Digest 3.21.2019 The State AG Report Weekly Update

Consumer Financial Protection Bureau

25 Democratic Attorneys General Oppose CFPB Proposed Rule to Delay Compliance Date of Payday Lending Rule

  • 25 Democratic AGs, led by North Carolina AG Josh Stein, submitted a comment to the Consumer Financial Protection Bureau (“CFPB”) in response to the CFPB’s Notice of Proposed Rulemaking (“NPRM”) that would delay the compliance date of its 2017 Final Rule Governing Payday, Vehicle Title, and Certain High-Cost Installment Loans (“Final Rule”) from the original deadline of August 19, 2019 to November 19, 2020 (“Proposed Delay Rule”).
  • In the comment, the AGs—who share enforcement authority under the Final Rule—urge the CFPB not to adopt the Proposed Delay Rule because it will leave consumers unprotected from exploitative loans, there are no obstacles to compliance warranting delay, and the CFPB’s cost-benefit analysis unjustly discounts the CFPB’s prior findings that the Final Rule will significantly benefit consumers.
  • As previously reported, the CFPB concurrently issued a NPRM that would rescind the Final Rule, and the deadline for submitting comments in response to the rescission NPRM is May 15, 2019.

Consumer Protection

North Carolina Attorney General Settles With Tree Removal Service Over Allegedly Overcharging Consumers After Hurricane Florence

  • North Carolina AG Josh Stein reached a settlement with tree removal service Georgia Tree Company LLC and affiliated individuals (collectively, “GTC”) to resolve allegations that it charged excessive prices for tree and debris removal work done after Hurricane Florence in violation of state laws against price gouging, against unfair and deceptive trade practices, and that prohibit certain debt collection acts.
  • According to the AG’s office, between September 2018 and January 2019, GTC allegedly did not provide upfront quotes for its services, sent agreements to consumers’ insurance companies without their permission, charged excessive prices for its services, and employed aggressive debt collection practices.
  • Under the terms of the consent judgment, GTC must pay over $234,000 in restitution to consumers, pay $40,000 in attorney’s fees and costs, cease tree and debris removal work in the state, and cease seeking or receiving payment from consumers for work done after Hurricane Florence, among other things.


FDA Issues Draft Guidance Proposing to Prioritize Enforcement Against Flavored E-Cigarette Manufacturers and Retailers

  • The U.S. Food and Drug Administration (“FDA”) issued draft guidance for the tobacco industry discussing proposed changes to compliance polices for flavored e-cigarette manufacturers and retailers.
  • In the draft guidance, the FDA announced its intention to modify its August 2017 compliance policy for flavored e-cigarette products by prioritizing enforcement against products that do not have required FDA marketing authorization, products whose manufacturers have not submitted premarket applications to the FDA, and products that are targeted towards minors or are likely to promote use by minors, among other things.
  • According to the Federal Register Notice, the deadline for submitting comments is April 15, 2019.
  • As previously reported, a bipartisan coalition of nine AGs submitted comments in response to the FDA’s March 2018 advance notice of proposed rulemaking regarding regulation of favored tobacco products recommending that the FDA ban flavored tobacco products.


21 Democratic Attorneys General Oppose EPA Proposed Rule to Replace Performance Standards for Coal-Fired Power Plants

  • 21 Democratic AGs and seven cities and counties, led by California AG Xavier Becerra, submitted a comment to the U.S. Environmental Protection Agency (“EPA”) opposing the agency’s December 2018 Proposed Review of Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units (“Proposed Rule”), which would replace the currently effective carbon dioxide performance standards for coal-fired power plants.
  • In the comment, the AGs argue that the Proposed Rule is based on flawed assertions that carbon dioxide emission controls required under the current standards are more expensive and less geographically available than anticipated, and replacing the current standard with the Proposed Rule does not comport with the EPA’s duties under the federal Clean Air Act, among other things.
  • The AGs urge the EPA to withdraw the Proposed Rule and to keep the current standard.

Vermont Attorney General Settles With Gasoline Refiners Over Alleged Groundwater Contamination

  • Vermont AG T.J. Donovan reached a settlement with 29 gasoline refiners to resolve allegations that they contaminated groundwater in violation of the state’s Groundwater Protection Act, Consumer Protection Act, and the common law.
  • According to the complaint, the refiners allegedly allowed a gasoline additive—methyl tertiary-butyl ether (“MTBE”)—that has been banned from use in the state to pollute the groundwater through the use of leaking gasoline storage and delivery systems, failed to mitigate MTBE contamination, promoted MTBE and gasoline containing MTBE as environmentally sound products, and misrepresented the risks of using MTBE, among other things.
  • According to the AG’s office, under the terms of the settlement agreement, the refiners will pay $3.8 million to the state and the private law firms that assisted the state in the case.

Health Care

Florida and California Attorneys General Settle With Former Health Care Products Company Over Alleged Kickbacks to Health Care Providers

  • Florida AG Ashley Moody, California AG Xavier Becerra, and the U.S. Department of Justice (“DOJ”) reached a settlement with former health care products company Covidien LP to resolve allegations that it provided free or discounted services to health care providers to induce them to purchase its products in violation of the federal Anti-Kickback Statute and state and federal false claims acts.
  • According to the settlement agreement, Covidien allegedly provided practice and market development support to health care providers—including creating customized marketing plans, holding lunch and dinner meetings to drive referrals, and assisting in planning screening events—to induce providers to purchase radiofrequency ablation catheters, thereby causing submissions of false claims to the federal Medicare and state Medicaid programs.
  • Under the terms of the settlement agreement, Covidien must pay over $17.4 million to the United States, $1.47 million to California, $1.04 million to Florida, and $3.14 million to the plaintiffs who originally brought the qui tam action related to the conduct.

Massachusetts Attorney General Settles With Nursing Home Facilities Over Allegedly Providing Substandard Care

  • Massachusetts AG Maura Healey reached settlements with nursing home facility owners and operators Athena Healthcare Systems, Jewish Nursing Home of Longmeadow, Synergy Health Centers LLC, Salmon Health and Retirement, Personal Healthcare, LLC, and Genesis Health Care (collectively, “facilities”) to resolve allegations that they provided substandard care that led to injuries and deaths in violation of state and federal regulations for long term care facilities.
  • According to the AG’s office, the facilities allegedly failed to implement safety measures for residents, such as installing federally-compliant bed side rails, seek necessary medical attention for residents, such as resuscitation or interventions after repeated falls, and failed to secure and maintain medical records, among other things.
  • According to the AG’s office, the facilities must pay a total of over $500,000 to the state, Athena Healthcare Systems, Jewish Nursing Home of Longmeadow, Salmon Health and Retirement, and Genesis Health Care must implement compliance measures, and Synergy Health Centers must cease participation in federal and state health care programs for the next seven years.

Ohio Attorney General Sues State’s Pharmacy Benefits Manager Over Allegedly Overcharging for Prescription Drugs

  • Ohio AG Dave Yost filed a lawsuit against OptumRX Administrative Services, LLC f/k/a SXC Health Solutions, Inc. (“OptumRX”)—the pharmacy benefits manager (“PBM”) for the state and the Ohio Bureau of Workers’ Compensation (“BWC”)—over allegations that it overcharged the state for the cost of prescription drugs in breach of its contract with the BWC and in violation of the common law.
  • According to the complaint, OptumRX allegedly failed to provide promised discounts for drugs purchased by BWC claimants; misused information related to its contractual relationship with BWC for other commercial purposes, including subsidizing pricing offered to its other customers; and misrepresented its discount rate to induce the state and BWC to choose it as its PBM.
  • The complaint seeks compensatory and punitive damages, costs, and attorney’s fees.

State AGs in the News

Connecticut Attorney General Supports Bill Formally Recognizing Attorney General’s Role in Defending Civil Rights

  • Connecticut AG William Tong released written testimony in support of a bill that would formally recognize the AG’s role in defending civil rights.
  • The bill, H.B. 7222, would formally recognize the AG’s authority to investigate allegations that an individual’s civil rights have been violated and initiate legal proceedings in response to such allegations.
  • AG Tong’s testimony argued that the bill would bring the state in line with the 22 states that recognize their AGs’ abilities to investigate and take legal action against civil rights violations and allow the AG’s office to strengthen its relationship with the state’s Commission on Human Rights and Opportunities.
  • The bill is currently pending in the state legislature’s Joint Committee on Judiciary.