Digest 4.12.2018 The State AG Report Weekly Update

Cozen in the News

Cozen O’Connor’s State Attorneys General Practice Analyzes Supreme Court Challenge by New Jersey to the Federal Professional and Amateur Sports Protection Act

  • State Attorneys General Practice Member Bryan Mosca and Law Clerk Mark Quist analyze the consolidated challenge by the State of New Jersey and the New Jersey Thoroughbred Horsemen’s Association to the federal Professional and Amateur Sports Protection Act (“PASPA”), which prohibits states from authorizing state-sanctioned sports betting, currently before the U.S. Supreme Court.
  • Oral arguments were heard on December 4, 2017, and the Supreme Court is expected to rule shortly, perhaps as early as this month.
  • Our latest analysis discusses the constitutional question presented by PASPA, the implications of New Jersey’s legal challenge for state-sanctioned sports betting nationwide, and this case’s potential broader implications for challenges to federal policies by other states.

2018 AG Elections

Democrat William Tong Declares Candidacy for Connecticut Attorney General

  • Democratic state Representative William Tong announced he is running for Connecticut AG in 2018. As previously reported, Connecticut AG George Jepsen is not seeking re-election to a third term.
  • Representative Tong is currently serving his sixth term in the Connecticut House of Representatives and works at a Stamford, Connecticut, law firm.
  • Representative Tong joins state Senator Paul Doyle, Assistant Attorney General Clare Kindall, and former Assistant U.S. Attorney Chris Mattei in seeking the Democratic nomination. State prosecutor Susan Hatfield and former state Representative John Shaban are seeking the Republican nomination.

Consumer Protection

Minnesota Attorney General Files Lawsuit Against Vehicle Warranty Provider Over Alleged Fraudulent Practices

  • Minnesota AG Lori Swanson filed a lawsuit against vehicle warranty provider AutoAssure, LLC (“AutoAssure”) alleging that it violated state consumer protection laws by making false or misleading statements to induce consumers to purchase vehicle warranty coverage.
  • According to the AG’s office, AutoAssure allegedly sent mass mailings to Minnesota consumers suggesting that their existing vehicle manufacturer warranties had expired or would soon expire, and, when consumers responded, AutoAssure represented to some consumers that it was associated with the vehicle manufacturer or that AutoAssure’s service would “extend” or “reactivate” manufacturer warranties, and it sometimes falsely described the scope of the coverage AutoAssure would provide.
  • According to the AG’s announcement, the lawsuit seeks injunctive and monetary relief.

Data Privacy

New Jersey Attorney General Reaches Settlement with Physician Group to Resolve Alleged Data Security Violations

  • New Jersey AG Gurbir Grewal reached a settlement with physician group Virtua Medical Group, P.A. (“VMG”) over allegations that it violated the New Jersey Consumer Fraud Act and the federal Health Insurance Portability and Accountability Act (“HIPAA”) by failing to implement adequate data security procedures prior to transferring patient data to a medical transcription vendor.
  • According to the AG’s office, VMG allegedly failed to conduct an adequate risk analysis or implement adequate security measures in connection with patient data that it transferred to a third-party medical transcription vendor, resulting in a breach of patient privacy when the vendor’s unintentionally misconfigured server allowed certain medical information for over 1,600 patients to become viewable over the Internet.
  • Under the terms of the final consent judgment, VMG has agreed to enact strict data security policies and pay over $417,000 to the state in civil penalties, attorneys’ fees, and investigative costs.


Massachusetts Attorney General Reaches Settlement with Treatment Plant Operator to Resolve Wastewater Pollution Allegations

  • Massachusetts Attorney General Maura Healey announced a settlement with wastewater treatment plant operator Veolia Water North America-Northeast LLC and related companies (“Veolia”) to resolve allegations that they violated the state Clean Waters Act by leaking millions of gallons of raw sewage.
  • According to the AG’s office, Veolia contracted with the Town of Plymouth to operate its sewage treatment and collection system, but failed to maintain the system, allowing it to corrode and ultimately discharge 10 million gallons of raw sewage across multiple locations in the Town of Plymouth and thousands of gallons of raw sewage into Plymouth Harbor.
  • According to the AG’s announcement, Veolia will pay $1.35 million in civil penalties to the state and $250,000 to a state conservation trust to fund ecosystem improvement and management projects.

False Claims Act

Nebraska Attorney General Announces Settlement with Hospital Over Medicaid and Medicare Billing Allegations

  • Nebraska AG Doug Peterson announced that his office and the Office of Inspector General of the U.S. Department of Health and Human Services (“HHS OIG”) reached a settlement with Mary Lanning Memorial Hospital Association d/b/a Mary Lanning HealthCare (“Mary Lanning”) to resolve allegations that it violated Nebraska’s False Medicaid Claims Act and the federal Civil Monetary Penalty Law by billing the Nebraska Medical Assistance Program for specific services that were not provided as claimed.
  • The AG’s office alleges that a Mary Lanning physician performed services in nursing homes that were not medically necessary and did not meet billing requirements, but knowingly billed the state’s Medicaid and federal Medicare programs for those services under billing codes that were false or fraudulent.
  • Under the terms of the settlement agreement, Mary Lanning will pay over $451,000 in restitution and over $225,000 in damages to the state and HHS OIG. According to the AG’s announcement, the state will receive over $161,000 of the total settlement funds.

State AGs in the News

New Jersey Attorney General Announces Governor’s Appointment of Paul Rodriguez as Director of New Jersey Division of Consumer Affairs

  • New Jersey AG Grewal announced that New Jersey Governor Phil Murphy will nominate Paul Rodriguez to serve as the director of the Office of the Attorney General’s Division of Consumer Affairs. Rodriguez will replace current Acting Director Kevin Jespersen.
  • Rodriguez previously served as Acting Counsel to New York City Mayor Bill de Blasio and prior to that worked in the New York City office of an international law firm.
  • The New Jersey Division of Consumer Affairs is tasked with protecting consumers’ rights, regulating the securities industry, and overseeing various state professional boards in New Jersey. AG Grewal’s announcement touts Rodriguez’s selection as Division Director as an effort to “fill the void left by the Trump Administration’s pullback of the Consumer Financial Protection Bureau (CFPB)” and as part of the effort to fulfil Governor Murphy’s promise to “create a ‘state-level CFPB’ in New Jersey.”

State v. Federal

Coalition of 17 Democratic Attorneys General Files Motion to Intervene in Republican AGs’ and Governors’ Lawsuit Seeking Declaration that Affordable Care Act Is Unconstitutional

  • A coalition of 17 Democratic AGs, led by California AG Xavier Becerra, moved to intervene as defendants in a federal lawsuit, Texas v. United States, No. 4:18-cv-00167-O, which seeks to challenge the constitutionality of the Affordable Care Act (“ACA”).
  • As previously reported, the underlying lawsuit was filed earlier this year by a coalition of 20 Republican AGs and Governors in the U.S. District Court for the Northern District of Texas and seeks a declaration that the ACA is unconstitutional in light of a 2017 federal legislative amendment that, according to the Republican AGs and Governors, eliminated the sole constitutional basis for the ACA as recognized by the U.S. Supreme Court in NFIB v. Sebelius, 567 U.S. 519 (2012): the tax penalty for failing to maintain minimum essential health insurance.
  • According to the Democratic AGs’ motion, they seek to intervene as defendants because the lawsuit threatens to harm their states by depriving them of billions of dollars of health care funding and “dismantl[ing]” the U.S. health care system.