Digest 4.4.2019 The State AG Report Weekly Update

Cannabis / Marijuana

FTC and FDA Issue Warning Letters to Companies Advertising and Selling Cannabidiol Products

  • The Federal Trade Commission (“FTC”) and the Food & Drug Administration (“FDA”) issued warning letters to three companies that advertise and sell products containing cannabidiol (“CBD”) Nutra Pure, LLC, PotNetwork Holdings, Inc., and Advanced Spine and Pain, LLC d/b/a Relievus (“Relievus”) over allegations that the claims they make about their products violate the FTC Act and the Food, Drug, and Cosmetic Act (“FDCA”).
  • In the letters, the FTC and FDA warn the companies that they are marketing products containing CBD—including hemp oil, “CBD softgels,” “gummies,” CBD salve, and CBD oil—as dietary supplements on their respective websites despite the FDA definition of dietary supplements excluding such products and that they are making health claims about their products without FDA approval or the reliable scientific evidence required to market products as a drug.
  • The letters instruct the companies to address the FTC’s concerns and the FDA-related violations and to notify the FTC and FDA within 15 days of receipt of the letter of specific action taken.


Florida Attorney General and FTC Settle with Veterans Charity Over Allegations of Deceptive Solicitations

  • Florida AG Ashley Moody and the Federal Trade Commission (“FTC”) reached a settlement with American Veterans Foundation, Inc. and one of its officers (collectively, “AVF”) to resolve allegations that it deceived donors about the intended use of charitable donations in violation of the FTC Act, Telemarketing Sales Rule, the Florida Deceptive and Unfair Trade Practices Act, and the Florida Solicitation of Contributions Act.
  • According to the complaint, AVF allegedly solicited donations over the telephone by misrepresenting to donors that donations would benefit veterans and deployed servicemembers, when 92% of funds raised were actually spent on for-profit fundraisers, executive compensation, and administrative costs.
  • According to the stipulated order, AVF must pay over $6.58 million to the state and the FTC, pay $105,000 to a nonprofit organization as a charitable contribution, and is permanently enjoined from receiving payments from the solicitation of charitable contributions, among other things.

Missouri Attorney General and FTC Settle with Law Enforcement Charity Over Allegations of Deceptive Solicitations

  • Missouri AG Eric Schmitt and the Federal Trade Commission (“FTC”) reached a settlement with Disabled Police and Sheriffs Foundation, Inc., d/b/a The American Police and Sheriffs Association and Police Officers Safety Association, and its executive director (collectively, “DPSF”) to resolve allegations that it deceived donors about the intended use of charitable donations in violation of the FTC Act, Telemarketing Sales Rule, the Missouri Merchandising Practices Act, and the Missouri Telemarketing Act.
  • According to the complaint, DPSF allegedly solicited donations over the telephone by misrepresenting that donations would benefit families of police officers killed in the line of duty, disabled police officers, and law enforcement agencies, when 95% of funds raised were actually spent on for-profit fundraisers and executive compensation.
  • According to the stipulated order, DPSF must pay over $9.93 million to the state and the FTC and is permanently enjoined from receiving payments from the solicitation of charitable contributions, among other things.


Washington Legislature Passes Legislation Raising Sale Age for Tobacco and Vapor Products to 21

  • The Washington state Legislature passed legislation requested by Washington AG Bob Ferguson that would raise the sale age for tobacco and vapor products to 21.
  • The bill, EHB 1074, is pending Governor Jay Inslee’s signature and would take effect January 1, 2020.


New Jersey Attorney General Sues Chemical Manufacturing Companies Over Alleged Soil and Groundwater Contamination

  • New Jersey AG Gurbir Grewal on behalf of the New Jersey Department of Environmental Protection filed four lawsuits against chemical manufacturing companies E.I. DuPont de Nemours & Company, DuPont Specialty Products USA, LLC (collectively, “DuPont”), The Chemours Company and its subsidiary (collectively, “Chemours”), and The 3M Company (“3M”) over allegations that they contaminated soil and groundwater around four DuPont and Chemours facilities in violation of the state’s Water Pollution Control Act, Spill Compensation and Control Act, Industrial Site Recovery Act, and the common law.
  • According to the complaints, DuPont and Chemours allegedly failed to safely dispose of hazardous chemicals—including per- and polyflouroaklyl substances (“PFAS”)—and volatile and semi-volatile organic compounds, and caused contamination levels far exceeding state standards by failing to stop the spread of these chemicals and compounds into the soil, groundwater, and other natural resources near four DuPont and Chemours manufacturing facilities. The complaints also allege that DuPont and 3M—which supplied chemicals to DuPont for use at its facilities—misrepresented the hazardous nature of PFAS chemicals.
  • The complaints seek injunctive relief, penalties, damages, disgorgement, abatement, reimbursement for the state’s work to address the alleged contamination, and attorneys’ fees and costs, among other things.

Vermont Attorney General Settles with Hazardous Waste Storage Company Over Allegedly Improper Management of Hazardous Waste

  • Vermont AG T.J. Donovan reached a settlement with hazardous waste storage company Safety-Kleen Systems, Inc. (“Safety-Kleen”) to resolve allegations that it failed to identify and manage hazardous waste in violation of state hazardous waste management regulations and the terms and conditions of the hazardous waste facility permit issued by the Vermont Agency of Natural Resources.
  • According to the pleadings by agreement, Safety-Kleen allegedly failed to ensure that the waste it collected through its vacuum waste program—in which trucks equipped with vacuums collected waste from devices such as oil/water separators, trench drains, and process tanks—was not hazardous waste; improperly accepted, handled, transported, and stored hazardous waste; and failed to use water samples that allowed for it to determine whether the samples contained hazardous waste.
  • According to the consent order, Safety-Kleen must pay $70,000 in penalties.

Financial Industry

Alabama Attorney General Sues Consumer Lender Over Alleged Illegal Lending Practices

  • Alabama AG Steve Marshall, the state Banking Department, and the state Securities Commission have filed suit against Future Income Payments LLC and its chief executive officer (collectively, “FIP”) over allegations that it deceived consumers about the loans it offered in violation of the state’s Small Loan Act, Consumer Credit Act, Securities Act, and Deceptive Trade Practices Act.
  • According to the AG’s office, FIP allegedly made unlicensed loans—many of which were made at unlawful interest rates—to consumers receiving pension benefits, misrepresented the profitability of “structured cash flows”—bundles of pension payments from consumers—to investors, and misled investors to believe that risks were mitigated by reserve accounts that did not actually exist, which caused investors to stop receiving returns.
  • According to the AG’s office, the lawsuit seeks injunctive relief.
  • As previously reported, former Illinois AG Lisa Madiganand former Minnesota AG Lori Swanson previously filed lawsuits against FIP, and Virginia AG Mark Herring, former North Carolina AG Roy Cooper, and Massachusetts AG Maura Healey previously reached settlements with FIP over similar allegations.

Massachusetts Attorney General Settles with National Mortgage Servicer for Allegedly Overcharging Consumers

  • Massachusetts AG Maura Healey reached a settlement with national mortgage servicer Ocwen Loan Servicing LLC (“Ocwen”) to resolve allegations that it overcharged consumers in violation of state laws regulating mortgage servicing.
  • According to the AG’s office, Ocwen allegedly forced borrowers to purchase unnecessary and expensive flood insurance policies which carried high deductibles and did not provide critical liability; failed to disburse insurance premiums from escrow accounts that it forced borrowers to pay into, causing borrowers insurance policies to lapse; charged duplicative pre-foreclosure property inspection and preservation fees; and failed to respond in a timely manner to borrowers’ requests and complaints.
  • According to the AG’s office, Ocwen will pay $2 million in restitution, notify borrowers who may be eligible to receive a loan modification, cease foreclosure proceedings for certain homeowners and allow for them to apply for loan modifications, and implement new policies to handle customer complaints.

Health Care

Massachusetts and Rhode Island Attorneys General Settle with Urgent Care Centers Over Alleged Medicaid Fraud

  • Massachusetts AG Maura Healey, Rhode Island AG Peter Neronha, and the U.S. Attorney’s Office for the District of Massachusetts reached a settlement with CareWell Urgent Care Centers of MA, P.C., CareWell Urgent Care of Rhode Island, P.C., and Urgent Care Centers of New England Inc. (collectively, “CareWell”) to resolve allegations that its billing practices violated the states’ Medicaid regulations and the federal False Claims Act.
  • According to AG Healey’s office, CareWell allegedly gave patients medically unnecessary examinations and billed services provided by nurse practitioners as services provided by physicians, falsely informed its medical personnel that the exams were required by its malpractice carrier, and directed non-medical staff to alter electronic billing records if medical personnel did not give the exams.
  • According to the AG Healey’s office, CareWell must pay $857,800 to Massachusetts, pay $2 million to Rhode Island and the United States, and implement a billing compliance program.


Bipartisan Coalition of 39 Attorneys General Pen Letter to U.S. Department of Health and Human Services Regarding Pain Management Draft Report

  • The National Association of Attorneys General (“NAAG”) sent a letter, signed by a bipartisan coalition of 39 AGs, to the U.S. Department of Health and Human Services (“HHS”) expressing concern over the agency’s December 2018 Pain Management Best Practices Inter-Agency Task Force Draft Report (“Draft Report”).
  • In the letter, the AGs warn that the HHS’s proposal to rely solely on the judgment of providers regarding the dose and duration of prescription opioid treatment and to move away from the 2016 Center for Disease Control’s Guideline for Prescribing Opioids for Chronic Pain (“Guideline”) would undermine legislative initiatives and refinements to standards of care, and express concern over the Draft Report’s failure to acknowledge that longer duration prescriptions increase risks for misuse.
  • The AGs argue that the Draft Report should be revised to clearly state that there is no completely safe opioid dose, point providers to more recent surgical guidelines issued, and remove claims that opioids are only addictive to certain at-risk populations, among other things.

Arizona Attorney General Settles With Former Opioid Manufacturer Executive Over Alleged Commercial Bribery

  • Arizona AG Mark Brnovich reached a settlement with Alec Burlakoff, the former Vice President of Sales for Insys Therapeutics, Inc. (“Insys”), to resolve an August 2017 lawsuit alleging that he participated in and oversaw commercial bribery to promote an Insys product in violation of the state Consumer Fraud Act.
  • According to the consent judgment, Burlakoff allegedly bribed doctors to prescribe Subsys—a highly addictive fentanyl drug intended for extreme cancer-related pain—and directed Insys employees to bribe doctors and make misrepresentations to healthcare providers.
  • Under the terms of the consent judgment, Burlakoff must pay $4.3 million in penalties to the state, disgorge $5.2 million in profits, and is permanently enjoined from selling or advertising prescription drugs or medical devices in the state.