United States: State AGs In The News - 2 October 2014

Hot News

More Arrows and Bigger Targets: What Corporate Counsel Need to Know About False Claims Acts

  • Dickstein Shapiro State AG Practice Partner Milton Marquis and Associate Christopher Allen recently published an article on the Association of Corporate Counsel's website regarding False Claims Act (FCA) litigation.
  • The article explores the historical underpinnings and current trends in FCA litigation and highlights strategies for managing potential FCA liability.
  • To read more, please see the full article.

2014 Election

ACC Webcast: Post-Election Analysis of the New Attorney General Landscape

  • Dickstein Shapiro and the Association of Corporate Counsel (ACC) are partnering for a webcast on Wednesday, November 5 at 2:00 PM EST for a post-election analysis of the new Attorney General landscape.
  • Bernie Nash, head of Dickstein Shapiro's State AG practice, will lead an interactive discussion regarding the new landscape and its implications for the business community.
  • This webcast is free and open to the public. Register here.

Antitrust

State Attorneys General Review Competing Bids for Family Dollar

  • According to recent reports, a group of state AGs is reviewing two separate offers by rival stores to acquire Family Dollar Stores, Inc., based on antitrust concerns.
  • On two prior occasions, Family Dollar's board rejected bids by Dollar General, citing the failure of Dollar General to address antitrust concerns.  Family Dollar decided to accept a lower offer from Dollar Tree, Inc.
  • Dollar General has presented a third, hostile offer directly to Family Dollar's shareholders and has offered to divest as many as 1,500 stores to alleviate antitrust concerns.
  • The proposed merger between Family Dollar and Dollar Tree is currently under review by the Federal Trade Commission (FTC).

Massachusetts Attorney General Secures Price Cap Concessions as Part of Health Center Merger Settlement

  • As part of its amended consent judgment, Partners HealthCare System, Inc. has agreed to cap prices at Hallmark Health Centers for six and a half years in connection with its planned acquisition of Hallmark Health Corp.
  • The concessions by Partners come after a lengthy antitrust investigation of the acquisition. The consent judgment also includes time-limited agreements by Partners to maintain premerger levels of psychiatric and behavioral health services, to cease from offering all-or-nothing network coverage, to avoid contracts with affiliate physician groups, to limit growth of physicians, and to block further expansion into eastern Massachusetts.
  • The consent judgment must be approved by a Massachusetts Superior Court judge.

Consumer Financial Protection Bureau

Connecticut and Florida Sue Alleged Mortgage Relief Scammer Under New Dodd-Frank Authority

  • Connecticut AG George Jepsen and Florida AG Pam Bondi initiated a lawsuit in federal court against the Resolution Law Group, P.C., the Berger Law Group, P.A., and six other defendants alleged to be operating a fraudulent mortgage assistance program.
  • The AGs brought the lawsuit according to their expanded authority under Section 1042 of the Dodd-Frank Act, which allows state AGs to sue in federal court for violations of the federal Mortgage Assistance Relief Services Rule and other federal consumer financial protection laws.
  • The complaint alleges that the defendants charged consumers large enrollment fees to participate in fake mass-joinder lawsuits against their mortgage lenders or servicers. In some instances, defendants are alleged to have offered low refinancing rates and foreclosure avoidance.
  • The court granted the AGs' request for temporary restraining orders, freezing defendants' assets related to the alleged scam during the course of the litigation.

The Consumer Financial Protection Bureau Issues First Order for Violation of Mortgage Servicing Rules

  • The CFPB entered a consent order against Flagstar Bank, F.S.B. for allegedly impeding mortgage borrowers' attempts to save their houses from foreclosure through federally-mandated loss mitigation and loan modification procedures.
  • This action against Flagstar was the first to be completed under the mortgage servicer rules, which are authorized by the Dodd-Frank Act and went into effect in January 2014.
  • Under the terms of the consent order, Flagstar will pay $27.5 million in redress to affected customers and a $10 million fine. Flagstar must also contact current borrowers and offer loss mitigation options, and will be prohibited from acquiring the servicing rights for default loan portfolios until it can demonstrate that it has proper loss mitigation procedures in place.

Consumer Protection

Illinois Attorney General Obtains $46.2 Million in Refunds From ComEd 

  • Illinois AG Lisa Madigan settled two lawsuits with electricity provider Commonwealth Edison (ComEd) for $46.2 million in customer refunds.
  • The lawsuits, which were filed in 2008 and 2010, alleged that ComEd violated the Illinois Public Utilities Act by improperly charging consumers surcharges connected to the construction of smart grid infrastructure and capital investments, and that the method used to calculate increased rates charged to customers to cover ComEd's capital investments was improper.
  • The settlement was approved by the Illinois Commerce Commission and will be implemented through credits to customer accounts during the November billing cycle.

Maryland Attorney General Reprimands Company for Charging Veterans to File Benefit Claims

  • Maryland AG Douglas Gansler issued a final order against James Mack and his company Benefits U Earned, LLC, for soliciting money from veterans in exchange for assistance in filing benefit claims with the Department of Veterans Affairs (VA).
  • Federal law requires persons assisting veterans with the benefit claims process to be accredited by the VA. It also prohibits charging fees in connection to assistance filing claims.
  • Under the terms of the Order, Mack and Benefits U Earned must cease offering veterans services, return any fees collected from veterans, and pay a civil penalty of $325,800.

Employment

New York Attorney General Reaches Settlement Regarding Airport Workers

  • New York AG Eric Schneiderman reached a settlement with contractor Alstate Maintenance LLC over allegations that it underpaid employees performing skycap services at JFK International Airport. The AG's investigation found that some workers were paid a wage as low as $3.90 per hour.
  • The investigation was initiated upon a tip from a local chapter of Service Employees International Union and comes amid a push for greater unionization of airport workers.
  • The settlement calls for $625,000 in restitution and another $300,000 in damages, to be distributed to the nearly 40 workers involved.

False Claims Act

Multiple States and the Federal Government Settle With Drug Maker Over Adderall Claims

  • The U.S. Department of Justice (DOJ) and numerous state AGs have announced a multistate settlement with Shire Pharmaceuticals LLC for $56.5 million in connection to allegations that it violated the False Claims Act. Shire also agreed to pay $2.9 million to resolve a separate civil complaint brought by Louisiana for violations of state law.
  • Shire was alleged to have marketed and promoted Adderall XR and other drugs as clinically superior at treating attention deficit hyperactivity disorder (ADHD), even when it had no scientific data to support such claims. Shire is also alleged to have made unsupported claims that Adderall would prevent poor academic performance, loss of employment, criminal behavior, traffic accidents, and sexually transmitted diseases.
  • Under the terms of the settlement, state Medicaid programs will receive $20.7 million, with the rest going to the federal government. In addition, Shire entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services and will be monitored thereunder.

For-Profit Colleges

Organization of For-Profit Colleges Sues Massachusetts Attorney General

  • The Massachusetts Association of Private Career Schools filed a lawsuit against Massachusetts AG Martha Coakley in federal court challenging regulations recently issued by the AG on for-profit educational institutions.
  • The complaint alleges that the regulations are outside the rulemaking authority granted to the AG under Massachusetts General Statutes, Chapter 93A – which does not permit rules that conflict with the FTC Act – and are in violation of the First Amendment and Due Process Clause.

Health Care

New Connecticut Legislation Requires Attorney General Notification for Health Care Mergers

  • Legislation first proposed by Connecticut AG George Jepsen will go into effect on October 1, creating notification requirements for certain acquisitions and mergers in the health care field.
  • The law applies to not-for-profit and for-profit health care providers, and obligates hospitals, health systems and affiliates to give notice to the AG's office of proposed transactions involving practices comprised of two or more physicians, or when the proposed transactions will result in a group practice comprised of eight or more physicians.
  • AG Jepsen has provided instructions and forms to assist in the notification process.

Mortgages/Foreclosures

New York Attorney General Initiates Mortgage "Redlining" Lawsuit

  • New York AG Eric Schneiderman sued Buffalo-area lender Evans Bank, N.A. and Evans Bancorp, Inc. for allegedly denying mortgages to purchasers seeking homes in predominately African-American neighborhoods.
  • The complaint was filed in the U.S. District Court for the Western District of New York and seeks declaratory and injunctive relief, as well as damages and civil penalties for violations of the U.S. Fair Housing Act, New York State Human Rights Law, and Buffalo City Code.

New York Adds $40 Million to Program Helping Homeowners Avoid Foreclosure

  • New York AG Eric Schneiderman announced that his office is committing $40 million in additional funding to extend the operation of the Homeowner Protection Program (HOPP).
  • HOPP serves as a funding conduit for small agencies to provide free counseling and legal advice to homeowners trying to avoid losing their homes to foreclosure.
  • HOPP was established in 2012 with a 3-year, $60 million commitment and, according to the AG's office, has already helped more than 30,000 families across New York state.

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