The State AG Report Weekly Update November 23, 2016

Consumer Financial Protection Bureau

CFPB Sues Structured-Settlement-Factoring Company for Allegedly Unfair Lump-Sum Payouts

  • The Consumer Financial Protection Bureau (“CFPB”) filed a lawsuit against Access Funding, LLC, Reliance Funding, LLC, and its owners and related entities (“Access”), a structured-settlement-factoring company, for allegedly deceiving consumers into signing away future structured-settlement payments for “significantly lower” lump-sum payouts in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
  • According to the CFPB, Access allegedly misled consumers, particularly victims of lead-paint poisoning, into accepting low lump-sum payouts for future structured settlement payments by referring them to an “independent professional advisor” who was paid directly by Access, and also by falsely portraying that the receipt of cash advances bound consumers to not-yet-approved structured-settlement transfers.
  • The lawsuit requests that Access be permanently enjoined from participating in the structured-settlement industry, and among other things, seeks restitution, civil penalties, and disgorgement. As we previously reported last year, Maryland AG Brian Frosh has taken action against similar companies purchasing structured-settlements over concerns these companies target vulnerable individuals.


Consumer Protection

Vermont Attorney General Settles with Student Loan Debt Consolidator for Allegedly Failing to Provide Loan Consolidation Services

  • Vermont AG Bill Sorrell reached a settlement with student loan debt consolidator United Advisors Group LLC (“UAG”) to resolve allegations that the company violated Vermont’s Consumer Protection Act and the Vermont Debt Adjusters Act.
  • According to AG Sorrell, UAG allegedly offered aid to reduce consumers’ debt by consolidating student loans, but instead enrolled unsuspecting consumers in debt deferral programs and collected fees while consumers’ debt increased. UAG also allegedly failed to obtain a Debt Adjuster License and the necessary bond to operate in the state.
  • Under the terms of the Assurance of Discontinuance (“AOD”), UAG must cease its business within Vermont, and among other things, pay $6,500 to the AG’s office as a civil penalty and $5,022.14 to consumers for restitution.



California Attorney General Obtains Judgment Against Oil Company Over Alleged Hazardous Waste Law Violations

  • California AG Kamala Harris and nine California District Attorneys reached a settlement with BP West Coast Products, LLC, BP Products North America Inc., and Atlantic Richfield Company (collectively “BP”) to resolve allegations that the company violated California’s unfair competition and hazardous waste laws by failing to properly operate and maintain its fuel underground storage tanks.
  • According to AG Harris, since 2006, BP allegedly failed to properly monitor, inspect, and maintain underground storage tanks that store retail gasoline, tampered with leak detection devices, and improperly disposed of hazardous wastes from the tanks, among other things. BP also allegedly failed to test and inspect its secondary containment systems on a regular basis.
  • Under the terms of the final judgment and injunction, subject to court approval, BP must pay a total of $14 million, which includes civil penalties, attorneys’ fees and costs, and supplemental environmental projects. 


False Claims Act

New York Attorney General and U.S. Attorney’s Office Settle with Radiology Practice for Alleged False Claims Act Violations

  • New York AG Eric Schneiderman and the U.S. Attorney’s Office for the Eastern District of New York reached a settlement with Zwanger & Pesiri Radiology Group, Zwanger Radiology P.C., and Dr. Steven Mendelsohn (collectively “Zwanger”) to resolve allegations that the practice violated the federal and state False Claims Act.
  • According to AG Schneiderman, Zwanger allegedly submitted claims for procedures between 2003 and 2012 that were falsely reported to be supervised by a Medicaid- or Medicare-enrolled provider, and also submitted claims for procedures between 2008 and 2014 that were not ordered by a physician.
  • Under the terms of the settlement, Zwanger must pay $6,921,490.80 to the federal government, and $1,232,236.20 to the state in civil penalties. Zwanger was also the subject of a criminal trial, in which it agreed to forfeit $2.4 million.


Health Care

Washington Attorney General Settles with Urgent Care Provider Over Allegedly Inadequate Fee Disclosures

  • Washington Attorney General Bob Ferguson reached a settlement with CHI Franciscan Health to resolve allegations that the operator of three urgent care clinics violated the state Consumer Protection Act by failing to provide adequate fee disclosures to consumers and mislabeling billing charges.
  • According to AG Ferguson, CHI Franciscan’s urgent care clinics allegedly charged a facility fee due to its hospital affiliation without adequately disclosing this affiliation to consumers and mislabeled urgent care visits as emergency room visits for three months in 2015, causing consumers to pay higher than necessary out-of-pocket expenses.
  • Under the terms of the AOD, CHI Franciscan must forgive $995,515 in outstanding patient debt incurred between July 2014 and August 2016 and pay the state $55,000 in costs and fees for the investigation.



Six More AGs Join Multistate Lawsuit Against Pharmaceutical Company Over Alleged Attempt to Maintain Monopoly

  • Six more AGs have joined 36 other AGs in a multistate lawsuit against Indivior Inc., f/k/a Reckitt Benckiser Pharmaceuticals, Inc., MonoSol Rx, LLC, and related entities for allegedly violating the federal Sherman Act and state antitrust and consumer protection laws. As we previously reported, the original group of 36 AGs filed their first complaint in September 2016.
  • The AGs’ complaint, amended to include the newly-added AGs, asserts that Indivior, the makers of prescription opiate addiction treatment drug Suboxone, allegedly collaborated with MonoSol Rx to illegally “product hop” in order to extend patent exclusivity protection and delay generic alternatives from entering the market.


West Virginia Attorney General Settles with Three Drug Wholesalers for Alleged Failure to Detect Suspicious Drug Orders

  • West Virginia AG Patrick Morrisey, along with the West Virginia Departments of Health and Human Resources and Military Affairs and Public Safety, settled with prescription drug wholesalers Top Rx, Masters Pharmaceutical LLC, and J.M Smith Corporation, a/k/a Smith Drug Company, over allegations that the companies failed to detect, report, and stop an influx of suspicious drug orders for painkillers.
  • According to the original lawsuit filed by former AG Darrell McGraw in 2012, the pharmaceutical companies allegedly failed to implement anti-diversion controls by not creating monitoring programs to end illegal drug sales despite the companies’ alleged awareness of the likely illegitimate use for the prescription painkillers, which allowed drug abuse to spread throughout the state.
  • The individual settlements require payments of $200,000 each from Top Rx and Masters and $400,000 from J.M. Smith, and increases their responsibility in alerting the state police and the AG’s office of suspicious drug sales. As we previously reported, AG Morrisey has reached similar settlements with other prescription drug wholesalers.


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 U.S. Department of Justice (“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.