The State AG Report Weekly Update September 10, 2015


Michigan Attorney General Sends Notice of Intent to Sue to Charitable Organization for Alleged Violations of State Charities Law

  • Michigan AG Bill Schuette ordered Childhood Leukemia Inc. (“CLF”) to cease and desist unsolicited phone calls to Michigan residents and issued a Notice of Intended Action against the company for alleged violations of the state charitable solicitations law.
  • According to the Notice of Intended Action and Cease and Desist Order, CLF allegedly failed to honor consumer requests to be placed on the do-not-call list and filed false and misleading financial statements that overstated their charitable activities.
  • AG Schuette plans to bring a civil action against CLF for injunctive relief and civil fines of up to $210,000, if he does not receive a “satisfactory response” within 21 days.

Consumer Financial Protection Bureau

CFPB Settles With Two Largest Debt Buyers and Debt Collectors for Alleged Deceptive Tactics

  • The Consumer Financial Protection Bureau (“CFPB”) settled with Encore Capital Group and Portfolio Recovery Associates for engaging in debt collection and litigation practices that violated the Consumer Financial Protection Act of 2010, the Fair Debt Collection Practices Act, and the Fair Credit Reporting Act.
  • According to the Consent Orders, Encore Capital Group and Portfolio Recovery Associates allegedly, among other things, attempted to collect on unsubstantiated or inaccurate debt and engaged in unlawful litigation practices, including filing lawsuits they had no intention of litigating, threatening legal action after the statute of limitations had passed, and misrepresenting their chances of litigation success.
  • The consent orders require Encore Capital Group and Portfolio Recovery Associates to refund collected payment to consumers of $42 million and $19 million, respectively, to stop reselling debts to third parties, to cease collecting on current debts, and to pay civil penalties of $10 million and $8 million, respectively.

Consumer Protection

FDA Warns Tobacco Companies That Advertise "Natural" and "Additive-Free" Tobacco Products

  • The Administration issued warning letters to three tobacco manufacturers, ITG Brands LLC, Santa Fe Natural Tobacco Company Inc., and Sherman’s 1400 Broadway N.Y.C. Ltd, notifying the manufacturers that they are in violation of federal law by marketing their cigarettes as “natural” and “additive-free.”
  • According to the FDA, the manufacturers cannot make such claims unless the agency has reviewed the scientific support for their claims and issued an order permitting the products to be commercially marketed.
  • Indiana AG Greg Zoeller and Maine AG Janet Mills, who serve as chair and vice-chair, respectively, of the National Association of Attorneys General (“NAAG”) Tobacco Committee, “applauded” the FDA’s action, and renewed their calls for the agency to regulate e-cigarettes as they do tobacco products.

Missouri Attorney General Settles with Home-Security Company for Using Allegedly Misleading Sales Tactics

  • Missouri AG Chris Koster reached a settlement with Vivint, Inc., f/k/a APX Alarm Security Solutions, Inc., a home-security company, over allegations it violated state consumer protection laws by using misleading sales tactics in its door-to-door sales.
  • According to AG Koster, the company’s sales people misrepresented, among other things, who they worked for, the length of time consumers had to rescind their contracts, and the local crime rates. The company also automatically extended consumers’ contracts for a year after the initial terms expired.
  • Under the agreement, the company will make changes to its business practices, pay $50,000 in restitution, and pay $15,000 in costs.

False Claims Act

Georgia Attorney General and the Federal Government Settle with Hospital System for Alleged False Claims Act Violations

  • Georgia AG Sam Olens and the federal government reached a settlement agreement with Columbus Regional Hospital System (“CHRS”), a non-profit health care system, and a subsidiary, to resolve allegations it violated state and federal false claims acts.
  • According to AG Olens, CHRS allegedly submitted claims for services at higher billing levels than was supported by documentation, for radiation therapy that did not meet necessary requirements, and for prohibited remuneration for the referral of Medicaid patients.
  • Under the terms of the settlement, CHRS will pay $25 million to the state and the federal government, plus up to $10 million in additional payments.  According to the AG’s press release, the case began as a qui tam action.