The State AG Report Weekly Update April 21, 2016

Consumer Protection

Arizona Attorney General Latest to Sue Car Manufacturer for Deceiving Consumers with “Clean Diesel” Advertising

  • Arizona AG Mark Brnovich filed a complaint against Volkswagen AG, Volkswagen Group of America, Inc., Audi AG, Audi AG of America, LLC, Dr. Ing H.C.F. Porsche AG, Porsche Cars of North America, Inc., and Volkswagen’s former CEO Martin Winterkorn (collectively “Volkswagen”) for violating state consumer protection laws over alleged false advertising of its purported environmentally friendly, low-emission “clean diesel” cars.
  • According to the complaint, Volkswagen allegedly deceived consumers by advertising its “clean diesel” vehicles as having low-emissions, meeting stringent emission requirements, and being environmentally friendly when the vehicles had high emissions that were masked during government tests.
  • Five other AGs and the FTC have filed lawsuits against Volkswagen over similar allegations.

Kansas Attorney General Sues Florida Debt Management Company for Overcharging Consumers

  • Kansas AG Derek Schmidt filed a complaint and obtained a temporary restraining order against Financial Help Services, Inc., a Florida-based financial services company, over alleged violations of the state’s Credit Service Organization Act and Consumer Protection Act.
  • According to the AG’s office, the company allegedly advertised and provided debt management services to Kansas consumers without a license, overcharged consumers for services, and failed to timely pay creditors after withdrawing money from consumers’ bank accounts.
  • The complaint seeks civil penalties, investigative fees, and restitution for all affected Kansas consumers.

Ohio Attorney General Settles With Out-of-State Travel Companies to Resolve Consumer Protection Claims

  • Ohio AG Mike DeWine reached an agreement with A2Z Vacations LLC and related out-of-state travel companies (collectively “A2Z Vacations”) to resolve a consumer protection lawsuit filed over the companies’ advertisements and cancellation policies.
  • According to the AG’s Office, A2Z Vacations allegedly failed to honor consumers’ right to cancel travel club memberships sold at hotel sales presentations made at hotels in Cleveland, Columbus, and Toledo.
  • Under the terms of the settlement, the companies agreed to pay $42,200.97 to reimburse 11 consumers who filed complaints after buying or attending a sales presentation. The companies also agreed to pay a $7,500 civil penalty and to comply with Ohio’s consumer protection laws.


Nine Attorneys General Seek Information from Retailers on Use of On-Call Shifts

  • Nine AGs, led by New York AG Eric Schneiderman, wrote letters to retailers regarding the use of “on-call shifts,” which require employees to contact their employers one to two hours before an assigned shift to find out if they need to report to work.
  • In the letters, the AGs argue that the practice of using on-call shifts is burdensome and potentially unfair to workers.  The AGs request information and documents related to the retailers’ scheduling processes, use of on-call shifts, and payroll records to learn more about the business practice.
  • AG Schneiderman sent letters to a total of 15 companies.  The letters are joined by some or all of the remaining eight AGs depending on whether the retailers had stores in the AG’s state, and contain alleged violations of state-specific labor laws.

Health Care

New York Attorney General Sues Health Insurer for Allegedly Failing to Cover Medically Necessary Care

  • New York AG Eric Schneiderman filed a complaint against health insurer Capital District Physician’s Health Plan, Inc. (“CDPHP”) for allegedly restricting coverage of treatment for chronic Hepatitis C infection.
  • According to the complaint, CDPHP, among other things, allegedly misled consumers regarding the scope of their coverage by claiming that it covered “medically necessary” treatment of disease, but in fact required members to show advanced stages of disease before Hepatitis C treatment would be covered and factored in cost when deciding whether a treatment will be covered.

West Virginia Attorney General Targets Third Pharmacy in Prescription-Transfer Scheme

  • West Virginia AG Patrick Morrisey sued CURERX LLC, a pharmacy, for allegedly obtaining data from multiple patients and using that information to transfer prescriptions to its pharmacy without the patients’ knowledge or consent and forced patients to pay a much higher price.
  • The lawsuit, among other things, alleges that CURERX LLC used forms, surveys, and online questionnaires to obtain personal information that was used to entice patients to unknowingly transfer prescriptions to the pharmacy.
  • The suit resembles two earlier suits brought against Rock City and David Pharmacy in November 2015.


Oklahoma and Nebraska Attorneys General Seek to Intervene in Marijuana Pre-Emption Case

  • According to reports, Oklahoma AG Scott Pruitt and Nebraska AG Doug Peterson asked the Tenth Circuit Court of Appeals for permission to intervene in a case, Safe Sts. Alliance v. Alternative Holistic Healing, LLC, which could determine whether federal law preempts Colorado’s legalization of marijuana.
  • In the case, opponents of Colorado legislation to legalize marijuana, Safe Streets Alliance and owners of land adjacent to a marijuana grow site, sued the grow site owners and Colorado government officials alleging, in part, that the Colorado law is preempted by federal law.  The lower court dismissed the complaint, ruling that the plaintiffs did not have a right to bring such a claim because they did not allege sufficient facts to substantiate the claim that their property values declined as a result of the marijuana cultivation activities. The AGs, in their petition for intervention in the case, argue that marijuana from Colorado has burdened law enforcement efforts in their respective states, where marijuana is illegal.
  • Last month, the U.S. Supreme Court refused to allow the AGs to directly sue Colorado to challenge the state’s law that permits recreational marijuana use.

State vs. Federal

EPA Withdraws Proposed Regulation of Competitive Racing Vehicles

  • The U.S. Environmental Protection Agency (“EPA”) announced that it has withdrawn language from a proposed rule that would have expanded the EPA’s jurisdiction under the Clean Air Act to cover vehicles modified for racing or hobbyist competition.
  • The proposed language would have required certified motor vehicles, motor vehicle engines, and their emission control devices to remain in their certified configuration, even if they were used exclusively for competition or were non-road vehicles or engines.
  • According to the EPA, the intent of the proposed rule was not to regulate vehicles built or used exclusively for racing, but rather companies that make and sell products that disable pollution controls on motor vehicles used on public roads.
  • The EPA’s announcement came after seven AGs, led by West Virginia AG Patrick Morrisey and Ohio AG Mike DeWine, urged the EPA to retract the proposed regulation.