Each week, Crowell & Moring’s State Attorneys General team highlights significant actions that State AGs have taken. Here are this week’s updates.
Monday, August 16, 2021
- Colorado Attorney General Weiser sent a letter announcing his support for the U.S. Department of Transportation’s (“USDOT”) airline refund proposal and its attempt to simplify the refund process. However, Attorney General Weiser also recommended that the USDOT specify in which circumstances airlines must issue refunds and that it require an accessible process for obtaining refunds. For example, Attorney General Weiser’s letter asks the USDOT to specify when carriers are not required to issue refunds for baggage delivery delays.
- Missouri Attorney General Schmitt announced that the owner of landscaping business Four Seasons Lawn & Landscape was sentenced for felony charges of defrauding consumers after the business did not deliver promised landscaping services after taking advance payments. The owner also paid $62,265 in restitution as part of his sentence.
Tuesday, August 17, 2021
Consumer Financial Protection Bureau
- The Consumer Financial Protection Bureau (“CFPB”) filed a proposed settlement against debt collection enterprise Fair Collections & Outsourcing and its owner for allegedly violating federal debt collection law by failing to establish reasonable policies and procedures covering the accuracy of information furnished to credit reporting agencies and by neglecting to conduct reasonable investigations of indirect consumer disputes. The CFPB also alleged that the company and its owner acted illegally by representing that consumers owed debts when they did not have a reasonable basis to make this assertion. The settlement would require the company and owner to pay a $850,000 civil penalty and put in place certain measures to prevent future violations.
- Arkansas Attorney General Rutledge announced a lawsuit against Ethos Custom Brands AR, LLC and several of its executives for allegedly violating the Arkansas Deceptive Trade Practices Act by marketing and selling custom leather goods that it ultimately failed to deliver. The lawsuit is seeking restitution, civil penalties, injunctive relief, and a jury trial.
Healthcare Fraud – Federal Trade Commission and GA Attorney General
- Georgia Attorney General Carr and the Federal Trade Commission filed a joint enforcement action against Superior Healthcare, LLC, Regenerative Medicine Institute of America, LLC d/b/a Stem Cell Institute of America, LLC, Physicians Business Solutions, LLC, and two individuals for allegedly violating the Georgia Fair Business Practices Act and the FTC Act by making false and misleading claims about regenerative medicine products. For example, the defendants allegedly claimed that their products could cure, treat, or help with a variety of diseases without having competent and reliable scientific evidence to support these claims. Attorney General Carr’s office is seeking injunctive relief, restitution, disgorgement, and civil penalties of up to $5,000 or $10,000 per violation depending on if the violation was committed against elderly and/or disabled consumers.
- California Attorney General Bonta announced a $75 million nationwide settlement with pharmaceutical company Bristol Myers Squibb, resolving allegations that the company underpaid drug rebates owed to state Medicaid programs, including Medi-Cal. Bristol Myers was accused of overcharging states by decreasing the rebate it had to pay to ensure competitive prices for pharmaceuticals.
- Washington D.C. Attorney General Racine announced two nuisance lawsuits against gas station and grocery store owners in Ward 8 and a settlement with gas station owners in Ward 5 for failing to address security issues, such as drug activity and gun violence. Specifically, the actions alleged that the business owners failed to make security improvements after violent incidents. The lawsuits seek improved security practices and damages, and the settlement resulted in an agreement to implement new security measures.
Wednesday, August 18, 2021
- Minnesota Attorney General Ellison announced an assurance of discontinuance with bridal stores Posh Bridal Couture and Elizabeth Bridal for allegedly delivering dresses late and falsely representing the reasons for the delays. Under the settlement the stores have agreed to make business changes and pay $50,000.
- Michigan Attorney General Nessel announced that her office entered into an assurance of voluntary compliance with Skin Envy, LLC after its owner allegedly made misleading claims on a television show about a product’s ability to prevent COVID-19. Under the settlement, the company has agreed to publicly retract the claim on Instagram, add language on its website warning of side effects, and pay $4,000 for investigative costs.
- California Attorney General Bonta applauded the U.S. Environmental Protection Agency’s new rule which ends the use of the pesticide chlorpyrifos in agricultural production after finding that there is no safe level of it in foods. The rule goes into effect in six months.
- Virginia Attorney General Herring announced a lawsuit against landlords JumpStart University and Vasilios Education Center and their operator for allegedly defrauding tenants by promising wraparound services they failed to provide, evicting tenants aggressively based on inaccurate billing and payment records, and using illegal leases.
- California Attorney General Bonta issued a consumer alert warning that the state price gouging law is in effect following a declaration of emergency for El Dorado County due to a wildfire.
U.S. Food and Drug Administration
- A bipartisan coalition of 31 states led by the attorneys general of Illinois, Idaho, Nebraska, New York, North Carolina, and Tennessee is asking the U.S. Food and Drug Administration (“FDA”) to support restrictions on tobacco and nicotine products that disproportionately harm young people. For example, the coalition is asking the FDA to eliminate flavors that appeal to youth, limit nicotine levels, and restrict marketing for this type of product.
Thursday, August 19, 2021
Labor and Employment
- Massachusetts Attorney General Healey announced that cannoli factory Golden Cannoli Shells Co., Inc. and two of its principals agreed to pay $105,000 in restitution and penalties for alleged violations surrounding wage theft, not providing proper notice of earned sick leave, retaliation, and failing to produce proper records. In addition to the monetary provision, the settlement includes an agreement to abide by applicable employment laws and submit records for a year.
- North Carolina Attorney General Stein announced that an individual was sentenced for conspiracy to commit health care fraud for submitting false and fraudulent claims for the reimbursement of behavioral health services. The sentencing also includes a payment of almost $2 million in restitution.
- North Carolina Attorney General Stein announced that North Carolina’s price gouging law is in effect statewide along with a state of emergency for flooding and heavy rains affecting the western area of the state.
Friday, August 20, 2021
- Michigan Attorney General Nessel reissued a consumer alert about data breaches after T-Mobile confirmed that it suffered such a breach affecting over 50 million customers in the United States. The alert suggests potential ways to respond to a data breach, including obtaining a free credit report, placing a fraud alert or security freeze on an individual’s credit file, using two-factor authentication, and monitoring credit.
- New York Attorney General James announced the indictment of the owner of LCM Livery P/U, Inc. for allegedly scamming individuals through a fake housing assistance program which obtained personal information and then used it to submit false claims for custom back braces. The individual is accused of stealing over $4 million through the scheme.
Intellectual Property – Patent Trolls
- North Carolina Attorney General Stein applauded a decision in Napco v. Landmark upholding the NC Abusive Patents Assertions Act, a law that is geared towards curbing patent troll practices. Attorney General Stein had previously filed an amicus brief in the case in support of the law.
- California Attorney General Bonta announced the sentencing of the owner of Quality Care Pharmacy for defrauding the state Medicare and Medi-Cal programs through fraudulent over-billing of more than $1.8 million in drug purchases.
Tax Evasion Scheme
- California Attorney General Bonta announced that the former owner of several restaurants based in Los Angeles and her brother pleaded guilty to filing a false sales tax return and conspiracy to do so. The former owner also pleaded guilty to filing a false income tax return. The individuals have paid the full over $2 million owed in restitution, which includes the tax owed plus interest and investigation costs.