent person, a criminal offense under Pennsylvania law.
  • According to the AG’s office, the AG’s Care-Dependent Neglect Team, within its Medicaid Fraud Control Section, is conducting the investigation. The office also launched a public email address dedicated to receiving reports of neglect and criminal complaints about nursing homes.
  • As previously reported, other AG’s offices, including those of Massachusetts, New Jersey, New Mexico, and Ohio, are conducting investigations into long-term care facilities and nursing homes in their states.

FTC Continues to Issue Warning Letters to Stop Unsubstantiated COVID-19 Treatment Claims

  • The Federal Trade Commission (“FTC”) issued letters to 45 companies warning them to stop marketing their products with false and unsubstantiated claims that these products can cure or prevent COVID-19.
  • The letters target companies that market a wide variety of products and therapies, including gene therapy products, Chinese herbal medicines, supplements, IV therapy, air and water purifiers, music therapy, and chiropractic therapy.
  • As previously reported, the FTC sent two rounds of similar letters to other marketers in recent weeks, in addition to a round of more than 25 letters that the FTC issued in conjunction with the Food and Drug Administration.


Rent-to-Own Operators Allegedly Collude to Reduce Competition

  • The FTC approved settlements with rent-to-own operators Aaron’s Inc., Buddy’s Newco, LLC, and Rent-A-Center, Inc., to resolve allegations that they engaged in anticompetitive behavior by negotiating and executing reciprocal purchase agreements with each other in violation of the FTC Act.
  • The FTC complaints against Aaron’s, Buddy’s Newco, and Rent-A-Center, alleged that each company entered into anticompetitive reciprocal agreements that swapped customer contracts from one rent-to-own store to another, enabling one party to the agreement to close down stores and exit a geographic market. Store closures resulted in reduced competition in the rent-to-own market and may have additionally impacted consumers by increasing their travel time and costs.
  • Under each of their consent orders, among other things, Aaron’s, Buddy’s Newco, and Rent-A-Center, and their respective franchisees, are prohibited from negotiating or entering into any reciprocal purchase agreements and from enforcing non-compete clauses from previous agreements.

Consumer Financial Protection Bureau

CFPB Settles with Mortgage-Loan Servicer for Improper Foreclosures

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with residential mortgage-loan servicer Specialized Loan Servicing, LLC (“SLS”) to resolve allegations that SLS engaged in behavior that harmed mortgage borrowers in violation of the Real Estate Settlement Procedures Act (“RESPA”) and its implementing regulation, Regulation X, as well as the Dodd-Frank Wall Street Reform and Consumer Protection Act.
  • According to the CFPB, since 2014 SLS allegedly violated RESPA and Regulation X by taking prohibited foreclosure actions against borrowers who submitted loss-mitigation applications, which are meant to protect borrowers from foreclosure, and by failing to send or timely send evaluation notices to such borrowers.
  • Under the terms of the consent order, SLS will pay $775,000 in restitution to affected borrowers and $250,000 in civil penalties to the CFPB. SLS will also waive $500,000 in borrower deficiencies. In addition, SLS is required to implement policies and procedures to ensure that borrowers are afforded the protections from foreclosure that are available to them under RESPA and Regulation X.

Consumer Protection

Medical Fraud Is Serious Business: Doctor Agrees to Pay $2.85 Million Restitution for Ordering Unnecessary Tests

  • Washington AG Bob Ferguson, together with the U.S. Department of Justice (“DOJ”), reached a settlement with a defunct network of pain clinics, Seattle Pain Center, medical lab Northwest Analytics, and their owner Dr. Frank Danger Li (collectively “Dr. Li”) to resolve allegations that Dr. Li improperly billed Medicaid for unnecessary urine tests.
  • According to the AG’s office, Dr. Li routinely and excessively ordered unnecessary urine drug tests and encouraged Seattle Pain Center providers to order drug tests during every patient visit. The urine samples were sent to Northwest Analytics, which was not licensed or accredited to perform urine drug tests for part of the period under investigation.
  • Under the terms of the settlement agreement, Dr. Li will pay $2.85 million in restitution, including $1.59 million to Medicare, and $1.1 million to Medicaid (of which approximately $680,000 will go to the State of Washington).

Data Privacy & Security

You Are Now Safer from Zoombombings; Zoom Agrees to Enhance Privacy and Data Security Practices

  • New York AG Letitia James reached an agreement with videoconferencing company Zoom Video Communications, Inc. (“Zoom”) to provide enhanced privacy and security protections for Zoom’s 300 million users.
  • As previously reported, AG James sent a letter to Zoom seeking information regarding the security measures Zoom had put in place to handle surging traffic and expressing concerns about the increased activity of hackers on Zoom’s platform.
  • Under the terms of the letter agreement, among other things, Zoom will conduct risk assessments and software code reviews to identify vulnerabilities, enhance encryption protocols, enable privacy controls for free accounts, cease sharing user data with Facebook by disabling users’ ability to log into Zoom from Facebook, and disable its LinkedIn Navigator feature, which shares profiles of users even for users that want to stay anonymous.