United States: State AGs In The News - December 18th, 2014

Last Updated: January 2 2015
Article by Bernard Nash


Attorneys General Continue to Scrutinize Merger of Food Distributors

  • In a letter to the Federal Trade Commission (FTC) dated December 10, 2014, Minnesota AG Lori Swanson questioned the effectiveness of divestitures proposed by Sysco Corporation and US Foods, Inc., as they seek regulatory approval to merge.
  • Earlier this year, a group of AGs began reviewing the proposed merger, identifying certain regional markets where the resulting entity, according to some estimates, would have greater than 70 percent market share.
  • In order to provide greater competition in these regional markets, and thus secure FTC and State AG approval, the merging entities proposed selling $5 billion in assets to a smaller distributor, Performance Food Group, Inc. AG Swanson's letter argues that these asset divestitures will not be enough to ensure competition.


Non-Profit Organization Tests California Disclosure Law on First Amendment Grounds

  • The Americans for Prosperity Foundation (AFP), a non-profit organization founded by Charles and David Koch, filed a lawsuit to enjoin California AG Kamala Harris from enforcing certain disclosure provisions of the California Supervision of Trustees for Charitable Purposes Act (the Charities Act).
  • The Charities Act requires organizations to register with the state and to submit the names and addresses of individuals who donate more than $5,000 in a tax year (information that organizations are also required to list on Schedule B of Form 990 to the IRS). In 2013, AG Harris requested that AFP submit a copy of its Schedule B for tax years 2011 and 2012. AFP resisted.
  • In its lawsuit, AFP contends that requiring the disclosure of Schedule B to California would hinder citizens' ability to freely and anonymously associate with AFP in violation of the First Amendment. AFP also argues that such disclosure is preempted by Section 501 of the Internal Revenue Code.
  • AG Harris faced a similar challenge to the disclosure requirements in the Charities Act earlier this year, when the Center for Competitive Politics (CFCP) sued to enjoin the disclosure of its Schedule B. In that lawsuit, the District Court refused to grant the CFCP's request for a preliminary injunction, and CFCP is currently appealing that decision to the 9th Circuit.

Consumer Protection

Six States Reach Settlement with Digital Advertising Firm Over Cookie Practices

  • New Jersey Acting AG John Hoffman and six other AGs entered into a settlement with PointRoll, Inc., a digital advertising and tech services company owned by Gannett Co., Inc., for allegedly violating various state consumer protection laws.
  • Following an investigation led by AG Hoffman, the AGs alleged that PointRoll engineered a process that allowed it to circumvent users' privacy controls and place internet tracking cookies on web browsers—even where the user had adopted privacy settings specifically designed to block such cookies.
  • The assurance of voluntary compliance requires PointRoll to pay $750,000 and prohibits PointRoll from overriding consumers' browser settings without their consent. In addition, PointRoll must implement a privacy program, including: placing a conspicuously-displayed explanation of what cookies are and how PointRoll uses them on its website, conducting employee training on consumer privacy, requiring third-party service providers to operate under similar privacy protocols, and organizing an annual assessment of the effectiveness of PointRoll's privacy-enhancing policies.

Maryland Attorney General Settles With Medicaid Supplier

  • Maryland AG Doug Gansler reached a settlement with Americle Healthcare, Inc.—a supplier of medical equipment and adult incontinence supplies to Maryland Medicaid recipients—resolving allegations that, from 2005 to 2009, Americle submitted bills to Medicaid for goods it did not provide, or that were not properly documented as being medically necessary.
  • The settlement requires Americle to pay $1 million in restitution and other recoveries to the state. The investigation was conducted with the Inspector General from the U.S. Department of Health and Human Services.


Massachusetts Attorney General Enforces Prevailing Wage Laws

  • Massachusetts AG Martha Coakley ordered New Hampshire-based R&A Drywall, LLC, and owner Allan Vitale to pay $200,000 in restitution and penalties for allegedly violating Massachusetts prevailing wage and recordkeeping laws.
  • AG Coakley alleged that R&A mislabeled certain employees as apprentices and underpaid other employees, according to standards set by Massachusetts law, which requires certain wages for companies completing public works projects. AG Coakley also found that R&A had failed to submit payroll records, in violation of state record keeping laws. In addition to restitution and penalties, R&A and Vitale were precluded from submitting bids for Massachusetts public works projects for one year.


New York State Bans Fracking Indefinitely

  • New York Governor Andrew Cuomo announced a permanent ban on extracting natural gas and oil through a process called hydraulic fracturing (fracking), following the completion of a study that found "significant public health risks" associated with the practice.
  • This ban comes shortly after New York AG Eric Schneiderman concluded agreements with oil and gas development companies to disclose to shareholders and the public the financial risks associated with the regulatory and environmental uncertainty associated with fracking. It also follows a ruling by the New York Court of Appeals affirming that towns have the authority to ban fracking through zoning laws.

For-Profit Colleges

Attorney General Settles With For-Profit College Over Alleged Deceptive Practices

  • Massachusetts AG Martha Coakley reached an agreement with Premier Education Group, L.P. and Salter College: A Private Two-Year College, LLC (collectively, Salter), to settle allegations that Salter violated the Massachusetts Consumer Protection Act by using deceptive practices to market its educational programs to potential students.
  • The complaint alleged that Salter made a number of misrepresentations to potential students, including overstating the rate at which it placed students in their career field, the level of job placement services provided, its success at finding externships for students, and the extent to which tuition included the costs of necessary post-graduation certification programs.
  • The consent judgment requires Salter to pay $3.5 million to the state, and to forgive $200,000 in outstanding student debt held by former Salter students. In addition, Salter must provide full disclosure to prospective students that it is an open enrollment institution and does not guarantee employment in the student's desired field.

Health Care

New York Attorney General Resolves Investigation With Medical Clinic

  • New York AG Eric Schneiderman entered into a settlement agreement with PATH Medical, P.C., to resolve claims that PATH provided false and misleading information to patients regarding the price of, and the extent to which insurance would cover, certain exotic and expensive medical services it recommended, such as "brain electrical activity mapping" and various psychological and cognitive assessments. AG Schneiderman also resolved claims that PATH improperly transmitted protected health information over unsecured personal email accounts, offered unlimited access to medical care for a fixed fee, and other violations of state and federal law.
  • In an assurance of discontinuance, PATH agreed to refund former patients for overcharges and to provide increased price transparency, better payment options for lower-income patients, staff training programs, and HIPAA-compliant email policies. PATH also agreed to pay $15,000 in civil penalties.


Attorneys General Investigate Mortgage Servicer, Again

  • A group of State AGs on the National Mortgage Settlement Monitoring Committee are investigating whether Ocwen Financial Corporation provided false or misleading information when it reported compliance with a 2012 national settlement agreement.
  • The investigation centers on determining if Ocwen has properly implemented an independent internal audit process to determine whether it was meeting standards for dealing with struggling borrowers as required by the settlement. In addition to the AGs' investigation, National Mortgage Settlement Monitor Joseph A. Smith Jr. has indicated that he will also take a close look at Ocwen's compliance.
  • In response to the investigation, Ocwen issued a statement that "[it] will continue to support the monitor's efforts to ensure that [Ocwen is] fully compliant with all aspects of the national mortgage settlement."

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