The State AG Report Weekly Update September 7, 2017


Washington Attorney General Files Antitrust Lawsuit Against Health Care Providers Over Alleged Price-Fixing

  • Washington AG Bob Ferguson filed a lawsuit against health care providers Franciscan Health System d/b/a CHI Franciscan Health and Franciscan Medical Group (collectively, "CHI Franciscan”), The Doctors Clinic, A Professional Corporation (“TDC”), and WestSound Orthopaedics, PS for allegedly violating the Sherman Act, the Clayton Act, and the Washington Consumer Protection Act.
  • According to the complaint, CHI Franciscan’s acquisition of WestSound Orthopaedics, PS and affiliation with TDC in 2016 combined the three largest providers of orthopedic physician services in the region and allegedly led to decreased competition and increased prices.
  • The lawsuit seeks to undo the two transactions and to obtain damages on behalf of the state and consumers, civil penalties, attorneys' fees, and other relief deemed just and proper.

Consumer Financial Protection Bureau

CFPB Takes Action Against Online Lead Aggregator Over Allegedly Illegal and Unlicensed Loans

  • The Consumer Financial Protection Bureau (“CFPB”) took action against online lead aggregator Zero Parallel, LLC (“Zero Parallel”) regarding allegations that it violated the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) by steering consumers to illegal or unlicensed loans.
  • According to the CFPB, Zero Parallel violated Dodd-Frank by allegedly connecting consumers with payday or installment lenders that “resulted in, or was likely to result in,” loans that were void in whole or in part under the laws of the consumer’s state of residence based on state-licensing requirements or interest-rate limits.
  • The consent order requires Zero Parallel to pay a $100,000 civil penalty to the CFPB’s Civil Penalty Fund and to ensure loans resulting from applications that it sells are not void under the laws of the consumer’s state of residence.

Consumer Protection

Ohio Attorney General Files Lawsuit Against Finance Consulting Firm for Allegedly Failing to Deliver Promised Services

  • Ohio AG Mike DeWine filed a lawsuit against Erika Taylor Consulting, Minority Credit & Finance Commission, and their owners (collectively “Erika Taylor Consulting”) for allegedly violating the state’s Consumer Sales Practices Act by failing its promise to connect consumers to an anonymous benefactor.
  • According to the complaint, Erika Taylor Consulting allegedly claimed to be part of “The Gift” project—a purported philanthropic project funded by a wealthy, anonymous benefactor that ‘gifts’ individuals up to $14,000 after completing a background check and paying a consulting fee—but, failed to provide consumers the promised money after paying fees.
  • The lawsuit seeks a declaratory judgement, a permanent injunction enjoining Erika Taylor Consulting from engaging in consumer transactions until restitution is awarded, reimbursements for all affected consumers, a $25,000 civil penalty, and court costs and attorneys’ fees.

Data Privacy

32 AGs, FTC Reach Settlement with Computer Manufacturer Over Alleged Privacy Violations

  • 32 AGs and the Federal Trade Commission (“FTC”) reached a settlement with computer manufacturer Lenovo, Inc. to resolve allegations that it violated the FTC Act and state consumer protection laws when it pre-loaded ad software that compromised consumers’ privacy and security.
  • According to the FTC’s complaint, Lenovo allegedly sold consumer laptops that came with “man-in-the-middle” software pre-installed, which allowed third-party advertisers access to consumers’ sensitive personal information, delivered targeted ads, and created security vulnerabilities without consumers’ consent.
  • Under the terms of the settlement, Lenovo will pay $3.5 million to the states, is prohibited from misrepresenting any features of software preloaded on laptops, and must institute a security program subject to third party audits.

False Claims Act

Maryland Attorney General Reaches Settlement with College Over Use of State Funds

  • Maryland AG Brian Frosh reached a settlement with Sojourner-Douglass College, Inc. (“Sojourner-Douglass”) to resolve allegations that the college violated the terms of a state grant program aimed at increasing the number of nurses in Maryland.
  • According to the AG’s office, Sojourner-Douglass allegedly failed to spend grant funds on authorized activities, did not document how they used grant funds, and did not return unused funds to the state.
  • According to the AG’s office, the consent judgment requires Sojourner-Douglass to pay $400,190 to the state.

State AGs in the News

Attorneys General Respond to the Trump Administration’s Rescission of DACA

  • The Trump Administration will rescind the Obama Administration-era memo authorizing the Deferred Action for Childhood Arrivals (“DACA”) policy, which allowed unauthorized immigrants who were brought to the U.S. as children to apply for deferred action on deportation and to apply for work permits.
  • The Administration’s announcement was reportedly prompted by a coalition of 10 AGs, led by Texas AG Ken Paxton, who penned a letter to the Trump Administration that promised to dismiss an earlier multistate lawsuit challenging deferred action programs if the Administration announced plans to rescind the DACA, or to expand the lawsuit if the Administration did not. Tennessee AG Herbert Slatery, originally a member of the 10 AG lawsuit, withdrew his state from the lawsuit before DACA’s repeal was officially announced.
  • A coalition of 16 AGs, led by New York AG Eric Schneiderman, Washington AG Bob Ferguson, and Massachusetts AG Maura Healey, subsequently filed a lawsuit seeking to stop the repeal, which the AGs contend violates the Due Process and Equal Protection Clauses of the U.S. Constitution and harms the residents, institutions, and economies of their respective states.