The State AG Report Weekly Update December 1, 2016

Breaking News

California’s Governor Names Congressman Becerra to be Next Attorney General

  • California Governor Edmund G. Brown Jr. today announced the nomination of U.S. Representative Xavier Becerra (D-CA) to serve as Attorney General, pending confirmation by the state Assembly and Senate. Becerra would be the state’s first Latino AG, and would replace AG Kamala Harris, who was elected to the U.S. Senate in November 2016. The nomination will be officially submitted once AG Harris resigns.
  • Congressman Becerra has served in the U.S. House of Representatives since 1992. He currently serves as the chairman of the House Democratic Caucus, as a member of the Committee on Ways and Means, and as ranking member of the Ways and Means Subcommittee on Social Security. Prior to this role, he served as a representative in the California State Assembly and as a deputy attorney general in California’s Office of the Attorney General.


Consumer Protection

Colorado Attorney General Obtains Judgment Against Auto Title Loan Companies

  • Colorado AG Cynthia Coffman obtained a judgment against Sovereign Lending Solutions, LLC, Car Loan, LLC, and Autoloans, LLC over allegations that the companies engaged in an illegal auto title loan scheme.
  • According to AG Coffman, the companies made, serviced, and collected personal loans, some with annual percentage rates exceeding 300%, which is higher than the maximum allowed by the state, and required consumers to turn over their vehicle titles as collateral for loans, leading to vehicle repossession.
  • Under the terms of the judgment from the Denver District Court, the companies must pay $24,739.01 in restitution to consumers and $587,390 in penalties, and among other things, must release liens filed against Colorado consumers’ vehicles.


District of Columbia Attorney General Settles with Sports Club Over Allegations of Cancellation and Billing Misrepresentations

  • District of Columbia AG Karl Racine reached a settlement with Town Sports International, LLC (“TSI”) to resolve allegations that the company violated the District’s consumer protection and debt collection laws by misrepresenting its membership cancellation policies.
  • According to AG Racine, although TSI’s membership agreements stated that membership cancellation must be provided in writing and with 30 days’ notice, TSI employees allegedly told consumers that they could cancel at any time by informing a desk employee or club manager. Despite this conflicting information, TSI allegedly continued to bill consumers after they informed managers and desk employees of their wish to cancel.
  • Under the terms of the settlement, TSI must pay the District $20,000 in penalties and investigation costs and provide refunds to consumers who submit complaints within the next three years regarding the continued billing.


Idaho Attorney General Settles with Telemarketer for Allegedly Claiming Government Affiliation

  • Idaho AG Lawrence Wasden reached a settlement with telephone solicitor US Registration, Inc. to resolve allegations that the company misled consumers about its affiliation with the U.S. Department of Transportation (“DOT”).
  • According to AG Wasden, US Registration allegedly misrepresented their affiliation with DOT to purchasers who recently obtained DOT numbers, leading purchasers to believe they needed to complete their DOT registration and pay a federal tax to operate across state lines. The company also allegedly failed to register with the AG’s office as required by law.
  • Under the terms of the settlement, US Registration must pay $1,000 to the AG’s office for the costs of the investigation, allow consumers to cancel their contracts, and provide them with refunds, among other things. AG Wasden suspended an additional civil penalty of $100 per telephone solicitation pending the company’s compliance with the settlement.


Maryland Attorney General Issues Order to Moving Company Over Alleged Inaccurate Estimates

  • Maryland AG Brian Frosh issued an order finding that Best Offer Moving Company, LLC (“Best Offer”) and its operators violated the state’s Consumer Protection Act and the Maryland Household Goods Movers Act by allegedly providing “lowball estimates” to move goods.
  • According to AG Frosh, Best Offer allegedly provided consumers with lower than realistic estimates to move their household goods, and then violated state law by charging consumers more than 125% of the estimate, in some cases holding consumers’ property until payment was received.
  • Under the terms of the settlement, Best Offer must pay at least $117,284.68 to consumers for payment collected in excess of the estimate, $391,000 in civil penalties, $39,468.58 in costs, and $1,473.19 for additional consumer economic damages, among other things.


Vermont Attorney General Settles with Travel Club Operator and Marketers Over Alleged Deceptive Sales Tactics

  • Vermont AG Bill Sorrell reached a settlement with Millennium Travel and Promotions, Inc., Vacation Tours USA, Inc., Set Sail Vacation, LLC d/b/a Member Travel Services, and their owners (collectively, “Millennium Travel”) over allegations that the companies violated Vermont’s Consumer Protection Act and Discount Membership Programs Act. AG Sorrell also filed a lawsuit against Travel Supplier of America, Start 2 Finish Travel Management, and Universal Concepts, Inc. (collectively, “TSA”) for alleged involvement in these violations.
  • According to AG Sorrell, Millennium Travel and TSA allegedly charged Vermont consumers more than $130,000 while failing to provide promised discounts through its travel programs, and violated state law by informing consumers they were “qualified for an award of two round-trip airline tickets” but failing to disclose these awards were contingent upon attendance at a sales presentation.
  • Under the terms of the Assurance of Discontinuance, Millennium Travel is prohibited from doing business in Vermont, and must pay $15,000 in restitution to Vermont consumers and $10,000 in penalties to the state. The lawsuit against TSA seeks civil penalties of up to $10,000 per unfair or deceptive act, among other things.


Virginia Attorney General Settles with Professional Fundraiser Over Alleged Charity Law Violations

  • Virginia AG Mark Herring reached a settlement with professional fundraiser Donorworx, Inc. to resolve allegations that the company violated the Virginia Solicitation of Contributions Law by failing to file necessary paperwork prior to a fundraising campaign.
  • According to AG Herring, Donorworx allegedly conducted a face-to-face fundraising campaign on behalf of a charitable organization at a local mall without properly filing a solicitation contract between the company and organization, written authorization from the organization to solicit on its behalf, and among other things, a solicitation notice.
  • Under the terms of the consent judgment, Donorworx must pay a $2,500 civil penalty and $1,500 in attorneys’ fees.


Medicaid Fraud

18 Attorneys General and DOJ Settle with Senior Living Facility Over Allegations of Failure to Resolve Overpayment Claims

  • 18 AGs and the U.S. Department of Justice (“DOJ”) reached a settlement with Emeritus Corporation d/b/a Emeritus Senior Living (“Emeritus”), over allegations that the company failed to refund overpayments for Medicaid services.
  • According to the DOJ, Emeritus allegedly “systematically wrote-off credit balances” as a result of limitations in the company’s computer accounting software, and failed to refund state and federal Medicaid programs for overpayments between 2008 and 2014.
  • Under the terms of the settlement, Emeritus must pay the federal government $587,400, which is the amount it should have refunded the Medicaid program. An additional $391,600 will be divided between the states.


State AGs in the News

Alabama Attorney General Announces Run for U.S. Senate

  • Alabama Attorney General Luther Strange announced that he will run in a special election to fill the U.S. Senate seat currently held by Jeff Sessions, who has been nominated to serve as the next U.S. Attorney General.
  • In making the announcement, AG Strange reportedly said that he is not seeking Alabama Governor Robert Bentley’s appointment to temporarily fill the seat until the special election is held, but AG Strange added that he would accept that appointment if offered.
  • AG Strange previously worked as a volunteer for Sessions’ campaign for Alabama AG in 1994, and reportedly stated that he would issue a statement in the coming weeks detailing the basis for his decision to run.


State v. Federal

18 Attorneys General Sue Federal Agencies Challenging Endangered Species Act Habitat Rules

  • 18 AGs, led by Alabama AG Luther Strange and Arkansas AG Leslie Rutledge, filed a lawsuit in the U.S. District Court for the Southern District of Alabama against the U.S. Department of Commerce (“DOC”), the National Marine Fisheries Service (“NMFS”), the U.S. Department of Interior (“DOI”), and the U.S. Fish and Wildlife Services (“FWS”) challenging two February 2016 Final Rules that expand the definitions and procedures surrounding “critical habitats” under the Endangered Species Act.
  • The Final Rules expand the type of features eligible to be designated as critical habitats, expand the definition of “destruction or adverse modification,” and clarify the purpose of critical habitats and the procedures to designate such a space.
  • According to AG Strange, the rules allegedly violate the Administrative Procedures Act by providing agencies with the ability to designate critical habitats for locations that could potentially host an endangered species even when the endangered species does not currently occupy the area and when the land does not contain features to support the species in question.


Upcoming Events

Cozen O’Connor to Host Webinar on Employment and Antitrust Law

  • Cozen O’Connor will host a webinar on December 6, 2016 entitled “Violating Employment and Antitrust Law: New Developments and Non-Compete Agreements” at 11:30 AM ET.
  • Milton A. Marquis, Member of the State Attorneys General Practice, and Michael C. Schmidt, Vice Chair of the Labor & Employment Department, will discuss considerations companies must incorporate into their hiring, compensation, and information exchange practices to comply with Federal Trade Commission (“FTC”) and DOJ regulations, as well as how companies can mitigate risk by implementing a multifaceted approach that takes regulators’ priorities into account.
  • To register for the webinar, please click here.