The State AG Report 1.28.2021: FTC Under New Management | First Assertion of the BOTS Act | Ash Cleanup Costs Redistributed

Breaking News

New Leadership at the FTC

  • President Joseph R. Biden designated Federal Trade Commission (“FTC”) Commissioner Rebecca Kelly Slaughter as Acting Chair of the FTC.
  • As Commissioner, Chairwoman Slaughter advocated for the “aggressive use of the FTC’s authorities,” and has been particularly focused on “growing threats to competition, and the broad use of consumers’ data.”
  • Chairwoman Slaughter subsequently announced five interim leadership changes, including the appointment of Daniel Kaufman as Acting Director of the Bureau of Consumer Protection, Maribeth Petrizzi as Acting Director of the Bureau of Competition, and Reilly Dolan as Acting General Counsel.


Consumer Protection

The Rise of the BOTS (Act)

  • The FTC reached settlements with ticket brokers Concert Specials, Inc., Just In Time Tickets, Inc., and Cartisim Corp., and related individuals, to resolve allegations that they used automated software to illegally buy large quantities of tickets for popular events in violation of the Better Online Ticket Sales (“BOTS”) Act. These are the first cases to be brought under the BOTS Act, which gives the FTC the authority to take enforcement action against the use of bots or other means to circumvent limits on online ticket purchases.
  • The complaints against Concert Specials, Just In Time, and Cartisim alleged that defendants purchased more than 150,000 tickets to concerts and sporting events using automated software that masked their IP addresses and that they used hundreds of fictitious Ticketmaster accounts and credit cards to circumvent the event ticket limits. Defendants later resold the tickets for millions of dollars in revenue.
  • Under the terms of the stipulated orders, among other things, all three are subject to civil penalties, large percentages of which are suspended based on defendants’ inability to pay. Concert Specials is subject to a $16 million civil penalty, of which it will pay approximately $1.57 million. Just In Time is subject to a $11.2 million civil penalty, of which it will pay approximately $1.64 million. Cartisim is subject to a $4.4 million civil penalty, of which it will pay approximately $500,000.

Bipartisan Group of Attorneys General Urge Menthol Cigarette Ban

  • A bipartisan group of 23 AGs, led by Idaho AG Lawrence Wasden and Illinois AG Kwame Raoul, sent a letter to the Food and Drug Administration (“FDA”) urging it to finalize rules that would ban menthol cigarettes.
  • The letter argues that overwhelming scientific evidence points to the urgency of prohibiting menthol cigarettes to protect public health because menthol smoking has remained constant even as non-menthol smoking has consistently declined in recent years. The letter notes that menthol increases youth smoking, disproportionately affects minorities and other vulnerable populations, and that menthol smokers are less likely to successfully quit smoking than non-menthol smokers.
  • The letter also rebuts arguments that such a ban would increase illicit trade by noting that there are “robust measures for monitoring and enforcement already in place” and that state AGs have decades of experience and expertise in enforcing FDA restrictions and bans on tobacco products. 

False Claims Act

Ventilator Company Pays Over $40 Million to Settle Fraudulent Billing Allegations

  • A group of state AGs, through their respective Medicaid Fraud Control Units, and the U.S. Department of Justice (“DOJ”) reached a settlement with non-invasive ventilator (“NIV”) providers Apria Healthcare Group Inc. and Apria Healthcare LLC (collectively “Apria”) to resolve allegations that Apria submitted false claims for the rental of NIVs to government health care programs, including Medicaid, Medicare, and TRICARE, in violation of the federal and state false claims acts, and the federal Anti-Kickback Statute.
  • The DOJ complaint, stemming from a case initiated by three whistleblowers, alleged that Apria submitted thousands of false claims and fraudulently received millions of dollars in reimbursements, including by not properly monitoring patients’ utilization of their NIVs and not stopping billing Medicaid programs when NIVs were no longer being used.
  • Under the terms of the settlements with the states and the DOJ, Apria will pay approximately $37.6 million to the United States and $2.4 million to the participating states.

Ergonomic Office Equipment Manufacturer Settles Allegations It Overcharged California

  • California AG Xavier Becerra reached a settlement with ergonomic office equipment manufacturer Workrite Ergonomics LLC and its parent company (collectively “Workrite”) to resolve allegations that it concealed information and overcharged state agencies in violation of California’s False Claims Act.
  • According to the settlement agreement, the matter arose from a whistleblower complaint alleging that Workrite made false disclosures and statements, and omitted information in its disclosure to the federal General Services Administration (“GSA”) regarding the discounts or prices Workrite provided to other customers. Because California relied on the information furnished to the GSA, it allegedly overpaid for the equipment supplied by Workrite.
  • Under the terms of the settlement agreement, Workrite will pay approximately $488,000 to California and approximately $87,000 to the whistleblower. 


Duke Energy Agrees to Shoulder More Ash Cleanup Costs

  • North Carolina AG Josh Stein, the Public Staff of the North Carolina Utilities Commission, and the Sierra Club reached a settlement with Duke Energy resolving a challenge to a 2017 Utilities Commission order granting Duke Energy’s request to limit its liability for the cost of cleaning up coal ash.
  • Under the terms of the 2017 order, Duke Energy was liable for a one-time $100 million environmental penalty and was allowed to pass on the remainder of the costs to its consumers in the form of monthly fees.
  • Under the terms of the settlement, which is expected to save consumers $1.1 billion in monthly fees by 2030, Duke Energy agreed to write off $755 million in existing and future coal ash costs for retail consumers, and to reduce its return on equity for cleanup costs, among other things.