United States: State AGs In The News - June 12th, 2014

Hot News

Attorneys General Discuss Possible Approaches to Prescription Drug Abuse Problem

  • The dangers of prescription drug abuse continue to be a huge concern for regulators at every level, including state AGs. This week at the National Association of Attorneys General summer meeting in Mackinac Island, Michigan, AGs furthered their discussions of such abuse and possible tools to combat the problem.
  • To read about what AGs have been and will be doing to fight prescription drug abuse, visit our recent blog post on this topic.

2014 Election

Arkansas Primary Runoff Election Results

  • Leslie Rutledge defeated David Sterling for the Republican nomination by a margin of 58.94% to 41.06% with all of the precincts reporting. Rutledge will face Nate Steel (D) in November's general election. Incumbent AG Dustin McDaniel (D) is term limited.

Nevada Primary Election Results

  • Ross Miller (D) and Adam Laxalt (R) received their respective party's nomination after both ran unopposed in the primary. Incumbent AG Catherine Cortez Masto (D) is term limited.

North Dakota Primary Election Results

  • Incumbent AG Wayne Stenehjem (R) and Kiara Kraus-Parr (D) received their respective party's nomination after both ran unopposed in the primary.

South Carolina Primary Election Results

  • Incumbent AG Alan Wilson (R) and Parnell Diggs (D) received their respective party's nomination after both ran unopposed in the primary.

Connecticut Primary Election Candidates

  • The Connecticut filing deadline was on June 10. The candidates for the primary election are incumbent AG George Jepsen (D), Kie Westby (R), and Stephen Fournier (Green).

District of Columbia Court of Appeals Rules in Favor of Attorney General Election in 2014

  • The District of Columbia (DC) Court of Appeals ruled that an election for the attorney general position must be held in 2014 unless it would not be "practically possible" for the board of elections to do so under applicable statutory and regulatory provisions. If DC can establish that an election is not practically possible in 2014, the court stated that the election must be held as soon as practically possible in 2015.
  • Paul Zukerberg, a potential AG candidate, brought the lawsuit to place the DC AG position on the ballot in 2014. Zukerberg argued that the DC Charter, which reads, "[t]he first election for the position of Attorney General shall be after January 1, 2014," prohibited the DC Council from delaying the election.
  • The DC Court of Appeals stated that the language was ambiguous when considered in isolation and could mean "the following day, any time after that date, or some point in between." The court held that when examined in the broader context of the D.C. Code, however, that "the far more natural reading" of that language would be that the election "must be held in 2014."
  • According to a news report, current AG Irvin Nathan stated that he would seek an en banc review of the case. The case is currently on remand to the DC Superior Court.

We will continue to provide updates on AG-related elections. For breaking news, please follow us on Twitter @StateAGMonitor.

Antitrust

Amicus Brief Filed by 23 Attorneys General Regarding Application of Federal Antitrust Laws to State Regulatory Boards

  • Twenty-three AGs, led by West Virginia AG Patrick Morrisey, filed an amicus brief in the U.S. Supreme Court in support of a state regulatory board in the case of North Carolina State Board of Dental Examiners v. Federal Trade Commission.
  • The AGs argue that the state board, which is staffed by professionals in the field, is not a private actor and that the state action exemption to federal antitrust law applies. They also argue that application of federal antitrust laws to state regulatory boards would interfere with the states' self-governance and sovereign authority to regulate industries within their borders.

Consumer Protection

Missouri Attorney General Settles Pricing Lawsuit With Major Retailer

  • Missouri AG Chris Koster and Walgreens settled a lawsuit brought by the AG alleging false, misleading, and deceptive retail pricing in Walgreens' Missouri stores.
  • Pursuant to the settlement, Walgreens agreed to use an independent auditor to audit 25 percent of the Missouri stores each quarter for three years and to pay penalties for any failed inspections. In the settlement, the company did not admit any wrongdoing.

Massachusetts Attorney General Settles With Motorcycle Financial Services Company

  • Massachusetts AG Martha Coakley settled with Harley-Davidson Financial Services, Inc., to resolve allegations that it failed to pay required refunds to borrowers under its motorcycle finance agreements.
  • The company allegedly failed to refund all finance contract enrollment fees, which are fees typically paid by borrowers for special loan terms and refunded in a prorated amount if the borrower pays off the loan early.
  • The company will pay $228,000 in restitution to consumers and $25,000 to the state. It has also agreed to follow policies and procedures that ensure borrowers always obtain refunds.

West Virginia Supreme Court Affirms $14 Million Judgment Against Loan Company

Energy

Michigan Attorney General Files Additional Charges Against Energy Company for Alleged Racketeering and Fraud

  • Michigan AG Bill Schuette filed additional criminal charges against Chesapeake Energy Corporation alleging racketeering and fraud. Chesapeake allegedly obtained uncompensated land options from landowners using false pretenses and prevented competitors from leasing the land.
  • In March, the AG had charged Chesapeake and Encana Oil & Gas USA with alleged antitrust violations with regard to private land leasing and the state land auction. In May, Encana settled with the AG for $5 million.
  • The AG is now charging Chesapeake with one count of conducting criminal enterprises and eight counts of false pretenses. Representatives from the company are scheduled to be arraigned on June 25 before Cheboygan County's 89th District Court.

Environment

Oil Spill Lawsuit Allowed to Proceed

  • A judge for the U.S. District Court for the Eastern District of Arkansas ruled that a lawsuit brought against ExxonMobil by Arkansas AG Dustin McDaniel, on behalf of the Arkansas Department of Environmental Quality, and the U.S. AG, on behalf of the U.S. Environmental Protection Agency, will be allowed to proceed.
  • The lawsuit, resulting from a pipeline rupture and oil spill in March 2013, alleges violations of the state and federal pollution and hazardous materials laws.
  • ExxonMobil argued that the plaintiffs did not state a claim or otherwise establish that the company should have to pay penalties for the spill. The court disagreed.

Vermont Attorney General Sues Gasoline Refiners for Alleged Groundwater Pollution

  • Vermont AG Bill Sorrell sued more than two dozen gasoline refiners, manufacturers, and suppliers of the gasoline additive methyl tertiary butyl ether (MTBE) for alleged pollution of state groundwater.
  • AG Sorrell alleges that the companies promoted, marketed, and distributed gasoline containing MTBE knowing that it was hazardous and posed risk to groundwater. AG Sorrell also alleges that the companies failed to inform state regulators, resellers, or consumers of the hazards or means to mitigate these hazards.
  • The complaint claims violations of the state groundwater protection act, design defect, failure to warn, public and private nuisance, trespass, negligence, and civil conspiracy. The AG seeks compensatory and punitive damages, injunctive and equitable relief, costs, and interest.

Pennsylvania Attorney General Investigation Leads to Criminal Environmental Charges

  • An investigation by Pennsylvania AG Kathleen Kane led to a grand jury recommending criminal charges against Minuteman Towing Inc., Minuteman Spill Response Inc., Minuteman Environmental Services Inc. (collectively Minuteman), Bolus Truck Parts and Towing Services Inc., the owners of these companies, and family members of the owners.
  • Prosecutors charge that Minuteman allegedly violated both the state Clean Streams Law and Solid Waste Management Act by unlawfully disposing of and/or burying waste in the ground. Prosecutors also found that Minuteman and its owner allegedly overbilled businesses, and that several of the owner's family members were allegedly added to the payroll for Minuteman and Bolus and submitted increased health care premiums for the group health insurance.
  • The company responded that the charges are "baseless and without merit" and that it will defend itself against them.

Financial Industry

Court Remands Lawsuits Against Financial Rating Agency for Lack of Federal Jurisdiction

  • The U.S. District Court for the Southern District of New York remanded lawsuits brought by 17 AGs against Standard & Poor's Financial Services LLC (S&P) for lack of federal jurisdiction. The decision effectively vacated an order by the U.S. Judicial Panel on Multidistrict Litigation (MDL), closed the MDL proceeding, and dismissed two related lawsuits brought by S&P against South Carolina and Tennessee.
  • The suits, filed in state courts, alleged that S&P violated consumer protection and deceptive trade practices acts by misrepresenting the objectivity of its rating service. S&P had the cases removed to federal court and the AGs moved to remand.
  • California, Connecticut, and Illinois have lawsuits against S&P that remained in state court. The U.S. Department of Justice also has a lawsuit pending in the U.S. District Court for the Central District of California.

Health Care

Kentucky Attorney General Settles for $3.7 Million With Hematology and Oncology Center

  • Kentucky AG Jack Conway , the U.S. Attorney for the Western District of Kentucky, and the U.S. Department of Health and Human Services settled for $3.7 million with Elizabethtown Hematology and Oncology, PLC and its owners (collectively Elizabethtown) to resolve allegations that it submitted or caused to be submitted false claims to health care programs.
  • Elizabethtown allegedly extended chemotherapy treatment times to maximize reimbursements and billed unnecessary office visits for infusion therapies.
  • Pursuant to the settlement, Elizabethtown will also enter into a three-year corporate integrity agreement that requires enhanced accountability and monitoring.

Medicaid Fraud

Louisiana Attorney General Settles with Abbott Laboratories for $9.5 Million to Resolve Allegations of Medicaid Fraud

  • Louisiana AG Buddy Caldwell settled with Abbott Laboratories for $9.5 million to resolve allegations that it misbranded its drug Depakote, an antiepileptic medication, by promoting it to control agitation and aggression in elderly dementia patients and to treat schizophrenia without obtaining approval from the U.S. Food and Drug Administration.
  • Forty-nine other states and the District of Columbia previously settled with Abbott on similar allegations for $1.5 billion.

Pharmaceuticals

Forty-Five Attorneys General Settle for $105 Million With a Pharmaceutical Company to Resolve Unlawful Marketing Allegations

  • Forty-five attorneys general, led by Illinois AG Lisa Madigan and Oregon AG Ellen Rosenblum, settled allegations of violation of consumer protection laws with GlaxoSmithKline, LLC.
  • The AGs alleged that GlaxoSmithKline misrepresented and improperly promoted the uses, qualities, and benefits of its asthma drug, Advair, and its antidepressant drugs, Paxil and Wellbutrin.
  • Pursuant to the settlement, GlaxoSmithKline will pay $105 million, which a multistate executive committee will divide amongst the states and the District of Columbia. In addition, the company agrees not to make any false, misleading, or unapproved claims and will revise some of its practices, including those used for marketing and responding to health care provider questions. It will also continue a program that addresses compensation of sales representatives to reduce any financial incentives to engage in deceptive marketing. The company did not admit to any wrongdoing.

State AGs in the News

Mississippi Attorney General Elected NAAG President

States v. Federal Government

West Virginia Attorney General Writes Letter Objecting to Proposed Carbon Emissions Rule

  • West Virginia AG Patrick Morrisey wrote a letter to the U.S. Environmental Protection Agency (EPA) objecting to the EPA's proposed rule to cut carbon emissions for existing power plants.
  • Last week we blogged about the AGs' responses to the proposed rule, including both objections to and support for the proposal. In AG Morrisey's letter, which is a follow up to his initial response last week, he argues that the proposed rule violates the Clean Air Act. He also describes the EPA's plan as "legally flawed" and urges it to withdraw the proposal.

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