Hot News

Multistate Investigation Best Practices Announced by Attorneys General at NAAG Meeting 

  • At the National Association of Attorneys General (NAAG) meeting in Washington, DC, Colorado AG John Suthers and Missouri AG General Chris Koster announced proposed best practices that would significantly change the process for AG approval and oversight of multistate investigations and large-scale consumer investigations. 
  • AG Suthers and AG Koster outlined several important issues for AGs to consider in changing their approval policies, including confirming the existence of a sufficient legal and factual threshold prior to initiating an investigation or lawsuit and requiring AG consent for the commencement of any multistate investigation. 
  • The movement by AGs towards multistate reform is a significant change that will provide AGs with greater oversight and control over the actions of their staff, and will give targets sufficient time to prepare a response to the multistate. 
  • Our more in-depth blog post on these announcements can be found here. 

Consumer Financial Protection Bureau

Eleven Attorneys General Appeal Lawsuit Challenging Constitutionality of CFPB and Dodd-Frank 

  • Eleven AGs (as well as other appellants), filed briefs in the U.S. Court of Appeals for the D.C. Circuit in the case of State National Bank of Big Springs et al., v. Jacob J. Lew et al., Nos. 13-5247, 13-5248. The original lawsuit, which was dismissed by the U.S. District Court for the District of Columbia, posed a constitutional challenge to the Consumer Financial Protection Bureau and the Dodd-Frank Act. The District Court ruled that the appellants did not have standing to sue and did not show financial injury because of Dodd-Frank.
  • In the newly filed appeal brief, the AGs stated that the District Court erred in ruling that they lacked standing to bring constitutional challenges to Title II of Dodd-Frank. The AGs asserted that they were injured by Title II of Dodd-Frank, which they argued superseded and abridged the Bankruptcy Code's guarantee that similarly situated creditors are entitled to equal treatment.
  • The AGs also stated that their constitutional claims are ripe before liquidation under Title II, arguing that Title II itself prohibits courts from hearing the States' constitutional claims after liquidation begins.

Consumer Protection

Washington Attorney General Settles With Online "File Locker" Company for Allegedly Deceptive Business Practices

  • In relation to allegations of deceptive business practices in violation of Washington's Consumer Protection Act, the Washington AG Bob Ferguson's Office settled with Ultra Mega Corp, LLC, also known as ultramegabit.com, for $20,000 and restitution to consumers who were charged for automatic renewals. Ultramegabit.com is a "file locker" website that stores files online and provides file download options.
  • According to the AG's office, Ultra Mega Corp failed to adequately disclose automatic renewals of member subscriptions, did not adequately identify copyrighted material that could not be downloaded, and led members to believe that all content could be legally downloaded by charging for access to content. 
  • The AG's office commented that the most popular files stored on the site are potentially copyrighted works, such as television shows and movies and the members may "unknowingly download copyrighted content illegally, opening themselves up to potential lawsuits by content owners."

Environment

Illinois Attorney General Proposes Coke and Coal Dust Regulations 

  • Illinois AG Lisa Madigan, in conjunction with Rep. Barbara Flynn Currie, proposed new legislation to regulate bulk materials storage facilities that handle petroleum coke ("pet coke") and other refinery production materials in response to the air pollution violations of several Chicago facilities. 
  • House Bill 5939 prescribes specific operating and maintenance practices to minimize emissions of airborne particulate matter from storage, processing, and transloading of pet coke, metallurgical coke, and coal near specific areas, such as homes, schools, and hospitals. The bill would impose several protections, including: 
    • Requiring transfer and processing to occur indoors or with operation of dust suppression systems
    • Covering loads during transit
    • Paving and regularly cleaning roads used for transit
    • Requiring more permits
    • Conducting air monitoring 
  • "The goal of the legislation is to protect the health and safety of residents living near storage facilities and to prevent companies from relocating and perpetuating this problem in other Illinois communities," according to AG Madigan. 

Intellectual Property

National Association of Attorneys General Sends Letter to Senate Committee Leaders Regarding "Patent Troll" Legislation 

  • The National Association of Attorneys General sent a letter signed by 42 AGs to the United States Senate committee leadership offering support for federal patent reform legislation S. 1720 and H.R. 3309, which will help limit the power of patent trolls. 
  • The letter stated, "So-called patent trolls stifle innovation and harm our economy by making dubious claims of patent infringement and using the threat of expensive litigation to extort money from small businesses and nonprofits." 
  • The AGs also suggested amendments to the legislation, including: 
    • Confirmation that state AGs have concurrent authority to bring the same types of enforcement actions under state law
    • Confirmation that state courts have personal jurisdiction over entities that direct unfair or deceptive patent demand letters into the state
    • Increased transparency for patentees that send demand letters by requiring disclosure of those with a financial interest in the patent at the time a patent demand letter is sent rather that at the time a patentee files a civil action alleging infringement. 

Medicaid Fraud/ False Claims Act

Tennessee Attorney General Settles False Claims Act Allegations With Mental Health Provider   

  • Tennessee AG Robert E. Cooper, Jr. settled with A.I.M. Center, Inc. (AIM), a community mental health facility, for $800,000 related to allegations that it violated the federal False Claims Act and the state Medicaid False Claims Act.
  • The investigation by AG Cooper began with a qui tam action filed by a former member of AIM. AIM allegedly knowingly submitted false claims to the state Medicaid program by overcharging for rehabilitation services in a practice known as "upcoding." AIM also allegedly concealed its obligation to return funds that were improperly paid to the Medicaid program. 
  • AG Cooper stated, "Mental and behavioral health services are a vital component of the care provided to [state Medicaid] recipients. This office will continue to pursue providers that improperly bill for these needed services."

Pharmaceuticals/ Medicaid Fraud/ False Claims Act

Several Attorneys General and the Federal Government Settle With Endo Pharmaceuticals for $171.9 Million 

  • Several AGs and the federal government settled with Endo Pharmaceuticals Inc. for $171,910,153 to resolve state and federal Medicaid and Medicare, unlawful marketing, and federal False Claims Act allegations related to the prescription drug Lidoderm. 
  • The FDA approved Lidoderm for treatment of pain associated with post-herpetic neuralgia, known as "shingles." Endo allegedly violated the federal False Claims Act and knowingly practiced unlawful marketing by promoting Lidoderm for lower back pain and chronic back pain. Endo also allegedly caused claims for payment of Lidoderm to be submitted to state and federal Medicaid and Medicare programs that did not cover Lidoderm for conditions not approved by the FDA. 
  • As part of the settlement, Endo also entered into a deferred prosecution agreement with the United States Attorney's Office for the Northern District of New York and the Consumer Protection Branch of the United States Department of Justice for allegations of misbranding Lidoderm in violation of the Federal Food, Drug, and Cosmetic Act. 

State AGs in the News

District of Columbia Attorney General Settles With Online Travel Companies for $60.9 Million in Back Taxes 

  • District of Columbia AG Irvin B. Nathan announced a contingent settlement for $60.9 million with six online travel companies relating to back taxes for hotel rooms booked online. The settlement is contingent upon the D.C. Court of Appeals affirming a Superior Court ruling that established tax liability. 
  • The six travel companies allegedly sold hotel rooms in the District at retail prices, but remitted taxes for those rooms based on the lower wholesale prices that they paid to those hotels. The District argued that the travel companies owed taxes based on the retail price of the room.
  • If the District wins on appeal, the recovery would be the largest ever received by the city in a case it litigated. AG Nathan stated, "This case sends the message that the District will vigorously enforce its tax laws and that all corporations, no matter their size or industry, have to pay their fair share of taxes." 

Pennsylvania High Court Rules State Agency Cannot Assert Attorney-Client Privilege in AG Probe

  • The Supreme Court of Pennsylvania ruled that a state agency could not assert attorney-client privilege or the work product doctrine to prevent the Pennsylvania AG, during a grand jury investigation, from reviewing allegedly privileged or protected communications between the agency and its counsel. 
  • The opinion, In Re: Thirty-Third Statewide Investigating Grand Jury, No. 85 MM 2012 (Pa. Feb. 18, 2014), affirmed the Investigating Grand Jury, which denied a motion by the Pennsylvania Turnpike Commission for a protective order that sought to prohibit the AG from reviewing communications between the Commission and its attorneys. The Grand Jury was investigating whether the Commission violated criminal statues in connection with its employment and procurement practices. 
  • The court reasoned that because the agency was being investigated by the commonwealth itself in grand jury proceedings for suspected wrongdoing, that the client of the agency's attorneys is the public and the public impliedly waived privilege and protection.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.