The State AG Report Weekly Update September 8, 2016

Consumer Protection

Iowa Attorney General Reaches Agreement with Retailer Over Supplement Labeling

  • Iowa AG Tom Miller reached an agreement with Wal-Mart Stores, Inc. (“Walmart”), to end the company’s use of an “independent verification” statement on store-brand dietary supplement labels.
  • According to the AG’s office, the phrase “Verified by an independent, certified laboratory” appeared on the labels of approximately sixty Walmart store-brand dietary supplements. The AG’s office alleged that the statement could lead consumers to believe that the supplements’ features had been verified when, in reality, a lab had only verified that ingredients listed on the supplement packaging were consistent with those contained in the supplement.
  • According to the letter agreement, Walmart will modify or cease to use the verification statement and will pay $100,000 to the AG’s office for consumer refunds, among other things.

Massachusetts Attorney General Settles with Debt Relief Company Over Alleged Unlawful Student Loan Practices

  • Massachusetts AG Maura Healey reached a settlement with student loan debt relief company Libre Technology, Inc., d/b/a Student Loan Service.US (“Libre”), to resolve allegations that the company used unfair and deceptive practices to target student loan borrowers.
  • According to the AG’s office, Libre allegedly charged consumers illegal upfront fees to receive debt relief assistance and falsely led customers to believe it was affiliated with the federal government.
  • Under the terms of the settlement, Libre must, among other things, refund $160,000 to Massachusetts consumers, clearly disclose to consumers that it is not affiliated with the federal government, and discontinue services for Massachusetts consumers that do not specifically request to continue the service.
  • AG Healey launched a Student Loan Assistance Unit in December 2015, and this settlement is that unit’s third enforcement action against a student debt relief company.

Nebraska Attorney General Settles with Waste Management Company for Allegedly Mishandling Recyclables

  • Nebraska AG Doug Peterson reached a settlement with Waste Connections of Nebraska, Inc., to resolve allegations that the company violated the Nebraska Consumer Protection Act and Uniform Deceptive Trade Practices Act related to the recycling services it offered in the city of Syracuse, Nebraska.
  • According to the AG’s office, Waste Connections improperly disposed of consumers’ curbside recyclable materials in a landfill rather than a recycling center, as promised, between 2012 and 2013.
  • Under the terms of the Assurance of Voluntary Compliance, Waste Connections must pay $50,000 to the city of Syracuse for beautification projects and pay $12,500 to the state, and must also properly collect, transport, and dispose of solid waste and recyclable materials and offer training to employees and contractors.



Rhode Island Attorney General Sues Gasoline Manufacturers Over Alleged Groundwater Contamination

  • Rhode Island AG Peter Kilmartin and the Rhode Island Department of Environmental Management filed a lawsuit against gasoline manufacturers that used a chemical additive which allegedly contaminated groundwater in the state and hired outside firms Baron & Budd, P.C., Weitz & Luxenberg, P.C., Rodman, Rodman & Sandman, P.C., and Pawa Law Group, P.C., to pursue these claims.
  • According to the complaint, gasoline manufacturers allegedly used the chemical additive methyl tertiary butyl ether (“MTBE”) to make fuel burn cleaner. The MTBE allegedly leaked from underground storage tanks to cause contamination to groundwater.
  • The lawsuit seeks past, present, and future costs associated with cleaning up contaminated groundwater. As we previously reported, Maryland AG Brian Frosh announced plans to pursue gasoline manufacturers over similar claims earlier this year.


Health Care

Kentucky Attorney General Files Suit Against Medical Device Companies Over Allegations of Marketing Harmful Medical Device

  • Kentucky AG Andy Beshear filed a lawsuit against Fresenius Medical Care Holdings, Inc., d/b/a Fresenius Medical Care North America, Fresenius USA, Inc., Fresenius USA Manufacturing, Inc., Fresenius USA Marketing, Inc., and Fresenius USA Sales, Inc. (collectively “Fresenius”), over allegations the companies violated state consumer protection, fraud, and common laws by marketing its GranuFlo Dry Acid Concentrate (“GranuFlo”), a product used in the kidney dialysis process, despite knowledge of adverse and deadly side effects.
  • According to the complaint, Fresenius allegedly marketed and received Medicaid payments to sell GranuFlo even though the companies were aware of a 2010 clinical study showing the product caused high bicarbonate levels in patients, leading to metabolic alkalosis, which is linked to arrhythmia, heart attacks, strokes, and death.
  • The complaint seeks, among other things, civil penalties of $2,000 for each violation of the Kentucky Consumer Protection Act and $10,000 for each violation of the Kentucky Consumer Protection Act affecting patients sixty or older, as well as punitive damages.



Alaska Attorney General Issues Formal Opinion Limiting “Marijuana Social Clubs”

  • Alaska AG Jahna Lindemuth issued a formal opinion concluding that the 2014 expansion of state law to legalize commercial marijuana sales does not permit the consumption of marijuana at unlicensed “marijuana social clubs,” which are physical venues where fee-paying patrons or members consume marijuana.
  • According to the opinion, Alaska state law does not permit the consumption of marijuana in unlicensed clubs because they either constitute “a place of business” where patrons pay owners to consume marijuana and thus require a license, or constitute public places where consumption is prohibited. Additionally, the opinion clarifies that distributing marijuana without a valid license violates state law, while offering marijuana samples under one ounce without a fee does not.
  • AG Lindemuth issued the opinion in response to a request from the Department of Commerce, Community, and Economic Development Commissioner Chris Hladick.



New York Attorney General to Investigate Pharmaceutical Company Over Alleged Antitrust Violations

  • New York AG Eric Schneiderman announced an investigation of Mylan N.V. over allegations that the company violated antitrust laws in sales contracts for its EpiPen Auto-Injector (“EpiPen”).
  • According to reports, Mylan allegedly offered schools the EpiPen4Schools discount program, which provided discounts to schools if they signed a one-year contract agreeing to refrain from purchasing competitors’ epinephrine injectors.
  • U.S. Senators Amy Klobuchar (MN) and Richard Blumenthal (CT) also requested that the Federal Trade Commission (“FTC”) investigate Mylan for possible violations of the FTC Act and the Sherman Antitrust Act related to the EpiPen4Schools discount program.

Massachusetts Attorney General Settles with Pharmacy Chain Over Alleged Failure to Monitor Drug Use Patterns

  • Massachusetts AG Maura Healey announced a settlement with CVS Pharmacy, Inc., to resolve allegations that the pharmacy retailer failed to monitor drug use patterns and use sound judgment when distributing controlled substances.
  • According to AG Healey’s office, CVS allegedly failed to provide pharmacists with access to the state’s Prescription Monitoring Program (“PMP”) prior to March 2013, allowing for commonly misused prescriptions, such as opioids, to be filled without checking for drug-seeking behavior. CVS also allegedly violated state laws and regulations by dispensing opioids to MassHealth members enrolled in the Controlled Substance Management Program in exchange for out-of-pocket payments.
  • Under the terms of the Assurance of Discontinuance, CVS must pay $795,000 to the state, of which $500,000 will be used to treat opioid dependence and addiction, provide its pharmacists with access to the PMP, review prescription holders’ prescription history prior to dispensing certain drugs, and update its written policies and procedures.