The State AG Report Weekly Update May 5, 2016

Breaking News

DAGA Announces New Executive Director

  • The Co-Chairs of the Democratic Attorneys General Association (“DAGA”), Oregon AG Ellen Rosenblum, District of Columbia AG Karl Racine, and Virginia AG Mark Herring, announced the appointment of Sean Rankin as the new Executive Director of DAGA.
  • Mr. Rankin is a political consultant at his own firm, the Apollo Group, and has aided federal and statewide political operations in 18 states and the District of Columbia.  Most recently, Mr. Rankin served as general consultant to AG Racine in his successful 2014 campaign to become the first elected AG in the District of Columbia.
  • Mr. Rankin will transition over the next few months and officially take over the post on July 1, 2016. He will replace Travis Berry, who has been Executive Director of DAGA for the last 14 years.


FTC Settles With Medical Product Supplier for Alleged Antitrust Violations

  • The Federal Trade Commission (“FTC”) reached a settlement with Invibio, Inc., Invibio Limited, and Victrex plc (collectively “Invibio”) to resolve allegations that it violated the FTC Act by entering into long-term exclusive contracts with medical device manufacturers for its sale of “implant-grade” polyetherketone (“PEEK”), which allegedly allowed the company to maintain a monopoly.
  • According to the FTC’s administrative complaint, Invibio’s contracts required medical device manufacturers to only use Invibio’s PEEK for all or nearly all of their implantable medical devices, which allowed the company to maintain high prices for the product and keep other companies from effectively competing for customers.
  • Under the terms of the proposed consent order, Invibio is, among other things, barred from entering into additional exclusive contracts, not permitted to prohibit its current customers from using alternate sources of PEEK in new products, and is required to allow certain customers to modify their current contracts so they can purchase PEEK from other sources. The proposed consent order is subject to a 30 day public comment period, after which the FTC will decide whether it will be finalized.

Consumer Protection

Court Ends Indiana Attorney General’s Lawsuit Against Energy Shot Company for Alleged Misrepresentations

  • The Indiana Superior Court of Marion County granted summary judgment in favor of Living Essentials, LLC, and Innovation Ventures, LLC, the makers of liquid energy shot product 5-hour ENERGY, against all claims alleged by Indiana AG Greg Zoeller.
  • In its order, the court found the AG’s allegations that the companies made implied claims that misrepresented, in part, the benefits of non-caffeine ingredients in 5-hour ENERGY were not actionable under Indiana law.

Oregon Attorney General Settles With Company That Allegedly Sent Fake Invoices to Businesses

  • Oregon AG Ellen Rosenblum reached a settlement with a company known as “Oregon State Compliance” that allegedly sent fake invoices to Oregon businesses.
  • According to the AG’s office, the company allegedly sent invoices falsely made to look like they originated from the State of Oregon for a labor law poster that the state provides for free online. In total, the company received payments totaling $24,740.70 from 293 Oregon businesses.
  • Under the terms of the settlement, restitution in full was obtained for the companies that paid the invoices, and the “Oregon State Compliance” company has been permanently banned from operating in the state.

False Claims Act

DOJ, 36 Attorneys General Settle with a Pharmaceutical Company Over Medicaid Drug Rebates

  • The U.S. Department of Justice (“DOJ”), 36 AGs, and other law enforcement entities reached a $784.6 million settlement with Wyeth, a wholly-owned subsidiary of Pfizer, Inc. (“Pfizer”), to resolve alleged false claims act violations that Wyeth knowingly reported false and fraudulent prices to the government on two of its proton pump inhibitor (“PPI”) drugs prior to Wyeth’s acquisition by Pfizer.
  • According to the government’s complaint, Wyeth allegedly avoided paying millions of dollars in Medicaid rebates by hiding discounts on PPI drugs sold under bundled sales arrangements from the government. Under the Medicaid Drug Rebate Program, drug companies are required to report the discounts they offer to their customers to the government and are required pay rebates to state Medicaid programs based on those discounts.

Attorneys General and the DOJ Settle with Olympus Corporation to Resolve Alleged Kickback Claims

  • A coalition of AGs and the U.S. Department of Justice (“DOJ”), acting on behalf of the Department of Health and Human Services and the Defense Health Agency, reached a joint settlement with Olympus Corporation (“Olympus”), a medical equipment manufacturer, to resolve allegations that it paid illegal kickbacks to healthcare providers in violation of federal and state False Claims Acts.
  • The Civil Complaint, filed jointly against Olympus by the DOJ and AGs from 29 states and the District of Columbia, alleges that between January 1, 2006 and December 31, 2011, Olympus used improper financial incentives, such as grants, fellowships, consulting payments, and free trips, to induce doctors and executives to purchase a variety of endoscopes and other surgical equipment manufactured by Olympus.
  • Under the terms of the settlement, Olympus will pay a total of $267.3 million to the federal government and $43.5 million to the Medicaid participating states.

State v. Federal

Nine Attorneys General File Amicus Brief Challenging the Regulatory Taking of Private Property

  • 9 AGs, led by Nevada Attorney General Adam Laxalt, filed an amicus brief with the U.S. Supreme Court challenging a ruling by the Wisconsin Court of Appeals in Murr v. Wisconsin that denied compensation for a regulatory taking of private property.
  • The case involves a family that owns two neighboring parcels of land in Wisconsin – one that is developed and one that is undeveloped. Subsequent to the Murr’s purchase of the undeveloped parcel, certain zoning regulations changed which precluded the development of the property. When the Murr family sued, the Wisconsin Court of Appeals treated the two adjoining parcels as one for takings analysis and ruled against the Murrs, holding that no taking occurred because, when the properties were combined, the Murrs retained some usage of the aggregated property.
  • The AGs argue in their brief that separate parcels should be treated separately for takings purposes and landowners should not be penalized for owning neighboring property.