The State AG Report Weekly Update December 15, 2016


20 Attorneys General Sue Generic Drug Makers for Alleged Anticompetitive Behavior

  • 20 AGs, led by Connecticut AG George Jepsen, filed a lawsuit in the U.S. District Court for the District of Connecticut against generic drug makers Heritage Pharmaceuticals, Inc., Aurobindo Pharma USA, Inc., Citron Pharma, LLC, Mayne Pharma (USA), Inc., Mylan Pharmaceuticals, Inc., and Teva Pharmaceuticals USA, Inc. for allegedly violating the federal Sherman Act and state antitrust laws by engaging in anticompetitive behavior.
  • According to the AGs, the companies allegedly engaged in a conspiracy to fix prices for doxycycline hyclate, used to treat respiratory tract infections and other conditions, and glyburide, an oral diabetes medication. The AGs allege the companies coordinated with competitors at trade shows, conferences, and other events in an effort to allocate markets to hinder competition, and allegedly attempted to destroy evidence once they were aware of the AGs’ investigation.
  • The lawsuit seeks to prohibit the companies from engaging in further anticompetitive behavior and disgorgement, among other things.


Consumer Financial Protection Bureau

CFPB Sues Mortgage Companies for Alleged Deceptive Advertising

  • The Consumer Financial Protection Bureau (“CFPB”) settled with reverse mortgage companies American Advisors Group, Reverse Mortgage Solutions, Inc., and Aegean Financial to resolve allegations that they violated the Mortgage Acts and Practices Advertising Rule by engaging in deceptive advertising practices.
  • According to the CFPB, the three companies allegedly advertised that consumers who took out reverse mortgages could not lose their homes and would always retain the right to stay in their homes, even though consumers with reverse mortgages can lose their home if they fail to comply with the terms of their loan.
  • Under the terms of the consent order, American Advisors Group must pay a civil penalty of $400,000, Reverse Mortgage Solutions must pay a civil penalty of $325,000, and Aegean Financial must pay a civil penalty of $65,000. Additionally, the companies must make clear disclosures and implement a system to ensure they follow disclosure laws.


Consumer Protection

FTC Issues Judgment Against Sunscreen Company for Allegedly Misleading "All Natural" Claims

  • The Federal Trade Commission (“FTC”) granted a summary decision against California Naturel, Inc. for allegedly violating the Federal Trade Commission Act (“FTC Act”) by using unsubstantiated claims to deceptively market sunscreen.
  • According to the FTC’s complaint, the company allegedly marketed their products as "all natural" and containing “only the purest, most luxurious and effective ingredients found in nature,” but admitted to using a synthetic ingredient in its formula.
  • Under the terms of the final order, the company must refrain from similar misrepresentations of their products. As we previously reported, the FTC recently settled with four companies over similar allegations. Learn more about labeling issues in our article “Health-Conscious Food Label Claims: The “Natural” Frontier for State AGs?”


FTC Settles with Blood-Pressure App Marketers for Allegedly Misleading Claims on Accuracy

  • The FTC reached a settlement with Aura Labs, Inc., d/b/a AuraLife and AuraWare, and its owner (collectively “Aura”) to resolve allegations that the company violated the FTC Act by making false claims about its Instant Blood Pressure (“IBP”) application.
  • According to the FTC’s complaint, Aura allegedly claimed its IBP application, which measures blood pressure by placing the users’ right index finger over the phone’s rear camera lens while placing the base of the phone over the heart, was able to measure blood pressure as accurately as the traditional around-the-arm cuff, when the application allegedly took less accurate measurements than the cuff.
  • Under the terms of the stipulated court order, Aura is prohibited from making deceptive claims about the accuracy of its product. Aura was also assessed a judgment of $595,945.27 that is suspended based on the company’s inability to pay.


New York Attorney General Settles with Auto Dealerships for Allegedly Deceptive Add-On Sales

  • New York AG Eric Schneiderman reached two separate settlements with SG Hylan Motors Corp., d/b/a Staten Island Honda and Staten Island Nissan (collectively, “SG Hylan”) and Best Auto Outlet, Inc. (“Best Auto”) for allegedly using deceptive and misleading practices to sell add-on items to consumers.
  • According to AG Schneiderman, SG Hylan and Best Auto allegedly charged over 2,300 consumers for additional products and services, such as credit repair and identity theft services, without their knowledge and consent, which sometimes added up to more than $2,000 of the final sale price.
  • Under the terms of the settlement, SG Hylan must pay $1.5 million in restitution and $100,000 in penalties. Best Auto must pay $115,000 in restitution and $10,000 in penalties. The companies are prohibited from misrepresenting the final price of a vehicle and offering credit repair and identity theft services in connection with auto sales, among other things.
  • As we previously reported, AG Schneiderman has settled with numerous other auto dealerships for related sales practices.


Vermont Attorney General Settles with Propane Dealer Over Alleged Failure to Disclose Fees

  • Vermont AG Bill Sorrell reached a settlement with Osterman Propane, LLC to resolve allegations that it violated Vermont’s Consumer Protection Act and Propane Rule by engaging in deceptive sales tactics to sell propane to companies.
  • According to AG Sorrell, Osterman Propane allegedly charged fees to certain commercial propane users without providing a fee disclosure form, as required under law.
  • Under the terms of the Assurance of Discontinuance, Osterman Propane must refund $15,788.51 to commercial propane users as restitution, pay the state $7,500, and, among other things, use the fee disclosure form as required by law.



Washington Attorney General Sues Agrochemical and Agricultural Biotechnology Company for Allegedly Concealing Adverse Effects to Human Health

  • Washington AG Bob Ferguson filed a lawsuit against Monsanto Company, Pharmacia LLC, and Solutia Inc. (collectively, “Monsanto”) in the King County Superior Court for allegedly using chemicals it knew were harmful to human health.
  • According to AG Ferguson, Monsanto produced polychlorinated biphenyls (“PCBs”) from 1935 to 1979, after which the Toxic Substances Control Act banned the use of PCBs. AG Ferguson alleges that during the time of their production, Monsanto knew that PCBs could pose serious problems to human health and the environment, citing internal company memos referring to the “systemic toxic effects” of prolonged exposure to the chemicals.
  • The lawsuit seeks, among other things, compensation for damages to natural resources and a payment to cover present and future costs of addressing ongoing negative effects of PCBs’ use.


Labor & Employment

District Court Judge Grants Permanent Injunction Sought by Ten Attorneys General Against DOL Persuader Rule

  • Ten AGs, led by Texas AG Ken Paxton and Arkansas AG Leslie Rutledge, won a final judgment in the U.S. District Court for the Northern District of Texas to enjoin the U.S. Department of Labor (“DOL”) from enforcing the persuader advice exemption rule, which would have expanded requirements for employers and consultants to file detailed public reports regarding activities affecting employees’ rights to organize and collectively bargain.
  • As we previously reported, the court issued a nationwide preliminary injunction of the rule in June, in which it held that DOL exceeded its authority by passing the rule, and that the rule attenuated the attorney-client relationship and violated the First Amendment.



43 Attorneys General Settle with Pharmaceutical Company Over Alleged Off-Label Marketing

  • 43 AGs, led by Maryland AG Brian Frosh and Kentucky AG Andy Beshear, reached a settlement with Bristol-Myers Squibb (“BMS”) for improperly marketing and making false claims about its antipsychotic drug Abilify.
  • According to the AGs, BMS allegedly misrepresented findings of scientific studies on Abilify and the risks it posed to patients in its marketing and promoted the drug for use in children and certain elderly patients experiencing symptoms of dementia and Alzheimer’s disease without first establishing the drug’s safety in such cases.
  • Under the terms of the settlement, BMS must pay approximately $19.5 million dollars to the states involved in the settlement and restrict its marketing of drugs containing Abilify’s active ingredient, arpiprazole, among other things.


West Virginia Attorney General Sues Pharmacy for Alleged Failure to Detect Suspicious Prescriptions

  • West Virginia AG Patrick Morrisey filed a lawsuit against Larry’s Drive-In Pharmacy for allegedly engaging in unfair methods of competition by failing to detect and report an influx of suspicious drug prescriptions in violation of the state’s consumer protection laws.
  • According to AG Morrisey, Larry’s Drive-In allegedly filled ten million doses of opioids within eleven years without implementing anti-diversion controls, such as monitoring programs, to end illegal drug sales despite the company’s alleged awareness of the problem.
  • The lawsuit seeks an injunction, civil penalties, and punitive damage, among other things. As we previously reported, AG Morrisey has reached similar settlements with eight prescription drug wholesalers in the past year