United States: State AGs In The News - July 3rd, 2014

Hot News

CFPB Exercises Both Supervisory and Enforcement Authority

  • The Consumer Financial Protection Bureau (CFPB) continues to assert itself in the consumer credit card market, exercising both its supervisory and enforcement authority in finding that GE Capital Retail Bank, now operating as Synchrony Bank, allegedly engaged in discriminatory and deceptive practices against consumers.
  • The two-part settlement reached with the CFPB and the U.S. Department of Justice orders GE Capital to pay a record $225 million. To learn more, please read our blog post about this settlement.

Antitrust

Massachusetts Attorney General Reaches Final Agreement With Partners HealthCare

  • Massachusetts AG Martha Coakley reached a final agreement with Partners HealthCare to resolve her antitrust investigation of the organization and its acquisition of South Shore Hospital.
  • A consent judgment was filed in Suffolk Superior Court seeking review and approval of the agreement. The judge denied a motion to intervene filed by Partners' competitors, but ordered a three-week comment period before ruling on the agreement.
  • The agreement will allow payers to split Partners into separate contracting entities, prevent Partners from contracting with affiliate physician groups that are not part of its owned hospitals, cap health costs at the rate of inflation, cap its physician growth, and block further hospital expansion in the eastern part of the state.
  • We previously blogged about the agreement in principle that AG Coakley had reached with Partners regarding its acquisition of South Shore and Hallmark Health Systems. Review of the Hallmark transaction is still ongoing.

Charities

New York Attorney General Settles With Fundraisers for Record $24.6 Million

  • Following an investigation, New York AG Eric Schneiderman settled with Quadriga Art and Convergence Direct Marketing, two for-profit mail vendors of the Disabled Veterans National Foundation, to resolve allegations of engaging in misleading solicitations and failing to disclose conflicts of interest.
  • Pursuant to the settlement, Quadriga will pay $9.7 million in damages and Convergence will pay $300,000. The money will be used to help support disabled veterans. In addition, Quadriga will pay $800,000 in costs and fees, forgive $13.8 million in debt owed to it by the foundation, and institute reforms to improve transparency and its ethics practices.
  • The settlement is believed to be the largest amount of financial relief obtained in the United States for allegedly deceptive charitable fundraising.

Climate Change

Nine Attorneys General File Amicus Brief Opposing Proposed Power Plant Rules

  • Nine AGs, led by West Virginia AG Patrick Morrisey, filed an amicus brief in the U.S. Court of Appeals for the DC Circuit urging the court to declare the U.S. Environmental Protection Agency's (EPA) proposed regulations to reduce carbon emissions illegal.
  • "In its proposed rule, EPA is blatantly violating the Clean Air Act," stated AG Morrisey. He also said that the U.S. Supreme Court's recent decision in Utility Air Regulatory Group v. Environmental Protection Agency, "rejected another effort by EPA to 'bring about an enormous ... expansion in EPA's regulatory authority without clear congressional authorization.' The proposed rule for existing coal-fired power plants at issue in the present lawsuit is even more obviously illegal than the rule the Supreme Court struck down. EPA's proposed rule here is not just without 'clear' congressional authorization, but is directly and unambiguously prohibited by the Clean Air Act."
  • We previously blogged about Alabama AG Luther Strange's testimony to Congress on this issue and AGs' responses to these proposed rules, including West Virginia AG Patrick Morrisey's letter to the EPA.

Consumer Protection

Attorneys General and the Federal Government Obtain Judgment Against Telemarketers for $255 Million

  • Florida AG Pam Bondi, New York AG Eric Schneiderman, and the Federal Trade Commission (FTC) settled with Tax Club, Inc. (which also does business as Success Merchant Services, Corporate Tax Network, and Corporate Credit) and its owners (collectively, Tax Club) to resolve allegations that they engaged in deceptive business practices and false advertising.
  • Tax Club allegedly called consumers repeatedly, falsely claimed affiliation with companies that the consumers had already done business with, and misled consumers about their home-based business services. Tax Club also allegedly charged a large initial fee and recurring monthly membership payments for their services, but had a restrictive refund policy. The AGs and the FTC asserted that many of the offered services were allegedly unnecessary or never provided.
  • The AGs and the FTC obtained judgments against Tax Club for $255 million, which will be suspended upon surrender of certain assets valued at almost $16 million. The settlement prohibits Tax Club, subject to some exemptions, from selling business coaching services and work-at-home opportunities; misrepresenting material facts; selling or otherwise benefiting from consumers' personal information; and violating the Telemarketing Sales Rule, which prohibits abusive and deceptive telemarketing acts.

Indiana Attorney General Settles Tobacco Dispute

  • Indiana AG Greg Zoeller settled a longstanding dispute with major tobacco companies resulting in a net amount of approximately $217 million to be paid to the state during this year and next.
  • An arbitration panel had ruled that six states had not diligently enforced laws in 2003 requiring escrow payments from tobacco companies that did not participate in a 1998 master settlement agreement. The six states, including Indiana, had not settled their cases during the arbitration. The arbitration panel had ordered that those six states were responsible not only for their own share of the loss, but also for the shares of the states that had settled their cases.
  • AG Zoeller filed a motion to vacate in state court objecting to the arbitration panel's decision. Relatedly, we recently blogged about a Missouri state court decision that partially vacated this arbitration panel ruling.

North Dakota Attorney General Suspends Activity of Door-to-Door Salespeople

  • North Dakota AG Wayne Stenehjem suspended all sales and installations of satellite television services in the state by Dish One Satellite, LLC, due to alleged aggressive and misleading sales tactics.
  • The company allegedly violated state consumer fraud laws by not carrying identification, making false and misleading statements, using contracts without proper cancellation notices, and not providing written copies of contracts.
  • "I am reserving a decision on issuing a Cease & Desist Order or other formal legal action, pending the outcome of the investigation and a determination on the cooperation," stated the AG.

Employment

Settlement With Film and Television Production Industry Labor Organization by New York Attorney General

  • New York AG Eric Schneiderman recently settled with International Alliance of Theatrical & Stage Employees, Local 52, a labor organization representing employees in the film and television production industry over allegations regarding discriminatory admissions processes.
  • Local 52 allegedly used nepotism in admissions processes and inconsistently applied its application procedures, which the AG asserts had a discriminatory effect on minority applicants.
  • Under the agreement, Local 52 will pay $475,000 in costs, fees, and restitution. It will also restructure its processes, implement new policies, hire a diversity consultant, hire staff to manage these policies and processes, develop relevant trainings, and establish new recordkeeping requirements.

Environment

Michigan Attorney General to Co-Chair Multi-Agency Pipeline Task Force

  • Michigan AG Bill Schuette announced that he will co-chair a multi-agency government task force with Michigan Department of Environmental Quality Director Dan Wyant to examine the pipelines transporting petroleum products around the state.
  • Formal oversight for interstate gas and oil pipelines comes from the federal Pipeline and Hazardous Materials Safety Administration, but the task force believes that the pipelines have the potential to affect Michigan's environment and communities.
  • We recently blogged about a formal inquiry that AG Schuette and Director Wyant sent to Enbridge Inc. and Enbridge Pipeline Inc. in May regarding their pipelines. A response to the inquiry is pending and will be reviewed by the task force.
  • The task force will also focus on emergency preparedness for spills, coordination of permitting for pipeline upgrades and replacement, and the creation of a state website.

False Claims Act

New York Attorney General Alleges False Claims Act Violations

  • New York AG Eric Schneiderman sued Continuum Health Partners, Inc., Beth Israel Medical Center, and St. Luke's-Roosevelt Hospital Center for allegedly failing to return improperly obtained money to the state Medicaid program in violation of the state False Claims Act and other statutes.
  • Beth Israel and St. Luke's-Roosevelt allegedly submitted improper claims to Medicaid. Continuum, which operated these organizations during the relevant period, allegedly failed to take steps to repay improperly submitted claims after identifying those claims.

Financial Industry

New York Attorney General Sues Bank for Alleged Wrongful "Dark Pool" Practices

  • Following an investigation, New York AG Eric Schneiderman sued Barclay's Capital Inc. and Barclays PLC regarding alleged wrongful practices related to its operation of its "dark pool." Dark pools are a type of privately owned and operated trading venue, as opposed to a public stock exchange.
  • The AG alleges that Barclays increased the market share of its dark pool through false statements to clients and investors about the extent and type of high frequency trading in its dark pool and its use of a surveillance system and services to detect alleged predatory traders.
  • The complaint alleges violations of the state Martin Act and persistent fraud and illegality. The AG seeks damages, disgorgement, restitution, injunctive relief, and costs.

For-Profit Colleges

Massachusetts Finalizes New For-Profit and Occupational School Regulations

  • Massachusetts published final regulations, which were proposed and filed by Massachusetts AG Martha Coakley, intended to enhance consumer protections governing the for-profit and occupational school industry.
  • The new regulations state that they are intended to promote accurate information for the public, prohibit misleading advertising practices, and address unfair lending practices.
  • Under the regulations, schools are required to disclose in their advertising accurate information regarding their tuition, fees, employment statistics, graduation rates, and program completion time. Schools are also prohibited from using any high-pressure sales tactics or deceptive practices related to student loans or financial aid.

Judge Affirms Sanctions on National College for Failing to Respond to an Attorney General's Subpoena

  • A state circuit court affirmed a previous order for National College and its attorneys to pay civil penalties for their alleged failure to comply with a subpoena issued by Kentucky AG Jack Conway.
  • The subpoena sought information regarding potential violations of Kentucky's Consumer Protection Act. After approximately three years of litigation and an allegedly incomplete production of documents in response to the subpoena, the circuit court ordered sanctions against National College and its attorneys for failing to comply and their delay in responding.
  • After further proceedings, the circuit court affirmed the penalties that it had imposed and ordered National College to pay $147,000 and its attorneys to pay $10,000.

Health Care

U.S. Supreme Court Rules on Religious Exemptions for Contraception Coverage Under the Affordable Care Act

  • The U.S. Supreme Court, in a 5-4 opinion in Burwell (Sebelius) v. Hobby Lobby Stores, Inc., held that, as applied to closely held corporations, U.S. Department of Health and Human Services (HHS) regulations promulgated under the Patient Protection and Affordable Care Act, which imposes a mandate for employers' group health plans to cover contraceptives, violated the Religious Freedom Restoration Act (RFRA). The court affirmed a Tenth Circuit judgment involving Hobby Lobby and Mardel, and reversed a Third Circuit judgment involving Conestoga Wood Specialties Corp.
  • The RFRA prohibits the government from substantially burdening a person's exercise of religion unless the government can demonstrate that the burden is in furtherance of a compelling governmental interest and is the least restrictive means. The Court held that RFRA applies to regulations that govern the activities of closely held for-profit corporations and that HHS's regulation substantially burdens the exercise of religion.  Although the Court found that there was a compelling governmental interest behind HHS's regulation, the Court held that the mandate was not the least restrictive means for furthering that interest.
  • The Court was careful to state that its decision only applied to the contraceptive mandate and not other insurance coverage mandates and that it cannot be used to cloak illegal discrimination.
  • As we previously blogged, 37 AGs filed amicus briefs with the Court in this case. Twenty AGs, led by Michigan AG Bill Schuette and Ohio AG Mike DeWine, and Oklahoma AG Scott Pruitt in a separate brief, argued that the Court should affirm the Tenth Circuit judgment. Similarly, 18 states filed an amicus briefasking the Court to overrule the Third Circuit. Fifteen states and the District of Columbia, led by California AG Kamala Harris and Massachusetts AG Martha Coakley, argued that the Court should overrule the Tenth Circuit.
  • AG Schuette and AG Pruitt celebrated the decision as a victory for religious liberty, while AG Harris and AG Coakley expressed disappointment in the decision, which they see as a setback in the provision of quality, affordable, preventative health care for women.

States v. Federal Government

U.S. Supreme Court Holds That President Lacked Authority to Make Recess Appointments

  • The U.S. Supreme Court, in National Labor Relations Board (NLRB) v. Noel Canning, held that the U.S. President lacked the authority to make recess appointments during a three-day recess during the Senate's pro forma sessions. In its opinion, the Court stated that the Recess Appointments Clause of the U.S. Constitution empowers the President to fill any existing vacancy during any recess of sufficient length, but that the U.S. Senate was in session during the pro forma sessions at issue and that three days is too short a time to bring a recess within the scope of the clause. The Court affirmed the DC Circuit on different reasoning.
  • As we previously blogged, 17 AGs had filed an amicus brief with the Court urging it to uphold the DC Circuit. The AGs argued that they had an interest in the case because ultimately it was one involving issues of federalism and the individual freedoms states want their citizens to enjoy.
  • In addition, as we previously blogged, the invalidation of these appointments could call into question some actions by the NLRB and other agencies, like the CFPB, whose officials were appointed during the same recess. Commentators have said, however, that any challenge to the CFPB's action before the confirmation of its director by the Senate, would likely be unsuccessful.
  • Kansas AG Derek Schmidt and South Dakota AG Marty Jackley, who had joined the amicus brief to the Court, applauded the decision and AG Jackley stressed the importance of Senate oversight of the NLRB.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions