Multistate Actions

A bipartisan coalition of 48 attorneys general announced a $573 million settlement with McKinsey & Company for its role in the opioid epidemic. McKinsey & Company is one of the world’s largest consulting companies and allegedly advised Oxycontin maker Purdue Pharma on how to maximize profits, including by targeting high-volume opioid prescribers, using specific messaging to get physicians to prescribe more OxyContin to more patients, and circumventing pharmacy restrictions in order to deliver high dose prescriptions.

Led by Indiana Attorney General Todd Rokita and North Carolina Attorney General Josh Stein, a bipartisan coalition of 35 attorneys general filed an amicus brief supporting robocall enforcement in the U.S. Sixth Circuit Court of Appeals. The attorney general amicus brief asks the Sixth Circuit to reverse a district court case that held that the U.S. Supreme Court’s 2020 ruling in Barr v. AAPC invalidated the Telephone Consumer Protection Act’s prohibition on robocalls as to calls between 2015 and the date of the Supreme Court’s decision.

Led by Pennsylvania Attorney General Josh Shapiro, a multistate group of 5 attorneys general obtained a $4.2 million settlement with Citibank for overcharging customers on credit card interest. The agreement resolves allegations that Citibank failed to reevaluate and reduce its annual percentage rate (APR) for certain credit card accounts as required by the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). Restitution will be distributed by a claims administrator.

Led by Minnesota Attorney General Keith Ellison and New York Attorney General Letitia James, a bipartisan coalition of 33 attorneys general opposed a class action settlement allowing allegedly unlawful mortgage servicing fees in order to protect nearly one million homeowners. The brief filed by the attorneys general maintains that PHH Mortgage Corporation, successor by merger to Ocwen Loan Servicing, LLC, would be allowed to charge customers fees for making payments online or by phone when such fees are not authorized by contract. The attorneys general also object to the lack of adequate monetary relief for consumers.

Led by Colorado Attorney General Phil Weiser and Nebraska Attorney General Doug Peterson, a bipartisan coalition of 31 attorneys general sent comments urging the Federal Communications Commission to provide E-Rate funds for remote learning during the pandemic.

Massachusetts Attorney General Maura Healey, New York Attorney General Letitia James, and Virginia Attorney General Mark Herring joined the Consumer Financial Protection Bureau in suing Libre by Nexus alleging that the company preys on immigrants held in federal detention centers by offering to pay for their immigration bonds to secure their release, while concealing or misrepresenting the true nature and costs of its services.

Six states sued a New York investment advisor, alleging a $1.8 billion securities fraud scheme affecting 17,000 investors. The securities divisions from Alabama, Georgia, Illinois, Missouri, New Jersey, New York, and South Carolina, as well as the SEC, sued GPB Capital Holdings, LLC in separate actions. The actions in New Jersey, New York, and South Carolina were filed by attorneys general Gurbir S. Grewal, Letitia James, and Alan Wilson, respectively.

Led by Massachusetts Attorney General Maura Healey and New York Attorney General Letitia James, 17 attorneys general urged Congress to cancel up to $50,000 in federal student debt.

Individual Attorney General Actions

Arkansas Attorney General Leslie Rutledge obtained a $172,348 judgment against a deceptive roofing company, Greenhagen Exteriors, LLC and its owners Chance and Samone Greenhagen for failing to complete projects on time or make refunds.

California Attorney General Xavier Becerra announced a $5.75 million settlement with General Motors (GM), resolving allegations that GM made false and misleading statements to investors, including California’s largest pension system, regarding the costs GM would incur due to its ignition switch problems. Attorney General Becerra also announced a victory in his defense of California’s net neutrality law when a federal court denied a motion for preliminary injunction brought by a group of Internet service providers.

Delaware Attorney General Kathy Jennings filed a lawsuit against an unlicensed debt management company, Centerdon Group, Inc., n/k/a Hilvanim Group, Inc. The suit alleges Centerdon of misleading business practices in addition to licensure violations.

Hawaii Attorney General Clare E. Connors obtained an $834 million order against Bristol-Myers Squibb and Sanofi Aventis for allegedly failing to investigate and disclose the ineffectiveness of Plavix® for many patients, including Asian and Pacific Island patients. The court awarded a $1,000 civil penalty for each of the 834,012 prescriptions sold in Hawaii from 1998 to March 2010 when the FDA required the defendants to add a “black box” warning on the label accompanying the drug.

Kansas Attorney General Derek Schmidt obtained a consent judgment against a business selling counterfeit vaping products. Jay Ganesh, LLC and owner Vinodbhai Patel agreed to pay $30,000 to resolve the state’s claims.

Kentucky Attorney General Daniel Cameron secured a $766,765 settlement with travel company Voyageurs International, Ltd. to reimburse Kentucky students and chaperones for 2020 trips cancelled because of the COVID pandemic

Massachusetts Attorney General Maura Healey obtained a national settlement with major student loan servicer PHEAA (Pennsylvania Higher Education Assistance Agency, d/b/a FedLoan Servicing). The settlement allows borrowers in the federal Public Service Loan Forgiveness program to request detailed account reviews and PHEAA to make corrections, restoring borrowers to the correct eligibility status for loan forgiveness, or payments if account corrections are not possible. Attorney General Healey also obtained nearly $1 million in relief for homeowners harmed by mortgage servicing company Kyanite Services, Inc, former parent of now defunct servicer Seterus, Inc. The company allegedly mishandled loan modifications harming approximately 180 Massachusetts borrowers.

Missouri Attorney General Eric Schmitt secured $426,000 in restitution for customers of travel company Voyageurs International Ltd. in a settlement of charges that the company unlawfully imposed cancellation fees for 2020 European trips for high school students cancelled due to the pandemic. Attorney General Schmitt also obtained a default judgment against Missouri-based time share exit company Martin Management Group LLC and its owner and operator Steven Martin who allegedly failed to perform contracted for services or offer refunds despite allegedly offering money-backed guarantees for their services.

New Mexico Attorney General Hector Balderas sued manufacturers of antiretroviral HIV/AIDS treatment drugs alleging antitrust and unfair practices act violations. Balderas claimed that Gilead Sciences, Inc., Gilead Sciences, LLC, Bristol-Myers Squibb, and Teva Pharmaceuticals USA, Inc engaged in coordinated schemes and anticompetitive agreements to suppress the entry of cheaper generic versions of each drug into the market, and to delay the development of safer, more effective treatment drugs in order to maintain a stranglehold on the market for antiretroviral treatment.

New York Attorney General Letitia James won nearly $7 million in relief for defrauded investors and the removal of private equity fund manager Laurence Allen. Investors in the fund ACP X were harmed by Allen’s self-dealing and unlawful retention of funds. The New York trial court also ordered the appointment of a receiver to wind down the fund. Attorney General James also sent a letter urging the FDA to take swift action to set standards to remove toxic metals from baby food, following the release of a Congressional study finding the presence of metals in leading baby food brands. 

Ohio Attorney General Dave Yost sued a contractor who allegedly scammed vulnerable homeowners impacted by tornadoes in Dayton. Robert T. Green, through his business TK Home Improvement LLC, allegedly took nearly $100,000 from homeowners left vulnerable by the storm and did shoddy or no work at all.

Pennsylvania Attorney General Josh Shapiro settled with a drug treatment center to halt deceptive marketing. Freedom Healthcare of America, LLC allegedly misrepresented on its website that it was an independent resource for information but deceptively steered consumers to the company’s own treatment centers, including by placing its own phone number near other providers’ information without adequate branding.

Tennessee Attorney General Herbert Slatery III sued Food City Supermarkets, LLC for unlawful sales of opioids. The state’s complaint asserts that Food City’s conduct and its failure to maintain required effective controls against abuse and diversion have directly contributed to the ongoing opioid epidemic. 

Texas Attorney General Ken Paxton issued civil investigative demands to Robinhood, Discord, Citadel, and other stock trading platforms that suspended stock trading and investing during a period of high volume market activity related to GameStop and other stocks involved in a highly publicized “short squeeze.”

Attorney General Bob Ferguson obtained a judgment imposing a $100 million criminal fine against StarKist for its role in a nationwide conspiracy to manipulate the price of canned tuna. The partial summary judgment resolves some of the claims in the case; additional claims against StarKist and other defendants are continuing. Attorney General Ferguson also reached a $4.75 million settlement with LuLaRoe, a multi-level marketing business featuring women’s apparel. The settlement resolves allegations that LuLaRoe was operating a pyramid scheme.

The First Circuit Court of Appeals held unconstitutional a Maine law requiring cable companies to unbundle channels to allow consumers to subscribe to individual channels. The court held the 2019 law violated the companies’ First Amendment rights and affirmed an injunction issued by the district court.

Charities

California Attorney General Xavier Becerra announced the sentencing of an individual in an AIDS research fraud scheme. Donnelly Montenegro, a former acting officer of AIDS Research Alliance, pleaded guilty to portraying himself as an active staff member of the charity, which had actually dissolved, in order to steal more than $300,000 from a donor’s estate.

Missouri Attorney General Eric Schmitt obtained a guilty plea from the president of a Shop with a Cop organization for receiving stolen property in connection with her theft of more than $18,000 from the charity.

New Hampshire Deputy Attorney General Jane E. Young obtained a final judgment against Worldwide Push Foundation, Inc. in connection with a cancelled fundraiser involving road races called “Margarita Madness 5Ks.” The charity failed to return entry fees for the cancelled events and the court ordered refunds and other injunctive relief.

Veterans and Military

The U.S. Veterans Administration (VA) is extending existing moratoriums on evictions and foreclosures and loan forbearance opportunities through June 30, 2021. The current extensions were set to expire March 31, 2021.

The VA launched public guidance to further protect veterans’ personal information. The new online resource outlines nine principles for communicating clear expectations on how Veteran data is to be managed and viewed by Veterans, staff, VA partners and other stakeholders.

Legislation

A Congressional hearing on “Safeguarding American Consumers: Fighting Fraud and Scams During the Pandemic” was held on Thursday, February 4 by the U.S. House Committee on Energy & Commerce’s Subcommittee on Consumer Protection and Commerce. Central to the hearing were concerns expressed by committee members and witnesses regarding the challenge to the FTC’s authority to recover restitution when using Section 13(b) of the FTC Act pending at the U.S. Supreme Court in AMG Capital Management, LLC v. Federal Trade Commission. Committee members and witnesses not only expressed near unanimous support for taking action to ensure the FTC’s authority to obtain restitution in Section 13(b) cases, but also discussed other potential enhancements to the FTC’s authority and resources, including providing civil penalty authority and a consumer restitution fund similar to that of the CFPB. Also discussed was expanding FTC resources in terms of positions and salaries, as well as increasing the agency’s budget.

Arizona Attorney General Mark Brnovich has introduced legislation to simplify cancellation procedures for health club members. Under current Arizona law, gyms are only required to allow for cancellation of a membership if it is done in person or via certified mail. HB 2697 would update the law to allow for cancellation by regular U.S. mail, email, or on a gym’s website.

Florida Attorney General Ashley Moody unveiled legislation to strengthen senior protection by, inter alia, expanding the jurisdiction of the Office of Statewide Prosecution to include specified authority over crimes against elderly persons and disabled adults. The legislation also provides additional methods of proving abuse and exploitation of an elderly person or disabled adult by criminalizing the intentional isolation of vulnerable adults from family members.

Kentucky Attorney General Daniel Cameron, state legislators, and city and county government associations announced joint support for legislation regarding the use of opioid settlement dollars. Under the bill, the Commonwealth would receive 50% of settlement proceeds with the other 50% going to cities and counties. The Commonwealth’s portion would be managed by an advisory commission comprised of volunteer members representing, among others, victims of the crisis, law enforcement, and the treatment and prevention community.

The Virginia state legislature passed comprehensive data privacy legislation, making it the second state, (California is the other) to pass such legislation. The bill is expected to be signed by the governor. The law would go into effect Jan. 1, 2023 and would be enforced by the Virginia Attorney General’s Office.

Other articles in this edition include:

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