The State AG Report Weekly Update November 12, 2015


FTC Challenges Proposed Acquisition Approved Previously by West Virginia Attorney General

  • The Federal Trade Commission (“FTC”) issued an administrative complaint challenging the proposed acquisition of St. Mary’s Medical Center, Inc., by Cabell Huntington Hospital, Inc., after West Virginia AG Patrick Morrisey approved the acquisition with conditions earlier this year.
  • The FTC’s complaint alleges that the proposed acquisition would create a monopoly over general acute care inpatient hospital services and outpatient surgical services, and further would likely result in higher prices and lower quality of care. The complaint also asserts that AG Morrisey’s agreement with the hospitals would not sufficiently cure the harm from reduced competition particularly after the time-limited agreement expires.
  • In addition to filing the complaint, the FTC claims that it will seek a temporary restraining order and a preliminary injunction, if necessary, to stop the acquisition pending the administrative proceeding.


Massachusetts Attorney General Obtains Judgment That Owner Created Sham Charities for Personal Benefit

  • Massachusetts AG Maura Healey obtained a judgment against Michael O’Donnell, the owner of two charities, that Mr. O’Donnell violated state consumer protection and charities laws.
  • The court found that Mr. O’Donnell misappropriated charitable assets for his own personal use, failed to register and file annual financial reports for the two charities he created, and engaged in unfair and deceptive practices by creating the charities to avoid or reduce taxes on private real estate transactions and business activities.
  • The court order prohibits Mr. O’Donnell from conducting real estate or lending transactions in the Commonwealth, holds him personally liable for $1.3 million in restitution, plus interest, for properties he improperly obtained through the charities, and also requires him to pay $440,000 in penalties to the Commonwealth.

Consumer Protection

Massachusetts Attorney General Settles with Auto Lender for Allegedly Charging Excessive Interest Rates

  • Massachusetts AG Maura Healey reached a settlement with Santander USA Holdings Inc., a national auto lender, for allegedly charging interest rates above the allowable amount under state usury laws on its subprime auto loans.
  • According to the AG’s Office, Santander’s loans allegedly were above the 21 percent state interest cap after the fees for “GAP coverage” were added to the consumers’ loan.  GAP coverage is an add-on product sold by car dealers, and often financed in the auto loan, that is intended to limit the shortfall between the payment on an auto insurance claim and the amount the borrower owes on their loan if the vehicle is totaled.
  • Under the terms of the settlement, Santander will provide $5.4 million in relief to consumers by eliminating, forgiving, and/or reimbursing, as appropriate, the interest above the allowable amount on certain auto loans. The company will also pay $150,000 to the Commonwealth and audit its existing loan portfolio to ensure no additional consumers have been overcharged.

New York Attorney General Orders Daily Fantasy Sports Sites to Stop New York Residents from Participating

  • New York AG Eric Schneiderman sent cease and desist letters to DraftKings and FanDuel ordering the two daily fantasy sports websites to stop New York residents from participating in the contests.
  • According to the AG’s letters, after a “review” of the daily fantasy sports business, the AG concluded that daily fantasy sports contests constitute gambling, and are therefore prohibited in New York.
  • DraftKings and FanDuel both claim that daily fantasy sports contests are a game of skill and legal under New York law.

New York Attorney General Settles with Retailer for Alleged Deceptive Sales Practices

  • New York AG Eric Schneiderman reached a settlement with Lowe’s Home Center, LLC, to resolve allegations the company used deceptive acts and practices in the sale of flooring installations.
  • According to the AG’s Office, since 2008 Lowe’s allegedly advertised and charged for flooring installation services on a “per square foot” basis, without disclosing that the measurements and installation fees were based on the materials ordered and not the project area.
  • Under the terms of the settlement, Lowe’s must refund up to 10 percent of the per-square-foot basic installation fees charged, and must commit to disclosing, prior to contracting, how its installation charges are calculated, including the square footage upon which the charges are based.

Data Privacy

Connecticut Attorney General Settles with Hospital and Contractor for Breach of Unencrypted Patient Information

  • Connecticut AG George Jepsen reached a settlement with Hartford Hospital and its contractor, EMC Corporation, to resolve an investigation into the theft of a laptop containing unencrypted health information, and whether the companies complied with the Health Insurance Portability and Accountability Act and state law.
  • According to the Assurance of Voluntary Compliance, a laptop was stolen from an EMC employee’s home in June 2012 containing the unencrypted protected health information (“PHI”) and/or personal information of approximately 8,883 Connecticut residents.
  • Under the terms of the settlement, the hospital and EMC must pay $90,000 and will implement additional training and policies to prevent against unauthorized acquisition, access, use, and disclosure of PHI.


Massachusetts Attorney General Settles with Company for Alleged Hazardous Waste Violations

  • Massachusetts AG Maura Healey reached a settlement with ENPRO Services, Inc., to resolve allegations that the environmental services company was improperly handling hazardous waste in violation of the Hazardous Waste Management Act and the Massachusetts Clean Air Act.
  • According to the complaint, ENPRO allegedly collected, transported, and treated hazardous waste oil improperly at an unlicensed facility, accumulated more than six times its limit of waste oil at a separate facility, and failed to maintain proper records.
  • Under the terms of the consent judgment, the company will undergo an audit by an independent auditor, comply with hazardous waste management laws, and must pay $150,000 in civil penalties, $42,500 of which is suspended pending compliance with the settlement.

New York Attorney General Targets Publicly Traded Energy Companies for Alleged False Climate Change Statements

  • New York AG Eric Schneiderman reached a settlement with Peabody Energy Corporation to resolve allegations that its statements to the public and investors, regarding the financial risks associated with climate change and possible government regulations, violated state consumer protection and securities laws.
  • According to the Assurance of Discontinuance (“AOD”), among other things, Peabody allegedly stated falsely in its Securities and Exchange Commission (“SEC”) filings that it could not reasonably predict the impact on its business of future regulations and laws intending to address climate change, when the company and its consultants had allegedly projected such impacts.  Under the terms of the AOD, Peabody’s SEC filings must now include projections on the impacts of potential laws and regulations involving climate change, on its company.
  • Separately, according to reports, AG Schneiderman is currently investigating Exxon Mobil Corp. over similar allegations that the company misled the public and investors about the risks of climate change and the impact regulations addressing the issue may have on its business, in violation of state laws.