Digest 07.30.2020: COVID-19 PPE Scam | Biotech Company in $49 Million False Claims Settlement | Hidden Telecom Fees


Selling Nonexistent PPE Is Not a Good Business Plan

  • New York AG Letitia James reached a settlement with medical supply company Borgese Holdings, Inc. d/b/a IMPACT Medical & Surgical Solutions and its owner (collectively, “IMPACT”) to resolve allegations that it fraudulently attempted to sell personal protective equipment (“PPE”) and other medical supplies that it could not deliver in violation of New York Executive Law 63(12), which prohibits repeated fraud in the conduct of business.
  • The complaint alleged that IMPACT fraudulently offered to sell PPE, including 3M-branded N95 respirator masks, to the state of New York and hospitals and healthcare systems nationwide, and obtained substantial upfront payments that it later had to refund because it never had access to the products it promised to deliver.
  • Under the terms of the proposed consent order and judgment, IMPACT may only resume selling PPE and COVID-19 test kits on or after January 1, 2023, and then only upon posting a $100,000 performance bond by IMPACT Medical & Surgical Solutions and another $100,000 bond by its owner. It also is barred from engaging in deceptive or fraudulent marketing and sales practices, among other things.

2021 AG Elections

New Entrant into 2021 Virginia Attorney General Race

 Consumer Protection

Washington AG’s “Honest Fees Initiative” Produces Third Telecom Settlement

  • Washington AG Bob Ferguson reached a settlement with telecommunications company Charter Communications, Inc. (“Charter”) to resolve allegations of misleading consumers with hidden fees in violation of Washington’s Consumer Protection Act.
  • The AG’s office alleged that, among other things, Charter’s online marketing failed to adequately disclose to consumers that a fee called a “Broadcast TV Surcharge” would be added to their monthly bills and that the fee would be periodically increased.
  • Under the terms of the consent decree, Charter is required to pay $739,400 to the AG’s office, including attorneys’ fees and costs, and also will issue $255,660 in bill credits to impacted Washington consumers.
  • Charter is also ordered to clearly and conspicuously disclose all fees, surcharges, and terms and conditions in its internet advertising, and send to customers an order confirmation setting forth all fees and material terms within one day of a customer placing an order, among other things.
  • As previously reported, AG Ferguson’s “Honest Fees Initiative” also has netted settlements with CenturyLink Inc. and with Frontier Communications Corporation.

FTC Shuts Down Another Credit Card Interest Rate Scam

  • The Federal Trade Commission (“FTC”) reached a settlement with a group of 11 entities and three related individuals, jointly doing business as CSG Solutions and Second Choice Horizon LLC (collectively “CSG”), to resolve allegations that it used deceptive robocalls promising reduced credit card interest rates to defraud consumers in violation of the FTC Act and the Telemarketing Sales Rule.
  • The FTC’s complaint alleged that, among other things, CSG targeted consumers with telemarketing cold calls and robocalls and falsely promised to permanently and substantially reduce the consumer’s credit card interest rates in exchange for upfront fees. CSG also allegedly called consumers who were on the National Do Not Call Registry and used personal information fraudulently obtained from consumers to apply for credit cards without their knowledge or consent.
  • Under the terms of the stipulated order, CSG is subject to a $13.88 million judgment, which will be partially suspended based on inability to pay, and will be permanently banned from selling debt-relief products and services, and from any telemarketing, among other things.

 False Claims Act

Alleged Fraud on the Government Costs Biotech Company $49 Million

  • The U.S. Department of Justice (“DOJ”), the Department of Health and Human Services (“HHS”), and a number of states, including North Carolina AG Josh Stein, reached a settlement with biotechnology company Progenity Inc. to resolve allegations that it engaged in a fraudulent billing scheme and paid kickbacks to physicians for ordering its prenatal tests in violation of the federal False Claims Act.
  • The complaint, which was brought by the U.S. Attorney for the Southern District of New York and arose from a whistleblower complaint, alleged that, among other things, Progenity fraudulently miscoded its tests in bills submitted to Medicaid, TRICARE (the Department of Defense healthcare program), and the Department of Veterans Affairs healthcare program, resulting in payments for tests it did not perform and for tests that were non-reimbursable. In addition, Progenity allegedly engaged in a kickback scheme that paid illegal “draw fees” to physicians who prescribed its tests.
  • Progenity will pay approximately $19.5 million to the United States, $16.4 million to resolve similar claims relating to TRICARE in a separate suit in the Southern District of California, and approximately $13.15 million to various states under a separate settlement to settle claims relating to state Medicaid.

Labor & Employment

Massachusetts Attorney General: Paying Overtime Is Not Optional

  • Massachusetts AG Maura Healey reached a settlement with utility service provider Omark Inc. to resolve allegations that it failed to pay overtime to its employees in violation of Massachusetts wage and hour laws.
  • According to the AG’s office, Omark failed to pay time and a half for hours worked in excess of 40 hours to certain employees, some of whom were working more than 80 hours a week on job sites impacted by the six-month long gas worker’s union lockout at National Grid.
  • Under the terms of the settlement, Omark will pay nearly $187,000 in restitution and penalties.