The State AG Report Weekly Update August 25, 2016

Consumer Financial Protection Bureau

CFPB Settles with Bank Over Alleged Student Loan Protection Violations

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with Wells Fargo Bank, N.A. (“Wells Fargo”), to resolve allegations that the company’s private student loan servicing practices violated the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Fair Credit Reporting Act.
  • According to the CFPB, Wells Fargo allegedly processed payments in a way that maximized costs and fees, failed to disclose how it allocated payments across multiple loans, charged improper late fees, and failed to take actions to update and correct erroneous information reported to credit reporting companies, among other things.
  • Under the terms of the consent order, Wells Fargo must pay $410,000 in consumer refunds and $3.6 million in civil penalties, correct errors on credit reports, and among other things, improve its student loan servicing practices by allocating payments to satisfy the maximum number of loan payments and allowing consumers to avoid additional late fees.



9 Attorneys General File Motion in Support of EPA’s Greenhouse Gas Emissions Standards

  • Nine AGs and the city of Chicago moved to intervene on behalf of the Environmental Protection Agency (“EPA”) in the U.S. Court of Appeals for the District of Columbia Circuit in a lawsuit filed by a group of fourteen AGs and oil and gas industry associations over the EPA’s methane emissions standards for new oil and gas operations.
  • According to their motion, the final rule, which provides a national minimum standard for new and modified oil and gas sources, forms a foundation for further EPA efforts to limit methane emissions, complements existing state regulations controlling methane emissions, and creates mechanisms to integrate state and local control requirements into standard regulations.
  • The final rule, which fulfills President Obama’s June 2013 Climate Action Plan, is the first time the EPA has attempted to limit greenhouse gas and volatile organic compound emissions in the oil and natural gas sector.


For-Profit Colleges

Kentucky Appeals Court Affirms Attorney General’s Investigation of For-Profit College

  • The Kentucky Court of Appeals affirmed a Franklin Circuit Court’s order requiring the American National University Inc. to pay the state $157,000 in sanctions stemming from the alleged repeated refusal of National University to respond to a 2010 subpoena.
  • According to Kentucky AG Andy Beshear, the subpoena was issued in conjunction with an investigation into potential violations of the Kentucky Consumer Protection Act. Instead of responding, National University filed suit in the Franklin Circuit Court to block the subpoena and investigation. The lower court ruled that the subpoena was authorized, but according to the AG’s office, National University continued to refuse to comply. Accordingly, the court assessed a $1,000 per day sanction from August 2013 to December 2013, and a $500 per day sanction from January 2014 to February 2014, when it concluded that the school had fully complied with the subpoena.
  • Under Kentucky law, National University has thirty days to request a discretionary review by the state Supreme Court.


Health Care

Massachusetts Attorney General Obtains Order Against Unlicensed Health Care Clinics Over Alleged Deceptive Practices

  • Massachusetts AG Maura Healey obtained a court order against Florida Men’s Medical Clinic, LLC, Men’s Medical Clinic, LLC, and its owners over allegations that the companies engaged in unfair and deceptive practices in the marketing, sale, delivery, and billing for medications and services to treat erectile dysfunction.
  • According to the complaint, the companies allegedly misrepresented that the medications they offered had minimal side effects, failed to disclose in its advertisements that a needle was involved in treatment, engaged in high-pressure sales tactics, and advertised facilities as clinics when they were not licensed as such, among other things.
  • Under the terms of the settlement, the companies must pay more than $17 million to the state, of which $6.3 million will be allocated to restitution for consumers.



New York Attorney General Settles with Insurance Company Over Alleged Wrongful Claim Denials

  • New York AG Eric Schneiderman reached a settlement with HealthNow New York Inc. (“HealthNow”) to resolve allegations that the insurance provider violated New York mental health parity laws, referred to as Timothy’s Law, which mandates that group health plans must provide broad-based coverage for the diagnosis and treatment of mental health disorders at least equal to the coverage offered for other health conditions.
  • According to the AG’s office, HealthNow allegedly improperly denied coverage for treatments by requiring that all outpatient behavioral health visits be preauthorized after the first 20 visits per year, and by excluding coverage for nutritional counseling of patients with eating disorders.
  • Under the terms of the Assurance of Discontinuance, HealthNow must pay a civil penalty of $60,000, reimburse members whose claims were wrongfully denied, and revise its policies, including ending its policy to review claims after a patient’s twentieth visit.


Labor & Employment

New York Attorney General and U.S. DOL Settle with Restaurant Owners for Alleged Wage and Hour Violations

  • New York AG Eric Schneiderman and the U.S. Department of Labor (“DOL”) reached settlements with Papa John’s Pizza franchisee owners Sultan Ali Lakhani, Moregrace LLC, and Thegrace, Inc., for alleged violations of state and federal wage and hour laws.
  • According to the AG’s office, the owners allegedly failed to pay minimum wage and overtime wages to approximately 200 workers and provide delivery workers with bicycle safety equipment and reimbursements for maintenance costs.
  • Under the terms of the settlement, the owners must pay $500,000 in restitution, institute complaint procedures, post a statement of employees’ rights, and designate an officer to monitor ongoing compliance and submit quarterly reports to the AG’s office for three years.



Colorado Attorney General Settles with Foreclosure Consultant Company Over Allegedly Misleading Foreclosed Homeowners

  • Colorado AG Cynthia Coffman reached a settlement with Austin Home Ventures, LLC, to resolve allegations that the company and its owners violated the Colorado Consumer Protection Act and the Colorado Foreclosure Protection Act.
  • According to the complaint, the company allegedly charged homeowners a fee of twenty to fifty percent to assist foreclosed homeowners in obtaining overbid funds, which are due to a homeowner when a foreclosed home is sold for more than the total amount owed on the mortgage. Overbid funds can be obtained free of charge through the public trustee’s office.
  • Under the terms of the consent judgment, the company must pay $125,000 to the state, refrain from acting as foreclosure consultants and equity purchasers, and refrain from entering any agreement concerning real estate that is undergoing foreclosure.


Unclaimed Property

Illinois Attorney General Settles with Telecommunications Company and Rebate Clearinghouse Vendor Over Alleged Unclaimed Property Law Violations

  • Illinois AG Lisa Madigan, representing Illinois State Treasurer Michael W. Frerichs, reached a settlement with Sprint Spectrum, L.P. (“Sprint”), and Sprint’s rebate clearinghouse vendor, Young America Corporation (“Young America”), to resolve allegations that the companies violated Illinois’ Uniform Disposition of Unclaimed Property Act, which requires that unclaimed property be reported to the state and paid to the treasurer’s office for return to its owner after a five-year period.
  • According to the complaint, Sprint and Young America allegedly retained the value of uncashed rebate checks for more than the five-year period required by the Unclaimed Property Act, failed to report this unclaimed property to the state, and failed to provide this property to the treasurer’s office.
  • Under the terms of the settlement, the companies will reimburse $2.3 million to Illinois customers who did not cash their rebate checks.